Reading Time: 3 minuteslegally establish your company

The vast majority of trucking companies in the United States have six or fewer trucks they operate, according to the American Trucking Associations. So, if you have plans to become a new owner-operator, you’re not alone! You’ll also be playing an important role in delivering the massive amounts of freight transported by the trucking industry. As you move forward with your plans, here are 6 steps to legally establish your trucking company.

1. Put Together a Business Plan

Start with a business plan for your trucking operation. This is an important step since it will serve as a blueprint for how you establish your trucking company. A standard business plan includes:

  • Goals/objectives
  •  A value proposition
  •  An analysis of your target market
  • A competitor analysis
  • A breakdown of how you intend to run your trucking business
  • Funding/budget details
  • Potential obstacles

2. Become Legally Established

It’s common for a new trucking company to be set up as a limited liability company (LLC). In a nutshell, what this does is separate your business and personal assets and legal liabilities. In other words, if somebody sued your trucking company, they couldn’t come after your own personal assets.

With the formation of a corporation or LLC, steps you’ll need to take include:

  • Appointing a registered agent – an official point of contact
  • Getting an employer identification number (EIN)
  • Using your EIN to open a business bank account

3. Get Your Necessary Licenses and Permits

In order to legally run your trucking operation, you’ll have to obtain the necessary federal, state, or local licenses and permits. The specific licenses and permits you’ll need to operate will depend on factors such as where you intend to operate and how you’ll be running your business.

Owner-operators typically need the following licenses/permits:

  •  A commercial driver’s license (CDL)*
  • A U.S. Department of Transportation (USDOT) number
  • A motor carrier operating authority – e.g., your MC number

*Related endorsements may be required.

Do you plan to operate in multiple states? If so, you’ll also need International Registration Plan (IRP) credentials and an International Fuel Tax Agreement (IFTA) decal.

4. Purchase or Lease Equipment You’ll Need

The equipment you have for your trucking business will play a big role in how successful and productive you are. As you go about looking for your truck(s) and any other necessary equipment, be sure to:

  • Look for a truck that will be able to accommodate anticipated loads
  • Get proper documentation that shows the quality and condition of vehicles/equipment
  • Determine if you may better to lease some equipment before you buy

5. Choose the Right Insurance

The right insurance will keep you legal and provide some added peace-of-mind should something unexpected happen. Do your homework and check with several agents to get quotes and policy details. Truck-related insurance coverage that’s typically required or needed includes:

  • Primary liability coverage
  • Cargo and physical damage coverage
  • Passenger accident coverage

6. Know/Track Expenses

As you get started with your trucking business, your budget will likely be tight. So, have a good idea of what your expenses will be as you get started. Also, carefully track all of your expenses. With finances, it can also be helpful to:

  • Use bookkeeping software or hire an accountant
  • Brush up on how invoicing works for deliveries
  • Understand the basics of client contracts and payment arrangements
  • Have a reliable system for tracking invoices
  • Separate your business and personal financial records

Finally, you’ll need to start looking for loads. A common way to do this in the trucking industry is with load boards. There are apps you can use to search for and manage loads as well. Also, remember to adhere to any industry, state, or local guidelines and requirements so you’ll stay in compliance.

Be sure to check out our next write up on how to obtain necessary licenses and permits!