Almost everything you buy has been moved by a truck at some point, whether it’s food, gasoline, clothing or other items. The trucking industry can be very lucrative, but it is also a highly competitive industry. It’s smart to research the industry thoroughly before starting your own company to be sure you understand everything involved with starting a trucking business.
Decide If You’ll Subcontract
One of the first decisions you need to make when starting your trucking company is deciding whether you will hire employees or use subcontractors to drive your trucks. They are positives and negatives to each method and trucking companies have succeeded both ways. There are generally less start-up costs involved when you have sub-contractors instead of employees, but you also have less control over the schedule of the drivers and you may have to pay a higher percentage of the money you make to subcontractors than you would pay to company drivers.
Trucking companies who hire drivers to work for them as employees have more control over the drivers and can set the rates that they will pay the drivers. The downside is that the company has to pay for insurance and equipment costs that would normally be paid by subcontractors.
Starting The Business
In some ways trucking companies are started the same way that other businesses are started. The company owner must register the business with all applicable state, federal and local agencies. You must get a business license and all necessary permits before your company can legally operate. It is essential that you get a Federal Department of Transportation Number. This number must be displayed on all of your trucks. You also need to apply for and receive Federal Motor Carrier hauling authority.
Tax Forms and Registrations
There are several tax forms that must be completed periodically for your trucking business to be operating legally. One of these is a heavy use tax form. You also need to obtain International Registration Plan tags as well as International Fuel Tax Agreement decals from your state department of transportation. A BOC-3 filing is required to operate a trucking company legally in the United States. It’s best to visit a local licensing office or your state department of transportation’s website for specific information you need to legally operate a trucking company in your state. It’s best to talk to an accountant who has experience with the trucking industry when you are forming your trucking company. They will be able to offer business advice and help you manage the company’s finances correctly right from the start.
There are very strict insurance requirements that anyone who owns a trucking business must meet. You must have insurance on your vehicles as well as the company itself. Some of the companies you haul freight for may have even stricter requirements than the federal regulations, so make sure your insurance policy meets their requirements before hauling loads for those companies.
If you decide to hire truck drivers and operate your own fleet of commercial vehicles, you need to purchase the vehicles. Most experts in the trucking industry recommend starting with just one or two vehicles and adding to your fleet as time goes on. This gives you the ability to learn the trucking industry without being overwhelmed by the number of drivers and vehicles in your fleet. Think about the type of freight you will be hauling before purchasing trucks and trailers so that you buy the appropriate vehicles. Refrigerated trailers are likely to be more expensive than dry van trailers, but they are necessary if you will be hauling food or other perishables.