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How to Start a Trucking Company

Last Updated on  October 14, 2020  By  eformblogadmin
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How to Start a Trucking Company

The trucking business can be highly profitable if you play your cards right. Whether you have been in the business for years or is looking to gain a foothold in this lucrative industry, this article will surely help you to step-up your game.

Read our step-by-step instructions on how you can kickstart your trucking business and what to watch out for before you build your empire.

1. Create Your Business Plan

First things first: build a business plan that encapsulates your goals, values, and actions.
This includes company overview, market analysis, financial projections, management and organization, and sales & marketing strategies. Creating a business plan not only helps you get organized but also offers a glimpse of where your business is going and how you're getting there.

2. Determine the Business Structure

Do you want to be an owner-operator or a company? Will you be operating as a sole proprietor, a partner, as a Limited Liability Corporation (LLC), or a Corporation. Each of these business structures has its pros and cons depending on the state that you are registering with. Therefore, meet with an accountant and figure out your business structure.

3. Pick A Name for Your Business

First impression is always the best impression. Your business name is your first impression with an investor or a prospective client. Make sure that it is a good one and - most importantly - a memorable one. A good business name will also help differentiate your business among potential investors.

4. Obtain License and Permits

The trucking industry is highly regulated. Before you open your doors, obtain the necessary license and permits such as a commercial driver’s license (CDL), USDOT number, and Motor Carrier number among others. Depending on your service and your area of operation, any number of licenses and permits may apply to your business.

5. Choose A Process Agent

You need to pick a process agent who can represent you in court papers. A process agent’s role is to act as a representative upon whom court papers may be served if legal issues arise in a state where your company is not registered. Therefore, you will need to have a process agent for each state your trucking company operates in.

6. Apply for an Employer Identification Number

In order to open a bank account for your company, you will need an Employer Identification Number or EIN. EIN is a nine-digit number, which is like a social security number for your business. EIN must be present on all tax filings throughout the life of your business.

7. Pay Heavy Highway Vehicle Use Tax

You must pay the heavy Highway Vehicle Use Tax by filing your Form 2290 in compliance with IRS policies. This tax must be paid annually if your vehicle has a taxable gross weight of 50,000 pounds or more. The best way to file your tax return is electronically through an IRS-approved e-filing service provider like eForm2290.

8. Purchase the Right Vehicle and Equipment

Once you’re figured out the nature of your trucking business, you need to purchase your vehicle and the equipment. To make the right purchase decision, you need to know the type of hauls your company intends to undertake. If you are planning to undertake short-hauls or daily hauls, you will not need a heavy-duty truck. But if you are planning to do long-hauls, you need a truck that is well-equipped with a sleeper among other requirements.

You need to pick a brand that offers prompt and reliable technical and mechanical support. While selecting equipment, you need to decide whether you are buying or leasing it. Talking to other truck drivers and owner-operators will help you weigh your options before purchase.

9. Invest in Technology and Deploy the Right Tools

Investing in the right tools and technologies will not only help you keep track of your fleet but also allows you to streamline your business. It also provides a wealth of data that you can use to make informed decisions that will improve your performance.

Commercial vehicles are mandated by the Federal Motor Carrier Safety Administration (FMCSA) to install Electronic Logging Devices or ELDs to maintain a record of compliance with the Hours of Services (HOS) rules.

They not only help you avoid costly ELD violations, but also come with a host of functionalities like vehicle diagnostics, automated IFTA calculation, idle time tracking, and advanced reporting. Investing in technologies such as safety sensors, dashcams & video surveillance, and real-time GPS tracking will simplify operations and ensure the safety of your driver and vehicle.

10. Understand and Track Your Income and Expenses

Once your business is up and running, you need to be mindful of your finances. Figure out exactly how much you need to earn from your business. Note down all possible expenses - from operating expenses and employee salary to emergency expenditure. As a beginner, your operating expenses will often exceed your income. Therefore, you must always strive to raise more money for your initial operating capital. This will allow your business to bolster its readiness during difficult times like recessions.

Furthermore, banks will only provide business funding for companies that can demonstrate they have cash reserves. If you get funding from the bank, you need to be extremely diligent with your fund. Always make your loan payments on time to keep a good credit history.

11. Opt for the Appropriate Insurance Coverage

It’s better to be safe than sorry. Which is why you should obtain business insurance for your company. You need to understand the coverage that your business needs before signing up. Although insurance is a significant investment for you, it protects your business as well as your client’s when accidents occur. Make sure that you choose a credible insurance provider that offers the best advice and protection to sustain in the industry.

Furthermore, banks will only provide business funding for companies that can demonstrate they have cash reserves. If you get funding from the bank, you need to be extremely diligent with your fund. Always make your loan payments on time to keep a good credit history.

12. Be Compliant

Always be compliant with government rules and regulations. Ensure that you stay up to date on tax filings such as annual HVUT, quarterly IFTA tax, and CDL renewals. Filing your road tax is a breeze when you choose a trusted IRS-approved e-filing partner like eForm2290. Being compliant not only helps gain public trust but also helps you avoid unnecessary penalties.

13. Learn How to Hire and Retain Drivers

While recruiting drivers, you must look into their background and track record. You can rely on a Pre-Employment Screening Program which will give you all the data on his/her past performance, which includes crash data and roadside inspections. After onboarding new drivers, develop an orientation program to help them understand the company values and goals.

Once you've hired the right workforce, entice them with attractive packages and comprehensive benefits. Consider offering yearly pay increases, weekend driving pay increases, performance bonuses, and more. ELDs and driver safety scores should be taken into account to rank drivers according to performance, safety, and efficiency while offering performance-based rewards.

14. Prepare Your Trucks for the Road

Before you hit the road, ensure that you have the following details:

  • USDOT number: A unique number allotted to your business that is used during inspections, compliance audits, and crash investigations
  • Your company’s registered name decals on the vehicle
  • Radio Frequency Identification (RFID) tags on your windshield
  • License plates and International Registration Plates if you operate across multiple states

15. Locate Your First Client

Now that you're road-ready, it is time to find a customer. As a novice player, you need to start small. Reach out to local businesses in your locality or identify prospects from social media groups and trade shows. You can also browse through online on-demand truckload marketplaces like Truckstop, Direct Freight, and DAT Load Board for on-demand loads. 

Once you get your first client, you need to deliver exceptional service. Be realistic about your mutual goals and keep in mind that truckers are mandated to work only 10 hours a day. Therefore it helps to have realistic delivery deadlines in place. Once you build your capabilities, you can pitch for new clients and grow your business.

Final Thoughts

We understand that being in this competitive industry can be overwhelming sometimes. We tailor our services keeping people like you in mind. Our smart and seamless services and industry know-how makes it easier for you to stay compliant and competent in this fast-paced industry.