Do you have dreams of starting your own business? Starting a trucking company is a great way to start a business in an industry that’s ready to grow. You don’t think about trucking much until you see them jockeying for space on the highway.
In reality, trucking makes the country move. About 80% of our goods and supplies are delivered by trucks. Without the trucking industry, you wouldn’t have anything to buy at the store.
Are you ready to contribute to the economy by starting a trucking business? Read on to find out how you can get your business going.
Private vs. Sub-Contracted
You have one decision to make when you’re starting a trucking company. Will you get sub-contractors to perform the work or will you have employees? That’s the main difference between a company that’s private or sub-contracted.
A private company is one that owns all of the trucks and equipment. The company also holds licenses for the company. The employees are responsible for deliveries.
With this option, the costs to start a trucking company are high. With the high costs come a higher level of control.
A sub-contracted business relies on sub-contractors to do what works. They have their own trucks and insurance. In exchange for them bringing their own equipment, they have control over how things are delivered to your customers.
Another option is that you operate on your own as a subcontractor. This option lets you operate on your own, but you have to depend on other trucking companies for business. You only get called when they have work.
That option is good if you don’t want the responsibility of running a business.
Yes, You Need a Business Plan
Do you want your business to do well? You need a business plan. That will tell you how much you need to start your business and give you a road map to start your business.
You’ll be able to identify your target market, your main competitors, what makes you different, and the level of risk to start your business.
You’ll have to create a marketing plan, too. This will give you a roadmap to start your business and get clients right away.
Get Your Trucking Licenses
This is an important step to making your business official. You’ll need to get a USDOT license from the Department of Transportation to operate as a trucking business. You can read this article to learn how to make that happen.
You’ll also need a Heavy Use Tax Form and Motor Carrier Authority Number.
File Your Business Registration
The other big decision you have to make in your business is how you will legally structure your business. You’re going to have to register the name of your trucking business with your secretary of state’s office to make your business official.
You’ll be asked to declare your business status, which can be a corporation or a sole-proprietor. There are advantages and disadvantages to each.
A sole proprietorship is the easiest form of business to set up. This may seem like a good option if you’re a sub-contractor. You and your business are the same entity legally and by the IRS.
As a corporation, they can be a little more expensive to set up, but you and your trucking company are separate under the law. You have separate bank accounts and may be taxed as separate entities (depending on the type of corporation).
Corporation vs. Sole-Proprietorship
The main difference between a sole-proprietorship and a corporation is the amount of liability you would assume if something happens. Let’s say you are in an accident while working and the accident is your fault.
You’ll have insurance to cover you to a certain extent. Beyond that, a person could come after you for your home, your retirement, and other assets as a sole-proprietor. Again, you and your business are the same things legally.
Now, as a corporation, you and your business are treated separately. Legally, someone would sue your business, not you personally.
The easiest form of corporation to create is an LLC (limited liability corporation). If you are a single-member LLC, your business and personal taxes will be the same. You’ll file a 1040 tax form and a schedule C form listing your business expenses.
You may prefer to be taxed separately from the business. If you’re making a certain amount, say more than $60,000 a year, it may make sense to be taxed as an S-Corp. Your business would have a tax return and be taxed at the corporate tax rate.
You’ll be taxed on your withdrawals or salary from the business, which would be at the federal income tax rate. This can provide some tax advantages in some circumstances.
Equipment and Financing
You’re likely to have to invest in equipment and trucks to get started. How much you’ll need will depend on your business model. In your business plan, you should have detailed how much you need to get started.
Once your business is official and you have the licenses to operate, you’ll want to get the financing to purchase equipment. This can come in the form of economic grants, investors, or SBA loans.
You may opt to have a combination of the three. You’ll need to have a good personal credit history to show that you’re responsible financially. Your business plan will also be presented to show your plan to pay back loans and investors. And don’t forget about commercial truck insurance.
Starting a Trucking Company
If you want to start a new business, starting a trucking company is a great way to go. You have your hands in an industry that’s going to grow for years to come.
There are a couple of big decisions to make. You need to know your business model and your business structure to ensure a profitable business.
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