With the American Trucking Association (ATA) anticipating a 36% growth in the freight industry over the next several years, now could be the time to open your trucking business.
Whether you're an experienced big rig driver looking to leave your current fleet to start your own small business or someone who just dreams of making a living driving on the open roads, owning and operating a trucking business takes training, industry knowledge, and business acumen.
This article will cover the basics of what you need to know to make your dream of becoming a trucking business owner come true.
Commercial Truck Operator License Requirements
Commercial truck operators in the United States are required to obtain a commercial driver's license (CDL) - also referred to as a Class A license - from their state of residence. Each state has its own testing standards for CDLs but all are required to meet certain minimum federal standards, which include administering a written test and a skills test. If you were a member of the military and performed certain driving duties, your state may let you forego the skills test.
Depending on the type of rig you plan to operate, you may also be required to obtain special endorsements or licenses to:
- Operate a vehicle with air brakes
- Drive a tanker truck
- Transport hazardous materials
- Drive a passenger vehicle
If you plan to become a hazmat hauler, you'll have to submit to additional security clearances (e.g., being fingerprinted and undergoing a Transportation Security Administration (TSA) security check).
In addition to proving your truck-driving abilities, you'll need to pass a U.S. Department of Transportation physical if you plan to operate a semitruck.
Planning Considerations for Your Commercial Trucking Business
Obtaining the credentials to hit the road is just the beginning. You will have to figure out what you will be hauling, get a truck that can accommodate your business, and make sure you have all the insurance and permits required.
Types of Cargo
The trucking business is exciting because no two days are the same. You could be hauling a load of oranges from a grove to a frozen concentrate packing plant in sunny Florida one day and transporting steel frames to an auto manufacturing facility in Detroit the next. Typically, large truck cargo falls into one of the following categories:
- Perishables: Called "hot loads" by truckers because of the urgency of getting them to their destination before they spoil, these include certain food items and pharmaceuticals, flowers, and other goods that spoil quickly and often need refrigeration for transport.
- Retail goods: This could be any type of consumer good - clothing, housewares, or non-perishable food items - that people need on a daily basis.
- Raw materials: Manufacturers rely on truckers to deliver the parts and products necessary to produce their finished products. Examples include transporting aluminum siding for mobile home construction or taking a load of ball bearings to a plant that makes washing machines and dryers.
- Liquids: Liquid hauls can include anything from milk to cement to petroleum products. You will need a tanker truck and, in some instances, specialized training and permits if transporting hazardous liquid cargo.
You might also find yourself bidding on business outside of these usual categories. You might be asked to transport specialty cargo like live animals or niche items like carnival rides and kiosks.
In addition to anticipating what type of cargo you will haul, you'll need to get a truck. Your choices include:
- Tractor-trailers - often called semitrailers, big rigs, 18-wheelers, or semis - are what most people think of when they consider starting a trucking business. The most common tractor-cab layout has a forward engine, one steering axle, and two drive axles. The trailer attaches with a fifth wheel coupling unit so weight distribution can be controlled.
- Flatbed trucks are used to haul oversized freight and cargo that is difficult to load into a trailer because of its shape.
- Tanker trucks are used to transport liquids, which can either be non-hazardous (milk or water) or hazardous (gasoline).
A new semitruck can cost anywhere from $70,000 to over $150,000 depending on the make, model, and options you want. A used truck might be a better option if you are just starting, or you can consider leasing if you don't have the money to invest in a big rig of your own right away. You might even be able to find a lease-to-own program for commercial vehicles.
As the owner-operator of a commercial trucking company, you will need insurance for your truck and your business. At a minimum, you should consider the following types of insurance coverage:
- General trucking liability insurance: This covers accidents that could occur at customers' premises, loading docks, truck stops, and other venues.
- Non-trucking liability insurance: This covers you if you cause another person injury or damage their property while not operating the truck.
- Primary liability insurance: This covers any damages you cause to another person or property while operating your truck.
- Physical damage coverage: This covers the costs of repairing or replacing your own equipment.
- Motor truck cargo insurance: This insurance covers damage to or theft of the cargo you are carrying.
The cost of insurance for your trucking company small business can be over $10,000 a year, more or less, depending on factors like coverage amounts and deductibles.
Trucking Industry Regulations and Permits
If you operate your truck across two or more states or Canadian provinces, you must obtain an IFTA license. The International Fuel Tax Agreement requires that qualifying large rig operators file an annual fuel tax return - and pay any taxes owed - with their home state every year.
IFTA taxes are calculated by dividing your total taxable miles by your overall fuel mileage. Then, subtract your total tax for paid gallons. This gives you your net taxable gallons. You can then consult with the IFTA to apply the current fuel tax rate to determine the amount of fuel tax you might owe.
As a startup trucking company owner, you'll need to make sure that you obtain all the required licenses and permits before taking to the road. While not a comprehensive list, examples of what you will need may include:
- A USDOT number (U.S. Department of Transportation) so that the government can identify your company when it conducts inspections and audits
- An MC number (Motor Carrier Operating Authority) required by the Federal Motor Carrier Safety Administration (FMCSA) that shows what types of cargo you're permitted to carry and whether you can operate in certain capacities
- An International Registration Plan (IRP) credential if you run a cross-border operation
- An International Fuel Tax Agreement (IFTA) decal if you operate across state lines or in Canada
In addition, some states require trip permits, temporary fuel permits, and combo permits.
Where to Start With Your Own Trucking Company
Once you have a basic business plan, you'll need to consider what legal form you want your business to take, how you will find customers, and how you will manage your business from the road.
Form a Legal Business Entity
One of the first decisions you'll need to make when starting your trucking business is what type of legal entity you want to form. You can choose to be a sole proprietor, form a partnership, register as a limited liability company (LLC), or incorporate.
- Sole proprietorship: This is the simplest structure for a business run by an individual. There are no costs associated with becoming a sole proprietor - it's a default structure if you take no action - and you have complete control over your business. You are taxed at your personal rate. The biggest drawback of being a sole proprietor in a high-risk occupation like trucking is that there is no separation, from a legal standpoint, between you and your commercial trucking business. You're personally responsible for all business debts plus personally liable if there's an accident.
- Partnership: If you're starting your trucking business with another person, you can form a limited partnership or a limited liability partnership. Which structure to go with depends on how you want to divvy up or share control and risk.
- LLC: An LLC might be a good choice for a new trucking company. LLCs are generally formed in higher-risk business situations because the owner's personal assets are protected. Your personal assets are protected from lenders in the event of bankruptcy or a lawsuit, and profits and losses are passed through to and taxed with your personal income.
- Corporations: Corporations - often referred to as C corps - cost more to form but offer the strongest protections against personal liability. A corporation is a legal entity, so it's subject to both taxation and liability. This protects you from liability but can cost you more in taxes because the corporation is taxed on any profits. If you take a distribution, you will be taxed on that amount as well.
Find Your Loads
Finding loads is, obviously, one of the most important aspects of running a successful trucking company. There are three ways to find merchandise to haul:
- You can source loads directly from shippers . This is the most beneficial way to get jobs from a financial standpoint, as you bypass the middleman and get to save on the selling commission. To source directly, however, you need to refine your negotiating skills and learn how to make competitive bids.
- You can work through freight brokers who find shippers for you. They charge a commission for this service, but it can be worth it if they can keep you busy and on the road.
- You can find loads through public load boards and load matching apps. Load boards usually charge a monthly fee - Truckstop.com's basic plan is $39 a month - but you can count on multiple opportunities to be available from different shippers. The load matching apps are provided by digital freight brokers, like Uber Freight, which offers upfront pricing, guaranteed payment, and free memberships.
Run Your Trucking Business
Purchasing your own truck, loading it up, and hitting the open road might be a dream come true, but the sobering truth is that you will have a business to run, and you don't have a lot of spare time to run it. Operating a carrier service is like any small business. Like other businesses, you have to:
- Find work, which means estimating jobs and often participating in a quote or bidding process.
- Create and send invoices so that you get paid.
- Track operating expenses.
Plus, because the trucking industry is so heavily regulated, you also are required to:
- Keep track of your fuel costs and usage for IFTA reporting and some state reporting requirements.
- Track truck maintenance, miles driven, and other metrics to stay compliant.
- Be prepared to undergo record-keeping audits.
Run Your Trucking Business From the Road With Skynova
Under federal law, truckers can drive for up to 11 hours in a 14-hour period as long as they take at least 10 hours off before starting work. As a busy truck driver doing the long hauls, the last thing you want to do on your time off is shuffle paperwork.
Fortunately, Skynova's software products make it easy to run your small enterprise from the road. All you need is a laptop and a decent internet connection to handle all of your accounting needs.