Have you dreamt of driving big rigs and navigating the open roads – and doing it all on your own terms? It can be a dream come true by launching a trucking business. The prospect of starting an owner-operator trucking company from the ground up can feel overwhelming, but there are many ways that truckers can get started.
In this blog post, we will show you how to start a trucking company – from obtaining the necessary licensing and permits to raising capital for investments. Enjoy the read!
What is an owner-operator trucking business?
An owner-operator in the trucking business is a truck driver who leases or owns their own truck and/or maintains a small fleet of drivers who operate their own trucks that transport goods and materials for customers. Being an owner-operator provides tremendous flexibility and autonomy. As an owner-operator, you are the sole proprietor of your own business. You get to choose the routes you drive, the schedule you keep and what special offers you will make to customers, just to name a few perks.
How Much Do Owner-Operators Make?
Working in the owner-operator business can be a lucrative career; the amount of money an individual makes depends largely on their experience, employer and skill level. Most people make between ~$50,000 and $150,000 per year. Those who keep meticulous records of every job they do may qualify for tax deductions that help increase their pay.
OTR Solutions Helps Truckers Make More Money!
At OTR Solutions, we understand that trucking is a tough business. That’s why we offer true non-recourse freight factoring to help you make the most of every load. With our service, you can get paid right away instead of waiting for 30, 60, or even 90 days for your invoices to clear.
How to Start a Trucking Company – in Just 6 Steps
Starting any business offers many opportunities and possibilities, but only if it is undertaken with a well-thought-out plan. The same applies for starting an owner-operator trucking company.
Below we outline the essential steps to take when pursuing the goal of becoming an owner-operator. Taking these steps will ensure that you have a solid foundation upon which to build your new trucking business.
1. Research the trucking industry
Gaining knowledge of the industry will provide insights into how it operates and how to be successful in it. You may also confirm, as you research, that this is indeed the path you want to take – or that it’s not and thank goodness you looked into it more before buying a rig!
2. Understand the Regulations:
The key to remaining compliant and avoiding any legal or operational roadblocks in the owner-operator business is proactively performing due diligence on current regulations related to all facets of the operation. Here they are (in no particular order):
Heavy Use Tax – The heavy-highway vehicle use tax applies to any vehicle that eights over 55,0000 pounds or more. You must complete and file tax form 2290 yearly, and pay the Heavy Use tax that will be due at the same time. For more information on this, visit www.irs.gov
IFTA Agreement – The International Fuel Tax Agreement (IFTA) was put into place for the purpose of simplifying the reposting of fuel use for truckers across the country. You will need a fuel use license and to file quarterly fuel use tax returns, each and every year within the state your operation is based. If you would like to learn more about this agreement, visit your state’s Department of Transportation website.
BOC-3 Filing – Registering a BOC-3 form with FMCSA is the way you would obtain interstate operating authority. This designates you as a legal process agent in each of the states that you will be operating in. Vist www.fmcsa.dot.gov for more information about this.
SCAC Code – You only need an SCAC code if you are a trucker who plans on haul military, government, international or intermodal loads. The National Motor Freight Traffic Association will have more info on this for you.
3. Draft a comprehensive business plan
This plan should outline all costs associated with beginning your own trucking operation such as buying or leasing trucks, hiring drivers, developing processes for booking freight, purchasing insurance coverage and various other aspects related to trucking operations.
4. Obtain the necessary credentials
Here is a list of the credentials you will need to obtain in order to run your own trucking company:
Commercial driver’s license (CDL) – all drivers will need a commercial driver’s license in order to operate heavy trucks. Obtaining a CDL entails an extensive background check, training and passing a written and driving test. Each state has its own set of CDL testing standards. You need to be at least 18 to get a CDL but if you plan to drive to various states you will need to wait until you are 21.
Federal DOT and Motor Carriers Authority Numbers – if you want to haul cargo in the United States you will need both a DOT number and a Motor Carries (MC) Number. The U.S. DOT tracks your safety record and compliance history. The MC number helps to identify the kinds of goods you are permitted to haul. In order to acquire these numbers you will start by registering your business with the Federal Motor Carrier Safety Administration (FMCSA).
Unified Carrier Registration (UCR) – The purpose of the UCR system is to verify that each carrier is covered by the proper insurance. You will register to UCR with your USDOT and MC numbers. If you want to learn more about UCR, you can do so by visiting your state’s Department of Transportation website.
International Registration Plan (IRP) Tag – An IRP Tag, or IRP license, allows you to operate an owner-operator business in all states and even in most Canadian provinces. Learn more about the IRP license by visiting your state’s Department of Transportation website.
5. Round up financial resources to fund your new venture
This may require applying for loans or seeking out investors, depending on the size and scope of your planned operations,and signing on with a freight factoring company that will keep your cash flowing.
6. Secure operational contracts from clients
Find clients who need transportation services regularly and consistently, so you can ensure steady cash flow. Partner with us here at OTR Solutions and gain access to unending loads through our mobile app and DAT’s industry-leading load board with pre-approved loads from OTR.
How to find the best freight rates as an owner-operator trucker
An owner-operator can navigate their way to the best freight rates by considering multiple factors and weighing them against each other. Here are some tips for doing so:
- Doing some research to evaluate companies, services provided, lane miles and geographic regions all can help decide which option offers the best cost savings without sacrificing quality or sacrificing volume in order to achieve low rates.
- Analyze suppliers that offer flat rate shipping. This can mean avoiding paying for empty miles traveled, allowing cargo space to be taken up quickly because of the low pricing structure this type of vendor offers while still ensuring gear is always filled with paying freight whenever possible.
- Running a successful business as an owner-operator is hard work, but adhering to practical guidelines when it comes to finding the best freight rates can make a significant difference in improving profit margins.
- Utilize a factoring company like OTR Solutions. We offer the industry’s only true non-recourse factoring program for owner-operators and fleets alike – no hidden fees, no long-term contracts, and no monthly volume minimums. Our toolbelt of solutions offers owner-operators competitive fuel discounts and $0 in-network Fuel Card transaction fees,, quick funding through BOLT Instant Payment, and access to a powerhouse of industry partners to benefit every aspect of business.
Partner with OTR Solutions
Hopefully, we have taught you everything you wanted to know about how to start a trucking company. Once you have it up and running, most have found that maintaining success requires finding a reliable and reputable freight factoring company that you can partner with.
OTR Solutions is one such factoring company, dedicated to helping our clients succeed for the long haul. By providing funding for fuel, maintenance, lumpers and other necessary expenses, we allow our clients to keep their trucks on the road and maintain their owner-operator business at a high level. If you are interested in learning more about partnering with us, please contact us today to get started.