Thanks to technology and the freedoms we are afforded in our lives, it’s now possible for almost everyone to start their own business if they want to. Of course, the business they start will depend on their skills, their interests, and how much money they have to invest, but the point is, you can do it if you want to. So if this is something you’re interested in doing, perhaps a trucking business would be the right choice for you.
Starting a trucking company is a big decision. Without a doubt, becoming a business owner operator is a huge responsibility, and taking the first steps can feel overwhelming. However, once you realize that the trucking industry is expanding and that you can capitalize on that expansion, you’ll know you’ve made the right decision. Continue reading to learn how to get started.
Legally Establish Your Trucking Company
Forming an LLC is the first step in establishing your own trucking business. As a company owner, operating as an LLC will safeguard your personal property and provide numerous tax benefits. There are many structures, so be sure you understand which one is ideal for you now and in the future.
Most states require you to designate a registered agent when you establish an LLC. Legal papers are accepted and sent on your behalf by that agent. They will also get compliance and tax information, as well as serve as the state’s primary point of contact. You will also need an EIN for your LLC. Obtaining an EIN, or employer identification number, is an essential step in establishing a trucking business since this number is unique to your company and is needed for many areas of operation. It is basically your owner operator trucking company’s Social Security number. To open a business bank account, you’ll also need your EIN.
Buy or Lease a Truck
You will, of course, need a truck. Before purchasing or leasing a vehicle, think carefully about your requirements. The aim of an owner-operator trucking company will vary, so you need to know what your own personal goals are relating to your business. Then you’ll know just what type of truck you need, how big it should be, even how many miles you’re going to drive in it. Consider your financial situation as well. While establishing your own trucking business may certainly pay off in the long term, you might find it’s hard to purchase a new truck right away. Perhaps a leased vehicle would be better. Leasing a vehicle may help you save money on your monthly expenses, and some dealerships even offer lease-to-own options.
Keep in mind that second hand trucks are a possibility as well. If you are considering this alternative, do thorough research and factor in possible truck repair expenses as an older truck that has potentially driven many miles could need more maintenance than a new one would. Before making a choice, compare dealers and take your time.
When you establish a trucking firm as an owner operator, you must get business insurance. Before you can be licensed by the US Department of Transportation, you must also have commercial truck insurance.
Always shop around when it comes to insurance, whether it’s for your business, your vehicle (or both), or anything else. Think about exactly what kind of business you’re setting up and what level of insurance you’re going to need. The DoT, for example, requires general liability and cargo insurance in the amount of $750,000 to $5,000,000.
Track Expenses and Stay Tax Compliant
Being an owner operator requires continuous attention. Keep up to current on filing deadlines and renewals. Remember that decals have an expiration date. Missing deadlines or expiry dates may result in a loss of good standing and hefty fines. Your LLC permission may potentially be withdrawn.
Tracking costs is another element of owner-operator trucking that remains essential after you start your trucking business. Cash flow is critical in the trucking industry. Fuel purchases, truck payments, and other expenses quickly deplete funds. It’s critical that you can make money as well as spend it, and that you are able to keep track of everything for your accountant and so you can pay your taxes correctly.
Is It Worth It?
The average pay of an owner operator is more than three times that of an OTR corporate driver. However, you must remember that all costs will need to be taken out of this pay in order to calculate the owner operator’s profit. This is just one of the many reasons why it’s so critical to manage cash flow and keep expenditures under control. Being an owner operator is an excellent opportunity for those with driving expertise, a business mind, and a desire to be their own boss.
Is It Profitable?
Starting a trucking business will be profitable and successful as long as you can strike the right balance between charging customers more per mile than your company’s cost-per-mile. Although it seems to be self-explanatory, this critical formula (which may make or break your business) is often missed by company owners who are caught up in the chaos of searching for loads, managing drivers, keeping compliance, and a variety of other distractions. Concentrate on understanding your cost-per-mile since it will serve as the foundation for all that follows. Make choices with an understanding of the impact they will have on costs, charge consumers enough to cover expenditures while remaining competitive, and drive as many loaded miles as you can. If you can keep this under control, trucking will prove to be a profitable venture for you.