How To Start A Trucking Business- Complete Checklist
The trucking business is one of the major industries of the USA. It is responsible for transporting more than 70% of goods all over the country, which is worth more than $791.7 billion.
It is a profitable business. And that is why there are over 500,000 trucking companies currently operating in the USA. According to a report, an owner-operator can easily make $2,000-$5,000 per week depending on the type of freight and the number of trucks they own.
Do you also want to share the profits by starting your journey as a truck business owner but don’t know where to start? If yes, then check out this detailed checklist. We have covered everything, starting from deciding the name of your business to fulfilling legal requirements.
- Why Should You Start Your Trucking Business?
- Cost Associated With Trucking Business
- Complete Checklist- (How To Start Your Trucking Business)
- Start With Proper Planning
- Target Market
- Rates Per Mile
- Business Plan
- SBA Loans
- Commercial Truck Financing
- Small Business Term Loans
- Business Bank Account
- Legal Registration
- Business Structure
- US DoT And MC Number
- 2290 Tax Form for Heavy Vehicle Use Tax Regulation
- Standard Carrier Alpha Code
- Identify Who You Need To Hire
- Find Employees
- Market Your Company
- Employing Right Tools
- GPS Tracker
- Fleet Management Software
- Freight Factoring Service
- Fuel Card
- Matrack Inc- The Best Solution For Your Problems
Why Should You Start Your Trucking Business?
Trucking is an essential part of the US economy. A big part of our country’s GDP comes from this industry. It is the one business that is recession-proof as there will always be a need for this industry to transport goods and services across the country.
But if still there is a doubt in your mind about whether you should take a risk and leave your job to form a trucking business, then here are a few reasons to encourage you:
- You can start your own trucking company with one or more trucks. You don’t need to invest more to start earning profit.
- You can also increase your profit by establishing your contacts with your clients and finding more loads.
- With proper planning and strategy, you can improve your profit margin.
- The success of your business depends on how you will manage the operation.
- Several tools are available in the market to help you streamline various business processes and boost productivity.
Cost Associated With Trucking Business
You need to invest a little to start a business. But if you are not aware of the cost associated with starting your trucking company, here is a glance for you:
- Documentation and registration: $500
- IRP plate: $900-$1,500
- Taxes for heavy-duty vehicles: $500-$3,000
- Additional State Tax: $500
- Salary of the employees: $40,000
- Purchasing a truck: $15,000-$175,000
- UCR: $96-$206
- BOC-3 form: $20-$40
- USDoT and Motor Carrier Authority Number: $300
- SCAC: $72
- Insurance: $10,000 per truck
- Endorsement of CDL: $2,000-$8,000
Complete Checklist- (How To Start Your Trucking Business)
Start With Proper Planning
Everything begins with a proper plan. And therefore, before you start brainstorming different operations, have a clear picture of your business.
Before you start anything, make sure you have decided the name of your business, target market, and rate.
Deciding the name of your business is a crucial process. It will be how your clients will remember your organization in the future. Additionally, look for a name that reflects the character or your business value.
You have to make sure that no other company uses the same name as you decide. For this, you can search the USPTO trademark database.
After the name, you need to have a clear picture of your target market. There are several industries and market options for you out there. But you have to be specific about your niche. It will help you find better freight and tie-up with larger firms.
Rates Per Mile
The next part of planning your trucking business is to determine the rate you will be charging your customers. You have to choose a rate that is profitable for you as well as sound for your clients.
A proper business plan can guide you through different stages of your business. You can use it as a road map to structure, operate, and create strategies.
There are two types of the business plan that you can make:
- Traditional plan
- Lean start-up plan
The traditional one is a detailed and comprehensive plan. But it is a time-consuming task. So if you want a flexible option, you can go with a lean start-up plan.
It is a flexible business plan that is relatively simple and highly adaptive to changes.
A business plan should include these elements:
- Key partnerships (suppliers, manufacturers, contractors)
- Key activities (how your business is different from others)
- Key resource (your assets)
- Value proposition (your unique value proposition)
- Customer relationship (how customers will interact with you and your business)
- Customer segments (your target customers)
- Channels (how you will communicate to your customers)
- Cost structure (your cost optimization strategies)
- Revenue streams (list ways your company will earn money)
You need a heavy initial investment to start your own trucking business. So you can either seek investors or get a business loan to fulfill your financial demands.
Based on your business structure, you can also consider selling your equity to get investments. Funding is more advantageous than loans as you don’t have to pay them back. But share the ownership and profits with the investors.
But if you don’t want to share your business with others, you can check with banks or credit unions for loans. If you are a start-up, then a credit union can be an easier choice for you. Many large banks ask for two years of operating history.
You can find different business loan options in the USA that can help you to kick-start your trucking business.
SBA loans are popular types of loans as they charge low-interest rates and have generous repayment terms. But it is not easy to get a loan because you will need a good credit history, credit score, and lengthy paperwork.
Commercial Truck Financing
Another great alternative is commercial truck financing. You will have to provide the quote to the lender, and they will pay you the amount you need to purchase equipment. You can repair that over a fixed period with interest.
Small Business Term Loans
You can also choose small business term loans. These are relatively easier to get because they have easier processes and lower credit requirements. The only drawback is that you will have to pay a little higher interest rates than the SBA loans.
Business Bank Account
You will need a business bank account to do financial transactions. It will also help you apply for a license, permit taxes, etc. Immediately starting with it can help you get a good business credit score. It will help you to get loans and funds easily in the future.
There are several legal requirements that a new owner-operator has to fulfill. Let us list them one by one:
The next step includes determining the legal structure of your business. There are four options for you:
- Sole proprietorship
- Limited liability corporation
Some suggest that sole proprietorship is the cheapest and easiest way for you to fill in tax details. Others believe that LLC is more efficient than it.
Additionally, LLC allows you to shift liability while retaining your assets.
Whether you are going to drive your trucks or hire drivers, you need a CDL. To get that, you have to undergo an extensive background check, training, written exam, driving test, etc.
And if you are planning to hire more drivers, make sure to look for their CDL.
US DoT And MC Number
If you want to operate in the state, you need USDoT and MC numbers.
The USDoT number is used to track your safety and compliance records. And the Motor Carrier authority numbers, also known as an operating authority, determine your company type and classifies the cargo you ship.
You can get both numbers by registering your business with the FMCSA (Federal Motor Carrier Safety Administration). While you can get your numbers, the FMCSA has the authority to review them. The administration will give you ten days to look at any contests against your application.
2290 Tax Form for Heavy Vehicle Use Tax Regulation
If your truck weighs more than or equal to 55,000 pounds, you fall under the purview of the federal heavy highway vehicle use tax. You will have to complete and file 2290 Tax forms with the IRS annually to pay taxes.
The IFTA agreement ensures uniform reporting of fuel consumption by trucks operating across the USA. The rule allows you to have a single fuel license to file quarterly for fuel tax returns. You need to have an IFTA decal that has to be renewed annually.
If you want your business to work interstate and even beyond the national borders, you will need to get an interstate operating authority. For this, you will have to fill BOC-3 form with the FMCSA. Then the administration will provide you with a process agent that will help you deal with legal cases.
“Process Agents- they are the person who will legally represent you when someone files a case against your organization in the court. Your company needs a process agent in every state where you operate. They will also help you to complete your BOC-3 paperwork.”
Standard Carrier Alpha Code
If you plan to haul goods for the military, government, international, and intermodal, you need to get a SCAC code. You can acquire this from the National Motor Freight Traffic Association.
The next thing you have to do is complete your unified carrier registration. This system confirms that a motor carrier has active insurance coverage in the state where it operates. You can register your UCR by using USDoT and MC numbers.
To operate in all states of the USA and even in some provinces of Canada, you need an international registration plan (IRP) plate on your vehicle. You can acquire this from your local DoT. You will also have to pay annual fees to renew it.
Now that you have fulfilled your legal requirements, you need to start with acquiring your assets.
You cannot start a tracking business without a truck. But buying a vehicle is not as easy as it seems. You have to consider various things to land on the correct choice for your firm.
- First of all, choose the ideal truck for your business. Make sure to consider your business type, target market, etc., before you come up with an answer.
- Next, make sure to double-check the cost of trucks from different vendors.
- Also, try to negotiate with the seller to find the best price for your truck.
- If you don’t have any budget constraints, it is always better to go with a quality vehicle. It will ask for heavy investment initially but would benefit in the long run.
- If you are thinking of purchasing a second-hand vehicle, then ensure to observe it before you choose it.
You can also own a truck in different types of leasing options:
Operators – in this type of leasing option, you own the vehicle – full time. And you are responsible for paying taxes, seeking permits, and scheduling maintenance. But once the lease term is over, you have to turn in the vehicle.
Lease- purchase – in this type of leasing option, drivers can get their trucks right away but have to pay interest.
Terminal rental adjustment clause- for this, you have to give the downpayment initially. After the lease period, you can either pay the remaining balance or let the leasing company sell the vehicle and get your profit share.
FMCSA has made the use of ELD compulsory for all commercial owner-operators. So if you fall under the jurisdiction of the ELD rule, you need to get an ELD for your vehicle. It will help you comply with the existing rules and avoid ELD violations.
If you want an affordable yet powerful solution, you can purchase it from Matrack.
Matrack Inc is a reputable vendor in the industry.
You also need insurance covers to operate your business. It protects your company from emergencies and absorbs financial losses.
You will have to purchase different insurances, including:
- Insurance for primary liability
- Insurance for cargo
- Motor insurance
- Insurance for drivers
- Insurance for accidents of passenger
Unless you are the sole owner-operator of your trucking business, you need to hire some employees.
Identify Who You Need To Hire
First of all, you need to know what positions you have to fill. You have to employees including:
- Logistics coordinator
- Dispatch Operator
You can hire employees by posting jobs in advertisements on different job portals. Or employ a recruitment agency.
While hiring, you need to verify their background and qualifications. You need to ensure that the drivers have their CDL and clean driving record.
Market Your Company
After successfully opening a trucking business, you need to adopt different marketing strategies to ensure TD income flow.
Some of them are listed below:
- You can create a professional website with information about your business and the services you offer.
- You can use memorable logos and brochures to market the service you offer.
- You can use online load boards to find loads.
Employing Right Tools
Managing a business becomes easy when you have the correct tools at your departure.
Several tools can help you to streamline various business processes and boost productivity. Let’s discuss them one by one.
GPS tracker is one of the most essential tools you need to have in your fleet. It allows you to get real-time location updates of your trucks. It can help you streamline route management, improve safety, and increase customer satisfaction.
Fleet Management Software
If you have more than two trucks in your fleet, you should consider getting fleet management software. It stores data in a cloud-based platform and makes it easy for you to analyze trucking patterns. With the help of its artificial intelligence and machine learning capacity, it can help you make difficult decisions. It also reduces your workload by streamlining every aspect of your fleet operations.
Freight Factoring Service
Freight factory service can help you maintain continuous cash flow in your fleet.
While clients often pay their bills, small business operators can’t wait for 80-90 days to get cash. They need immediate money to operate. And that is where fleet factoring service can help you.
The company can exchange the bill for cash for a nominal fee, and you can resume your activities.
Fuel Expenses are a big part of any fleet budget. With the increasing fuel prices and growing demands, you have to take advantage of fuel cards.
A fuel card can help you to get discounts on your fuel purchases. Additionally, some can also offer you rebates on truck stops and maintenance.
Matrack Inc- The Best Solution For Your Problems
Matrack Inc offers various solutions and services to make your trucking journey easy. It is a leading provider of GPS and asset tracking solutions owing to its affordable prices, cutting-edge technology, and outstanding customer service.
Here are some highlights of Matrack for you to prove our claims:-
- Affordable and straightforward solutions.
- No long-term contract
- No activation or hidden fees
- Increase your revenue by $10,000 with the Matrack dispatch service
- Rescue your fuel expense by 10-15% with the Matrack fuel card
- Get discounts on your insurance premium with Matrack’s auto-insurer network
- Maintain continuous cash flow in your fleet with Matrack’s non-recourse freight factoring service.
Do you want to know more? Click on the link or email us at email@example.com. Or simply, give us a call at 855-658-7225!