Have you ever thought about starting your own trucking company? It’s not uncommon for drivers to consider striking out on their own and becoming their own bosses. It’s a new year and anything is possible. So, what’s it going to take to become an entrepreneur and start your own trucking business? Here are some tips from our partner Evilsizor & Associates who specializes in helping trucking companies big and small deal with all things paperwork related to the FMCSA and USDOT:
Company Name and Structure
The beginning is always exciting so take this time to decide on your company structure and name. When it comes to deciding on a structure, it isn’t a one-size-fits-all type of deal. However, the most popular ones we see is an LLC or an S Corp. Be sure to do your own research on corporate structures and also check with a professional accountant you trust to guide you in this area. Then, head online and check with your Secretary of State to be sure your name isn’t taken. Have a couple of name options available in case your preferred ones are taken.
You’ll also want to decide on your company type. There are two main types of authority: Motor Carrier and Broker. Here’s the difference: Motor Carriers own trucks and carry the goods. Brokers DO NOT own trucks and simply arrange the freight between the shipper and the carrier.
File For Your EIN Number
This is the special tax ID number you will use when you file your annual taxes. You can file for this directly online with the IRS for free and it only takes about 5 minutes.
This EIN is a 9-digit number that will be the basis for many accounts like your FMCSA authority, IFTA account, IRP account, Mileage Tax accounts, and the like (see point #3 below). Do NOT use your social security number. You must apply and secure an EIN if you want to file your taxes as a business.
Make Sure You’re Compliant
This is one part you definitely don’t want to skip Making sure you’re compliant on all trucking safety fronts before you start is absolutely critical:
USDOT and MC Numbers – This number is issued by the U.S. Department of Transportation (DOT) and is used to collect, monitor, and streamline safety compliance associated with official audits, reviews, and accident investigations. A USDOT number identifies carriers that are operating in interstate commerce while an MC number identifies carriers who transport regulated commodities in interstate commerce.
Unified Carrier Registration Program (UCR) - The UCR is an annual permit that is required for ALL interstate carriers, brokers, freight forwarders, and leasing companies. Not filing for this permit will likely result in a hefty fine at a port of entry if you’re caught.
International Registration Plan (IRP) - The IRP distributes registration fees based on distance traveled in each U.S. state or Canadian province. Simply register on your state's transportation website.
International Fuel Tax Agreement (IFTA) – The IFTA is a special agreement among the lower 48 U.S. states and Canadian provinces to simplify the reporting of fuel used by carriers who drive in multiple states. Every truck must have an IFTA decal on it, and you have to apply for a new one every year.
Operating Authority – All for-hire carriers must obtain authority from the Department of Transportation to bring specific types of freight across state lines.
BOC-3 Filing – Once you have applied for your authority and received your MC and DOT numbers you are now ready to file the BOC-3. A BOC-3 is a list of agents who will receive documents on your behalf if you are named a DEFENDANT in a lawsuit that is transportation related. The documents will then be forwarded on to you for further action. You can file for your BOC-3 on the Evilsizor website.
Clearly, this is a lot of information. Evilsizor actually has a FREE online course teaching people how to start their own company and become a motor carrier.
Get Insurance and Roadside Assistance
You’ll need to have trucking insurance before you can be licensed by the DOT, which requires between $750,000 and $5,000,000 in general liability and cargo insurance. Evilsizor has an insurance specialist that you can have a free consultation with to determine which type is best for you. Roadside assistance for truck drivers is a definite bonus but, in our eyes, a necessity.
Drug Consortium and DQ Files
Depending on your status, you may be required to subscribe to a third party drug Consortium, which helps you manage your DOT drug and alcohol testing program. If your vehicles are over 26,000 pounds, a CDL is required in addition to the drug consortium subscription.
An ELD, also known as an electronic logging device, is a piece of hardware that gets attached to a commercial motor vehicle engine to record driving hours and allows professional truckers to easily track HOS (hours of service) compliance. There are a variety of organizations that provide ELD packages. Do your research and find the one that works best for your needs. If at all possible, try to see if dash cams can be included in your ELD package. Dash cams are great for peace of mind, safety, and can also potentially lower your insurance premiums. Most ELDs are run from your tablet or smartphone, thus making it easy to use and integrate into your daily work.
Tracking expenses and managing cash flow is a challenge any new business owner faces. And, what you’ll quickly learn is that trucking relies heavily on cash flow, your ability to book loads, and to keep your truck rolling. Freight factoring is a smart and easy financing tool that provides you with immediate cash so that you can continue to buy fuel, make truck payments, and ensure your vehicle is getting the maintenance it needs (and more!). A team member at Thunder Funding is happy to help you with your cash flow and factoring needs.
And, once you're all set up, you're going to want to know how to find loads for your trucking company. Don't worry -- we've got you covered there too!
Got any questions about starting up your business? Got any tips for successfully launching a trucking company? Tell us in the comments below!
Be sure to check out our Thunder Funding Blog for more trucking industry news and trends from the team at Thunder Funding!