When most people in our industry say they’re starting a trucking company, they usually mean they’re becoming an owner-operator. An owner-operator is just what it sounds like — a person who owns and operates the truck in their company. It’s typically a one-person operation and that person is considered a self-employed trucking company owner.
As owner-operators driving a custom rig, my husband and I are often asked about how to get started in trucking. It’s not hard, but it’s not easy, either. There’s a lot of research involved and even more questions to ask — of others and of yourself.
For the purpose of this piece, I’m going to assume you already have a commercial driver’s license (CDL). If you don’t have a CDL, you’ll need to research the steps to do that. Start at the Federal Motor Carrier Safety Administration’s page that answers the question: How do I get a Commercial Driver’s License?
10 questions to ask before starting a trucking company
As with any business, every topic you research will branch off in many directions, with more questions cropping up that need answering. Just keep going. The more you know, the more prepared you will be. Your first stop: the following list of questions that you’ll need to ask yourself before starting a trucking company.
What kind of freight do you want to haul?
What kind of equipment do you need?
What business structure is best for you?
How will you handle maintenance and repairs?
Do you have an accountant?
Do you need special clearances or endorsements added to your license?
What kind of business licenses and insurance do you need?
Do you want to be an independent contractor or do everything yourself?
Do you have enough money to fund the equipment?
Are you a member of the Owner-Operator Independent Drivers Association?
Ready to see our answers? Keep reading.
1. What kind of freight do you want to haul?
Some drivers haul anything and everything that works with their trailer type, while others specialize and do the same freight on a regular run.
There are many trailer types to choose from — van, refrigerated, flatbed, RGN (removable gooseneck), step-deck, tanker, etc. — and which one you’ll use will be determined by the type of freight you expect to haul. There are many tractor types available, too, so you’ll want to narrow it down to the one that meets the specifications of your operation.
2. What kind of equipment do you need?
Equipment usually means a tractor and a trailer. Tractors can range from $30,000 for a used model to $250,000 for a custom sleeper truck. Trailers can range from $10,000 to $120,000, depending on what kind of freight you’ll be hauling. In the process of determining your equipment needs, you’ll also want to figure out where you’re going to operate — some trucks are better suited for long-haul operations. And because these trucks and trailers are not cheap, you’ll want to get equipment that can be flexible if you choose to branch out in the future.
This is where you’ll be doing the bulk of your research. Go online, find a few trucking forums, ask questions. Go to truck stops if you can and talk to drivers you see hauling the kind of freight you’re interested in.
Stop by truck and trailer dealerships to see what they’re offering and pick up spec sheets. And if you can, hit one of the major truck shows — MATS or GATS are great places to start. Trust me, you’ll leave with a goodie bag full of information!
3. What business structure is best for you?
Read through the definitions of the available legal business structures, then decide which one is a fit for your business needs. The simplest, with the least amount of paperwork, is the sole proprietorship, but you will need to do your homework before deciding which works best for your situation.
4. How will you handle maintenance and repairs?
Repairs can be one of the biggest money drains on your business. Although your trailer might need the occasional fix, the most expensive repairs are usually done on the tractor.
Sure, it will cost you money, but if you keep up with regular maintenance and take care of small issues before they become big ones, breakdowns will happen less frequently. Truck stops across the nation offer shops to help with maintenance along the way, but if you have a local shop you trust, even better. And if you’re mechanically inclined, you can save a lot of money by doing your own maintenance and repair work.
5. Do you have an accountant?
Whether you decide to file taxes yourself or hire a professional, it’s important to be familiar with the trucking industry’s unique deductions, including per diem, fuel tax, repairs and equipment depreciation, not to mention the numerous small business deductions available to you. Having a good accountant familiar with tax law, tax codes and possibly even the trucking industry will be extremely helpful.
6. Do you need special clearances or endorsements added to your license?
Many drivers will need a Hazardous Materials (HazMat) Endorsement and possibly a Transportation Worker Identification Credential (TWIC) to transport certain freight or access shipping ports or military installations. Those are both available through the U.S. Department of Homeland Security.
Other endorsements might be needed to pull certain trailer types, such as tankers, doubles and triples. Inquire about these at your local motor vehicle department.
Remember that while they all cost money, these special additions are typically good for two to five years, depending on your state and the type of endorsement you get.
And they often provide advantages to you over other drivers when being considered to haul certain kinds of freight. Although it’s best to get the manual from your state to study and review, these practice tests are helpful because the operation of the vehicle and the information needed for the endorsements are generally similar. I’ve used them many times and find the repetition helps to solidify the information in my mind.
7. What kinds of business licenses and insurance do you need?
Registering your business with your state is one of the first steps you can take in making your company official. Trucking is a federally regulated industry, and whether you’re intrastate or interstate, there are requirements you’ll have to meet for both.
The links below will allow you to access the information you need to get started in these areas:
- Get your USDOT Number and your Motor Carrier (MC) Operating Authority Number through the FMCSA.
- Get an International Registration Plan tag (IRP) and your International Fuel Tax Association decal.
- Go to the IRS website to find out about filing your Form 2290, Heavy Highway Vehicle Use Tax Return.
- Check the FMCSA website for electronic logging devices information.
In addition, you’ll also need insurance for your business — liability, bobtail and cargo, to name a few. Make sure to check minimums, and get enough to cover cargo damage. There are several companies that deal primarily with the trucking industry, and they can help you determine what fits your operation.
8. Do you want to be an independent contractor or do everything yourself?
Many owner-operators lease on with a large carrier who then handles everything from finding customers to doing most of what’s listed above in No. 7. This leaves you to drive, maintain your vehicle, and prepare and pay your taxes.
Leasing your equipment on to a company means they’ll take a small percentage of what the load pays, which is often worth it, especially when you’re first starting out and learning the ropes of being independent.
Other drivers handle everything themselves, using load boards such as GetLoaded or DAT to find loads, which they then book themselves and manage payment on their own or through a factoring company. Do your research to figure out what will be the best path for you.
9. Do you have enough money to fund the equipment?
Startup expenses include equipment purchases, licensing and regulatory fees, insurance, maintenance costs and employee pay. Startup and operating expenses are a big concern when creating any business, but in trucking, some of the equipment can cost as much as an average person makes in a year. Sometimes, it can be as much as you might pay for a house, so you have to be realistic about what you can afford. If you don’t have this kind of money lying around, you’re going to want to look into financing. Do this homework early in the process.
10. Are you a member of the Owner-Operator Independent Drivers Association?
If not, join today! The OOIDA is a North American international trade organization dedicated to the interests of truck drivers. As a member, you will be supporting the only group that represents the nation’s small business truckers to the lawmakers in Washington, D.C., and lets them know how truckers feel about what’s happening in our industry. Plus, the organization offers truck insurance, health and life benefits, retirement plans, rebate and discount programs, education and business tools, classes and more. It’s well worth the annual membership fee. You’ll even get a free monthly magazine!
These 10 questions should help guide your research as you think about starting a trucking company. As with any endeavor, it’s best to gather as much information as you can. If you’re already driving a truck, the transition to owning your own business will be that much easier.
Surf the net, stop at truck stops, pick up industry magazines, and don’t be afraid to reach out to people like me who work in and write about the industry. What I’ve found being in this business is that drivers are more than happy to help. I wish you the best of luck!