Every industry needs trucking companies to deliver their products. That’s why starting a trucking business can be a lucrative opportunity. You can be your boss, make your schedule, and decide how many drivers you want to hire. If you want to start a trucking company, this article is for you! This comprehensive guide will walk you through all the necessary steps to help you get up and running with your trucking company.
Why Start a Trucking Company?
Before we get into the nitty-gritty of how to start a trucking company, let’s first discuss why you should do it. Think about it—trucking is an essential part of the American economy. And with e-commerce sales expected to reach $524 billion by 2023, there will always be a demand for trucking services.
Not to mention, starting your own trucking company comes with several perks. For instance, you’ll be free to control your schedule and choose your clients. Plus, you can take advantage of tax write-offs for owning a business. And if you decide to hire drivers, you can earn a passive income while on the road (or sitting at home).
Step-by-step Guide To Starting a Trucking Company
Now that we’ve gone over why you should start a trucking company let’s understand how to do it. It might seem complicated, but with a clear plan and some hard work, you can get your trucking business up and running in no time! To start, here are nine key steps you’ll need to follow:
Step 1: Create a Business Plan
A successful trucking business starts with a solid business plan. According to the Small Business Association (SBA), your business plan should project three to five years ahead while detailing your plan to make a profit and grow revenue. A typical business plan should also include the following information:
- Executive Summary: A brief overview of yourself, your proposed company, and how you plan to reach your goals.
- Company Description: More details about you and your business, as well as an explanation of what makes you unique—what sets you apart from other trucking companies and how you plan to serve your target market.
- Operations: The staffing, technology, and systems you plan to utilize to ensure efficiency and consistency in your operations.
- Services: List of the services you’ll offer your customers. Include how you’ll provide these services and what your pricing structure will look like.
- Market Analysis: A comprehensive review of the current marketplace and how your company will generate revenue from it.
- Marketing and Sales: Your marketing strategy, sales plan, and how you’ll generate leads and turn them into customers.
- Financial Projections: Your company’s financial roadmap details how you will accomplish your revenue goals, including your income statement, balance sheet, and cash flow statement.
Step 2: Get a Commercial Driver’s License (CDL)
Whether you hire drivers or plan to be an owner-operator, the Federal Motor Carrier Safety Administration (FMCSA) requires you and your drivers to get a commercial driver’s license before operating a trucking company.
Drivers ages 18 to 20 can drive intrastate, which means they can only drive within the state they’re licensed in. Drivers 21 and older can apply for an interstate license, which allows them to drive across state lines. To apply for a CDL, you and your drivers will need to provide the following:
- Pay for the application fee
- Proof of identity
- U.S. residency
- Valid social security number
Drivers will also have to take and pass both vision and knowledge examinations. Then, after acquiring a commercial learner’s permit, they must pass a pre-trip inspection, road skills, and driving exam. After passing all these tests, the driver will need to pay all applicable fees to finally receive their CDL.
Step 3: Apply for Your Trucking Business’s Authority
After you’ve obtained your CDL and have a business plan in place, you’ll need to register your trucking company with the FMCSA. This process is also known as getting your “authority.” Your trucking business will need an operating authority, especially when they work as a hired carrier over state lines for vehicles that are more than 10,000 GVW (gross vehicle weight).
To register, you’ll first need to create a unique business name and check online to ensure it’s unused and available. Once you have a business name, you can complete an application for your trucking authority with the FMCSA. The application will require:
- Your business’s name, address, and contact information
- The names of your company’s officers
- A description of the company’s planned operations
- Your DOT and MC number
- Proof that you have met the minimum insurance requirements
- Your company’s USDOT number
After you’ve gathered all the required information and documents, you can submit your application online through the FMCSA’s website. The entire process usually takes around 30 to 60 days.
Step 4: Choose Process Agents
The next step in your journey to starting your trucking business is to choose process agents. A process agent is an individual or business that agrees to accept legal documents on your trucking company’s behalf. They will also be the ones to legally represent you when filing court papers for your trucking business.
Remember that your business will process agents in every state you plan to work, travel to, or operate in. It’s a legal requirement by the FMCSA, so do not skip this important step. In addition, project agents can also help in working for your trucking company. They can provide helpful tips and guide you on how to start a trucking company.
Step 5: Determine Your Business Type
When Starting a trucking business, you’ll need to choose what legal structure best suits your company. The three most common business structures are sole proprietorships, partnerships, limited liability companies, and corporations.
Sole proprietorships are the most simple and common type of business structure. As the name suggests, this type of business is managed by a single individual. The owner has full control over the company and all profits generated by the business.
Partnerships are similar to sole proprietorships in that two or more individuals own them. The main difference is that partners share the profits and losses generated by the business. Partnerships can either be limited partnerships or general partnerships.
Limited liability companies (LLCs) are a type of business structure that offers its owners limited liability protection. This business model ensures that the owners are not personally liable for the debts and liabilities of the company.
Corporations are a business structure that offers their shareholders limited liability protection. Shareholders will not be liable for the debts and liabilities of the company. Corporations can either be C corporations or S corporations.
Step 6: Open a Business Bank Account
The next step in starting your trucking business is to open a business bank account. Having a business bank account is important because it can make tracking expenses and preparing tax returns easier.
When choosing a bank, shop around and compare fees, interest rates, and other features. Once you’ve chosen a reliable bank, you now need to open a business checking account. Next, you’ll need to provide the bank with your business’s name, address, and contact information. You’ll also need to provide your Employer Identification Number (EIN) or Social Security number.
Step 7: Get Insured
Large trucks account for a large portion of injury and fatal crashes every year. So the next step in starting your trucking business is to get insured. This is a requirement by the FMCSA. You’ll need to have both liability and cargo insurance.
Liability insurance will protect you from damages that occur as a result of your trucking business operations. Cargo insurance will protect the goods you’re transporting from damage or loss.
When choosing an insurance policy, shop around and compare rates. You should also consider the coverage limits and deductibles offered by each policy.
Step 8: Get Financing
Starting a new trucking business will require some startup capital. You’ll need to have enough money to cover the cost of the truck and trailer, insurance, fuel, and other operating expenses. There are several different ways to finance your trucking business. You can use your personal savings, take out a bank or credit union loan, or get financing from an investor.
You can also check with large or small banks and credit unions for truck financing options. In addition, many online lenders also offer truck loans. Be sure to compare rates and terms before choosing a loan.
If you cannot get financing from a bank or credit union, other options are available. For example, you can check financing programs with the Small Business Administration (SBA). You can also look into equipment financing or leasing.
Step 9: Automate Your Payment Processing System
Finally, the last step in starting your trucking business is to automate your payment processing system. Doing so will help you save time and money while also ensuring a consistent flow of revenue.
Many different payment processing options are available, so be sure to compare rates and fees before choosing one. In addition, many different software programs can automate invoicing, billing, and payments.
Shop around and compare features before choosing a payment processing system. Then, once you’ve chosen a system, set it up and test it out before using it for your trucking business.
Why Use ReliaBills?
If you want the best of both invoicing and payment processing, you should try ReliaBills. Our platform offers both services and some of the best tools and features to help you save time and money.
Some of the features that our platform offers include:
- Automated billing and invoicing
- Online payments
- Recurring payments
- Early and late payment discounts
- Detailed reporting
- Failed payment recovery
- Customer Portal
- 2-way sync with QuickBooks
- SMS notifications
- and more!
With ReliaBills, you have an all-in-one solution to automate your payment processing system and get paid on time. Visit our website at www.reliabills.com to learn more!
Starting a trucking company is hard work—but the result is more than worth the effort once you’ve successfully established your business. If you’re looking for more information on how to start a trucking company, be sure to do more research, ask, and speak with trucking business experts. They can help you get started right away while avoiding common mistakes.