Last Updated December 27, 2024
When it comes to running your own trucking business, one important element is understanding the difference between owner-operators and carriers. While there are some differences between how these terms are typically used, the owner-operator vs. carrier gap isn’t as wide as you might expect.
What Is an Owner-Operator?
An owner-operator is defined as a trucker who runs their own business and has purchased their own truck. In addition to having started the trucking business, they remain involved in its daily operations. Most owner-operators will operate under their own authority to maintain full control over finding loads and maintaining equipment.
Alternatively, an owner-operator may lease-on to a larger carrier that will take on key responsibilities, such as finding loads and managing paperwork. This is different from being a company driver, as the owner-operator is considered to be self-employed and is paid by mileage or a percentage of the load’s value rather than receiving a fixed salary.
What Is a Carrier?
A carrier is defined as any company that transports goods or materials from shippers to buyers. Carriers are often made up of large fleets of trucks, with several drivers who work for them either as salaried employees or leased-on owner-operators. However, a carrier could only have a handful of trucks—or just one.
Technically, all owner-operators are also carriers under this definition, but not all carriers are owner-operators. A carrier is only an owner-operator if it is an individual who is operating as an independent contractor. A larger fleet or company would simply be considered a carrier.
Responsibilities of a Single-Truck Owner-Operator
A single-truck owner-operator takes on all the responsibilities of running a trucking business, from finding loads to purchasing equipment to handling all accounting for their accounting work. Here is a full list of owner-operator responsibilities:
- Finding loads
- Buying or leasing equipment
- Equipment maintenance and repairs
- Paying for insurance and other overhead
- Accounting (including paying taxes)
- Organizing records, registrations, and other paperwork
- Scheduling
- Driving
- Maintaining compliance with all applicable regulations
Responsibilities of a Carrier With a Fleet of Trucks
A carrier with a fleet of trucks has many of the same responsibilities as an owner-operator (aside from driving). Notably, the carrier takes care of many tasks on behalf of their drivers, such as finding loads and ensuring regulatory compliance like maintaining driver qualification files.
By working with a large number of drivers and vehicles, carriers have additional responsibilities:
- Maintaining Driver Qualification Files (DQF) for all drivers
- Driver dispatching and route planning
- Load tracking
- Driver recruitment, training, and performance monitoring
- Fleet management
- Tax obligations for company drivers
Leasing-On With a Carrier vs. Operating Under Your Own Authority as an Owner-Operator
One of the most important decisions for owner-operators is whether they will lease-on with a carrier or operate under their own authority. Here are some key differences to be aware of in deciding between a motor carrier vs. owner-operator setup.
Leased-On Owner-Operators
Curious about how to become an owner-operator under a carrier? In this setup, the carrier provides administrative support for your business, including key tasks like securing loads, managing logistics, and helping with compliance. Carriers use established networks to provide a steady workflow.
Leased-on owner-operators are still responsible for maintaining their own vehicle and complying with all of the carrier’s policies, standards, and schedule requirements. Owner-operators must pay an agreed upon percentage of their earnings to the carrier. While they are typically still responsible for their fuel, maintenance costs, and taxes, the carrier may help with other operational costs.
Own Authority Owner-Operators
Operating under your own authority provides complete control over how you run your trucking business. This can potentially result in higher earnings than leasing-on, but it also requires that you handle all of the administrative work of the business yourself (or hire someone to help).
This level of independence allows owner-operators to maintain their desired work-life balance, choose the loads and routes they want, and potentially earn more. However, finding loads, managing regulatory compliance, and obtaining funding for your operational costs can be time-consuming and challenging.
In-Summary: Differences Between an Owner-Operator and a Carrier
All owner-operators are carriers, but not all carriers are owner-operators. For those interested in starting their own trucking business, the biggest decision typically comes down to whether you wish to be completely independent and work under your own authority or lease-on with a larger carrier for more consistent and predictable work. By evaluating which responsibilities you are comfortable taking care of yourself, you can determine whether working as an owner-operator or leasing-on with a carrier is right for you.
Freight Carrier FAQs
Can you start a trucking company with only one truck?
Yes, you can start a trucking company with one truck. With one truck, you are considered an owner-operator, which will typically require creating a business plan, forming a business entity, obtaining funding, fulfilling all documentation requirements, setting up an accounting system, finding loads, and scheduling routes. Of course, you’ll also need to obtain a truck for your business.
How much does it cost to start a trucking company?
The cost to start a trucking company can vary but usually ranges between $10,000 and $30,000 for owner-operators working with a single truck. This estimate involves financing or leasing equipment rather than buying it outright.
How do you get trucking authority?
To get trucking authority, you need to register your business, get a USDOT number and motor carrier number, apply for insurance, and then complete the BOC-3 form. You will also need to pay the HVUT, register and agree to the IRP, set up an IFTA account, get a UCR permit, and pass a drug and alcohol test.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
