Motor Carrier Authority

9 Steps to Starting Your Trucking Business

STEP 1: Get driving experience

First, you’ll need a commercial drivers license (CDL). You can go to private truck driving school, or some trucking companies have their own training programs. Some companies might also help pay for you to go to a CDL school. Many drivers who eventually become owner-operators will cut their teeth in the business as a company driver for a few years.

STEP 2: Make a business plan

Your business plan should show what you expect your revenue and expenses to be. Remember that your expenses need to include salary that you will pay yourself too. You may want to hire a business adviser to help figure out the best plan for you.

STEP 3: Pick how your business will be structured

Common structures of trucking businesses include:

• Sole proprietorship
• Partnership
• Limited liability corporation (LLC)
• Corporation (C-corp, S-corp, etc.)

Each structure has different advantages and disadvantages based mostly on liability and taxes, and it varies with each state. You might want to meet with an accountant to find out which structure best suits your business.

STEP 4: Save money for start-up expenses

There’s going to be a big investment up front to purchase a tractor and/or trailer(s), plus licensing requirements and registration. Research financing and secure a line of credit. It’s a good idea to save up enough money to cover your first six months of operation.

STEP 5: Plan your business operations

• Operations: Parking, maintenance, etc.
• Sales: How will you find loads?
• Back Office: Invoicing, accounting, payroll, taxes, IFTA – all the paperwork
• Personnel: Will you have employees helping with any of the above?

STEP 6: Comply with safety regulations

Before you start operating, your company needs to comply with the following trucking-specific requirements:

• USDOT Number – This number from the U.S. Department of Transportation (DOT) is used to collect and monitor your company’s safety information, inspections, crash investigations, etc.
• Operating Authority – All for-hire carriers have to have authority from the DOT to haul freight across state lines.Your authority also determines what types of freight you can haul.
• Heavy Vehicle Use Tax – Applies to all trucks that weigh more than 55,000 pounds.
• International Registration Plan (IRP) – IRP distributes registration fees based on distance traveled in each state or Canadian province. You have to register on your state’s transportation website.
• International Fuel Tax Agreement (IFTA) – IFTA is an agreement between the lower 48 U.S. states and Canadian provinces to simplify reporting of fuel use by carriers who drive in multiple states. Carriers file a quarterly fuel tax report that determines their tax and distributes it to the states. Your truck has to have an IFTA decal on it, which you have to apply for at the beginning of every year.
• BOC-3 Filing – This names your company’s process agent, which is who gets served court papers in any legal proceeding. You have to designate a process agent in each state where you maintain an office or establish contracts. Some companies offer blanket coverage that designates a process agent in every U.S. state.

Other federal and state regulations, including size and weight standards, EPA/air quality regulations, and safety rules. The U.S. Small Business Administration has a list of links to the regulations and compliance standards for the trucking industry. DAT One can also help you through the regulatory maze so you can get your authority. We can even handle your IFTA tax reporting, and assist with other compliance requirements.

STEP 7: Get insurance

Insurance is a major expense for trucking businesses, and there are several types you’ll have to get:

• Primary Liability: You have to carry at least $750,000 in primary liability coverage, which covers damages or injury done in case of an accident when you’e at fault. Many shippers or brokers require $1 million in liability coverage.
• Cargo: $100,000 is most common to cover cargo, but it depends on what you are hauling. Covers damage to the freight and/or theft.
• Physical Damage: Covers truck damage in accidents where you are not liable.
• Non-trucking-use (bobtail): Covers if you’re liable for an accident that happens when you’re not hauling a load for someone else.

The Owner-Operator Independent Drivers Association has more info on trucking insurance at www.ooidatruckinsurance.com.

STEP 8: Buy or lease a truck and/or trailer

For the tractor, do you plan on only running day trips, or will you need a sleeper cabin? What kind of freight will you be hauling? Will your need a van, reefer, or flatbed trailer? Below are some common types of leases:

• Operating (Full-Service) Lease: You take care of maintenance, taxes and permits, and you walk away at the end of the lease.
• Terminal Rental Adjustment Clause (TRAC) Lease: You make a small down payment, and at the end of the lease you can cover the difference in value and purchase the truck. Or you can opt for the leasing company to sell the truck. If the leasing company makes money on the sale, you get the profit. If it loses money, you pay the difference.
• Lease-Purchase Plans: These are for truckers who don’t have enough for a down payment or have bad credit. You may pay more in the long-term in these plans versus traditional financing.

STEP 9: Build Your Business

DAT One can help you every step of the way in starting and growing your trucking business. Click below to find out more about any of these services.

Authority – Get your operating authority without all the hassle.
Load Board – Looking for loads? DAT One is the biggest load board in the industry, and you get tools like broker spot rates, so you can see what other trucking companies got paid on the lanes you search.
DAT Fuel Card – Save on fuel costs at more than 1,900 truck stops nationwide.
Freight Factoring – Increase cash flow without debt with OTR Solutions.
Mobile App – My DAT Trucker is a free mobile app that helps you find the nearest truck stop, rest stop, service station, Walmart, or trucker-friendly hotel. You can also use it to find nearby loads.

More Resources

Starting a Trucking Business, U.S. Small Business Administration
Partners in Business: A Business Manual for Owner-Operators, Overdrive Magazine
Starting a Trucking Company: How to Run a Trucking Business, TruckersReport.com
Owner-Operator Independent Drivers Association
American Trucking Associations