Why start a trucking company?

The trucking industry never goes out of demand. In the United States today, interstate trade and transport of goods from our neighboring countries to the north and south is currently recovering from the pandemic and increasing, and there’s no sound reason to think it will decrease anytime soon. Furthermore, because the existing rail infrastructure offers a fairly static capacity, interstate highway transport is where any rapid growth will take place.

This gives you a unique opportunity to open a business. Your potential niche is profitable, sustainable and built on top of a market that moves roughly 71.4% of all products shipped across the U.S. per year. This amounts to a whopping $10.4 trillion worth of value in goods shipped, out of a total shipping value of over $14.5 trillion in transported goods according to Census Bureau findings.

In other words, while trucking is a competitive industry, there’s no shortage of room for carving out a slice of its colossal pie if you’re willing to plan correctly and put the effort in.

Step 1: Write a business plan

Your first concrete step for establishing how to start a trucking company will be a business plan. You can use this to guide your steps, find investors and of course, to motivate your own efforts with clearly laid-out steps. At a basic level, your business plan should project on the needs of your company for the next two to five years. At the very least, it should offer a clear breakdown of how you define your business across several key categories, as follows:

• General summary: Give a general and brief overview of your qualifications, your business purpose and how you hope to grow.
• Business description: Flesh out the details of what trucking niche your business serves, what regions or markets it hopes to cater to, what unique sales proposition it offers and what kind of assets and experience you offer to the market.
• Operational layout: Include the capital assets, technology, communications systems, other equipment and staff you plan on using at the starting and later phases of your trucking company’s growth.
• Products/ Services breakdown: Break down your specific service offerings and how they work.
• Market research: Lay out your analysis of the market you hope to offer your trucks to and how your particular business can fit inside it uniquely.
• Marketing plan: Describe the methods you’ll use to attract customers and build brand awareness for your target trucking market.
• Financial Plan: List your current resources and a rough plan for how your revenue, earnings and expenses should develop.

Step 2: Obtain commercial driver’s licenses

If you’re already the owner and operator of a transport truck, you’re ahead of the game by having at least one vehicle and commercial trucking license on hand. However, if you’re not, you’ll have to get one, or at least competitively hire drivers who have valid commercial driver’s licenses.

These are legally required by the Federal Motor Carrier Safety Administration (FMCSA) for commercial long-haul truckers, and anyone over the age of 20 can apply to legally transport cargo on interstate routes. Your drivers will also have to be legal U.S. residents with proof of identity and social security numbers. The licensing exams also require vision testing and other knowledge tests.

Plan ahead for obtaining any new commercial driver’s licenses, either for yourself or new employees who don’t already have them. The process requires first obtaining a learner’s permit, further subsequent tests and pre-trip inspections. Only after passing these and paying an applicable fee does a driver obtain their full commercial license.

Step 3: Determine your business type

There are several important steps that you have to take specifically in relation to starting a trucking business. However, before you embark on these, a basic step you can take right away is to legally establish your business structure for tax purposes. To start, make sure you have a unique business name that you’ve made sure is available. File this name with your state. You can do this with the Small Business Administration.

You can register your company as a sole proprietorship, partnership, LLC or even as a corporation. In choosing which to go for, keep in mind registration expenses, questions of legal liability, tax liability and practical need. At this point, it might be a good idea to also book a consultation with an accountant who specializes in trucking businesses.

One thing to particularly keep in mind in the context of a trucking business is legal liability. You will have one or more drivers hauling heavy cargo in huge trucks across state lines and inside cities. This opens you up to all sorts of potential accident risks. This may be a good reason for choosing to incorporate your business as a separate entity so that any lawsuits apply to the company instead of you personally.

Step 4: Apply for your trucking authority

Trucking authority is a special type of legal permission that allows you to be legally paid as a carrier of goods and freight inside a state or between states. FMCSA offers this to trucking companies and gives each company its own unique Motor Carrier number. The type of authority you need to apply for can change depending on the kind of cargo you carry and it might even be necessary to apply for more than one kind of authority if you’re transporting diverse cargo.

Some states even require trucking authority for goods shipped inside their boundaries, so be sure to check your state’s regulations on this. Applications for trucking authority are generally required for any company hoping to haul loads over state lines with trucks weighing more than 10,000 pounds in gross vehicle weight. Also keep in mind that it can take as many as two months to process an authority application, so plan ahead.

Step 5: Find a process agent

A process agent is a legal figure who represents your company when you file papers in court for your business. Due to regulations stipulated by the FMCSA, you need to have a process agent in every state in which your prospective company will do business, so it’s a step you can’t miss.

Process agents are legal representatives for your company who complete certain forms on your behalf with the FMCSA. You can find listings of available process agents per state at the FMCSA’s website.

Step 6: Open business bank accounts

Having your business revenues, expenses and profits handled directly through your personal bank accounts is a bad idea, particularly if you’re incorporating, forming a partnership or opening your business as an LLC.

To avoid complications and for tax purposes, Open a business bank account in the name of your registered trucking company. You should also apply for business credit cards under your company account.

Step 7: Obtain insurance

Long haul trucking is a commercial insurance-heavy business for obvious reasons of potential liability. Accidents and even fatal crashes are far from uncommon and often involve third party liability. For these reasons and because of legal requirements by FMCSA, you need to obtain one or more kinds of insurance coverage.

These typically include: commercial liability insurance with at least $750,000 in coverage, cargo insurance coverage for at least $100,000 and physical damage coverage for no-fault accidents and losses. Shop around for competitive rates, and carefully check coverage clauses. FMCSA can assist you with coverage requirements.

Step 8: Comply with other trucking industry business legal requirements

The FMCSA strikes again with several additional legal registration and other requirements that you will have to comply with. These include the following:

• Applying for a Department of Transportation number (DOT) for your business
• Filing your BOC-3 through your process agent
• Obtaining International Fuel Tax Agreement stickers for your trucks through your home state government’s IFTA website
• Obtaining an Employment Identification number from the IRS for your business
• Installing FMCSA-specified electronic tracking devices on your trucks if applicable based on the tonnage of your trucks and their routes
• Obtaining a Standard Carrier Alpha Code with the National Motor Freight Traffic Association

You’ll also need to find out what specific business licenses and regulations need to be complied with in the specific states that you operate in. These can vary considerably from state to state. Finally, if you’re operating trucks that weigh more than 55,000 pounds, the IRS asks you to file a special form called IRS tax form 2290, which is for heavy highway vehicle taxes.

Step 9: Obtain your first trucks

If you haven’t already bought and registered one or more trucks by now, this is the time to do it, especially because it’s necessary for complying with several of the steps above. If your credit is good enough for reasonable terms, you can get new or used truck financing. Multiple leasing options are also available. If you have enough capital on hand, you might want to even consider buying used or new trucks outright.

Lease options exist for operating your vehicles and returning them once a lease expires, purchasing your trucks through monthly payments financing or leasing trucks to eventually buy them. You can also find other leasing or buying options if you shop around.

Step 10: Subscribe to load boards

Load boards are online marketplaces in which truckers and trucking companies get matched up with potential hauling contracts across state lines. Shippers and freight brokers register with these sites as well for the sake of finding reliable carriers for their cargos.

In order to make the process of finding your first customers easier, consider registering with one or more load boards on the internet. Load boards let you search based on multiple filters that include region, cargo type, hauling rates and so forth.

Step 11: Keep an eye on staff, driver and equipment compliance

The trucking business is heavily tied up in local, state and federal regulations of all kinds. These rules are usually taken very seriously and infractions can be costly. Unfortunately, your drivers might accidentally or deliberately ignore some of the rules they should follow. As the business owner, you can be held responsible for their mistakes, so make sure that your staff is staying on top of their legal requirements.

For your part, make sure that you’re complying with your state and national trucking regulations and that you’re keeping abreast of what the brokers you work with require of your trucks and drivers.

Also make sure that your company is in line with legal rules around hours of service for your trucks, OSHA safety regulations and working rates for your drivers. Finally, keep all inspection, maintenance and sticker regulations that apply for your trucks firmly in mind for scheduling.

Step 12: Hire additional staff

If you’ve managed to start and expand your business enough so that you can’t handle all of the work yourself, congratulations — you’re on the right track. However, keep in mind that running a trucking company’s logistics is hard work that can quickly overwhelm even a diligent owner.

For this reason, if you find yourself unable to keep track of numerous business-related regulations, transport schedules and maintenance needs, consider hiring more staffers. These can include logistics coordinators, dispatchers, receptionists and maintenance staff, too. They will make growing your business easier and smoother.