I want to switch my trucking company payroll to W-2, how do I do that? When should I do that?
First off, that’s great that you have decided that paying W-2 to your drivers and office people is the best and legal way to go. Now what? What do you do next?
My advice is to rip the Band-Aid off so to speak. If you are supposed to be paying by W-2 and you are paying 1099, the longer you wait the worse it is. If you have decided to switch your trucking company to W-2, do it ASAP. Think of it as a time if your logs were bad (remember paper logs before ELD’s? Good times). If you decided that you had to improve your DOT compliance logging issues, you would want to start that today. So that the trucking company can run out the six months of logs you have to keep for a DOT audit. The sooner you start, the sooner the non-complaint activity is far away.
I am skipping getting a payroll service or doing it in-house because it is self-serving for me. It needs to happen but that’s for another day. Our mission is to help trucking families so that’s the focus of this article. If you want to work with us, reach out and we are happy to help but you can also use other methods.
Now that we have decided to pay W-2
We want to start that as soon as possible, what’s next? You need to tell your employees. Since it is hard to get OTR truck drivers together in one place and at one time, I suggest calling them each individually or talking to them as they come in. When they come in to see you or call, the best way to explain it is the good things for the driver. Tell them that now they get 50% of the social security tax paid for them. Also, tell them that they now have taxes taken out through the year so they don’t owe crazy money at tax time. Tell them they now have unemployment insurance. I get that these things aren’t the most exciting perks to any employee but they are important. The main thing is that you tell them it is better for them to be w-2 than 1099 (which is true). Further, you as the employer stepped up to make this happen.
Some drivers will protest for many reasons. We will talk about that in another article. The main thing is don’t make it optional for the drivers. If paying W-2 is the correct and legal way to pay your drivers, you’ll need to pay them all that way. You wouldn’t let half your drivers drive 95 MPH, would you?
Written by Mike Ritzema
With over 20 years of experience in entrepreneurship, management, business planning, financial analysis, software engineering, operations, and decision analysis, Mike has the breadth and depth of experience needed to quickly understand entrepreneurs’ businesses and craft the most suitable solutions.
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