Owning a Trucking Business - Requirements, Steps, and Benefits
Many people believe that owning a trucking business is simple and easy. They often think that anyone can be owner operators of a trucking business. However, owner operators need technical skills and business knowledge to achieve success. The following are the things that people should keep in mind before starting a trucking business.
How to Start a Trucking Business
Identify How the Vehicle will Operate
Owner operators should first determine the purpose of the trucking business. They should identify what goods will be transported and where they will go. Certain types of goods will also have particular requirements like proper equipment. States also have specific laws with regards to interstate goods transport.
Most trucking businesses operate using one of two different methods. This depends on the contracts and how they get their drivers. The driver can personally own the truck as this makes him or her the owner operator. A business owner can also hire drivers.
• Owner Drivers
Owner operators are usually the ones who drive their own trucks. They privately own and run their businesses. This type of operation gives drivers more freedom and choice in how they want their businesses to operate. However, drivers who want to run their own companies need more capital and are obligated to meet different business requirements.
• Subcontracted Drivers
Some company owners prefer to run the business end and get people to drive their trucks. This type of business operation requires employing outside drivers. They are hired on contracts for specific transport jobs. This is suitable for owners who want to start their company with less capital and fewer business requirements. However, owners don't have total control over their trucks, and drivers can sometimes cut into profits.
Meet the Necessary Requirements
Each state has particular laws with regards to owning and operating a trucking business. They also have different rules about in-state and interstate transport of goods. The following are the basic requirements for starting a trucking business.
• International Registration Plan
This registration is aimed to maximize interstate highway use. Truck owners should fill out the registration form on the IRP website. They can then proceed with registration and pay the fees.
• International Fuel Tax Agreement or IFTA Decal
Different states provide an International Fuel Tax Agreement decal for trucks depending on local laws. Owners should check their state's rules on acquiring this registration. They can check their state's IRP portal or transportation websites.
• Motor Carrier Authority Number and Federal DOT Number
The truck can be registered online through the Federal Motor Carrier Safety Administration website. Business owners can check the requirements and download the form. They can determine what permits they need and obtain their USDOT number, Hazardous Materials Safety Permit, Operating Authority number or Cargo Tank online.
• Heavy Use Tax Form
This form can also be downloaded online through the IRS website. This identifies the tax that should be paid depending on the truck's weight and frequency of road use. The IRS should receive the form within 120 days of filing.
• Filing for BOC-3
This form is filed through the FMCSA website. It entitles the owner to faster processing for services like USDOT number registration. Owners are required to pay a onetime fee of $75 upon filing.
Other Legal Requirements
• The driver should obtain a commercial driver's license or a CDL
• The vehicle must have a registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms for vehicles with two axels
• Vehicles with three or more axels have no minimum weight requirements
Owner operators should comply with the business insurance requirements in their state. This usually costs more than the registration fees.
Business owners should identify the type of insurance policy that best suits their company's needs. They should carefully review the policies to safeguard their business and equipment. The right insurance policy will be helpful as commercial vehicles are susceptible to damage and minor accidents.
Choose the Right Equipment
Owners should identify how much start-up capital they will have to determine what equipment they can afford. The number of trucks and equipment purchased will depend on this. Different goods also need particular equipment to maintain their freshness and condition.
Owners who want to get into the food transport business should consider purchasing essential equipment like refrigerators. They can start with smaller refrigerators as initial orders will be relatively small. Owners can always upgrade their trucks and equipment while the business grows.
The trucking business is highly competitive and demanding. Owner should be proactive in finding clients. They can go through online bidding sites to check for available contracts and accounts. There are a number of websites that cater to contract bidding. Owners can easily browse through them and put in their bids. The lowest bidder will get the contract. It is best for start-up trucking companies to provide lower rates at first.
Owners can also go through classified ads and other portals to find clients and contracts. They should keep in mind that no matter how great their trucks are, dealing with clients is still more important.
Some clients will also help by recommending quality trucking companies to other businesses. This is why trucking business owners should always put their best foot forward before, during and after the transport. Clients will always come back for another transaction if they receive great service.
• An IFTA registration is not needed if the truck will not transport products inside state boundaries.
• A Motor Carrier Road Tax registration is not required if the truck transports products across state borders.