If you know what an expedited service in trucking is then you know that it may provide you with more freedom compared to being a company driver.
That means having more control over your times, routes, and rates.
But if you are determined to enter the game of good trucking service whether driving a sprinter cargo van or a semi-truck, you'll enjoy the outcomes.
Below, find a list of steps for starting an expedited trucking business.
The list of things to start an expediting business
Here's a list of everything you need to set up a trucking business:
- Get truck driving experience.
- Develop a business plan.
- Choose a business name.
- Legalize it.
- Choose a business structure for your business.
- Get an EIN.
- Open a savings account.
- Get an accountant.
- Acquire the necessary capital to fund your expedited business.
- Get insurance to cover your business needs.
- Comply with federal and state regulations.
- Market your business.
- Build your reputation.
- Make your trucking company profitable.
1. Get truck driving experience
I already mentioned above that the competition in the trucking industry is fierce. So, if you are not ready, the competition will eat you for breakfast.
The safest approach to starting a trucking company is to jump from being a company driver to being an owner-operator and then to building an expedited trucking business.
An owner-operator has more experience than a truck driver freshman.
He has the experience of owning a truck and participating in the daily activities of a fleet, or which business trucking ideas are best to start. That allows him to make better decisions when building a business in the trucking industry.
Experience prevents you from the mistakes that may cost you money.
Even if you plan to start a trucking company without driving, it's still advisable to have a good understanding of the trucking business.
2. Develop a business plan
The next step in starting a trucking business is by developing a business plan.
A business plan helps you to keep your hand on the pulse of the business.
As soon as you have a business plan ready, you have a road map to follow for the next 3 to 5 years. It helps you to stay focused on the core parts of the growing process of the business.
Starting with an organized plan and manage your trucking business better, which increases your chances of succeeding in the trucking industry.
3. Choose a business name
Your business name is the first point of contact for the potential clients with your business.
So, make sure that the business name clearly articulates the type of your trucking service that your company offers.
After you’ve come up with at least five possible versions, check if these business names are still available.Visit the U.S. Patent and Trademark website and search the trademark database for your company’s name availability.
After that, register your business on the U.S Small Business Administration website.
4. Legalize it
Next step is getting your business licensed with your state. Get a federal tax identification number.
There is no cost to receive a DOT number.
After that, apply for operating authority.
The U.S. government requires all interstate carriers to obtain Motor Carrier (MC) numbers from the Federal Motor Carrier Safety Administration.
The cost of insurance depends on a few factors. They are the amount of coverage you get, your driving history, and the amount of time you're in the business.
5. Choose a business structure for your business
At this step, you need to decide on the business structure for your company.
The available business structure models are "sole proprietorship", "partnership", "corporation", or "LLC”.
Each business entity offers various personal liability protections, taxation methods, ownership structures, and other technical differences.
If you start as a one-person self-owned trucking company, look into limited liability companies (LLCs) to protect your assets.
If you establish your company with a business partner, consider creating a partnership or a corporation.
Operating your trucking company as a properly structured corporation or Limited Liability Company (LLC), for example, sets boundaries between your assets and business liabilities.
Choosing a business structure might be a complex thing to understand. So, it’s recommended to consult an accountant or an attorney on this topic.
6. Get an EIN
Next step is to get your free EIN number from the IRS.
Your employer identification number, or EIN, is like a social security number for your business. This nine-digit number is required to open a business bank account and must be present on all tax filings for the life of your business.
7. Open a savings account
Once you have set up an EIN, you can go to a bank to open a business account.
One major benefit of a business account is that it keeps your personal finance safe in case your trucking company gets sued along with other benefits.
For tax planning and for establishing a good business credit score, keep personal funds separate from company funds.
Having your business finances separate from your personal assets helps when you need to get approved for a business loan or any type of funding in the future.
8. Get an accountant
An accountant helps you prevent all the finance-related issues.
An accountant explains to you how your expenses impact profits.
He/she prevents the company from having issues with the State and Federal Tax Department.
When you operate as an expediting company, you need to focus on delivering good service. This is the core activity that brings money into the business.
The least what you want is to run into problems with taxes, labor, or insurance.
Also, an accountant can help when you plan to sell a trucking company by making all the documentation ready for the sell.
Here's when an accountant comes into play.
9. Acquire the necessary capital to fund your expedited business
What if you don't have money to invest? Can you start a trucking company with no money?
You may need to buy a van, a pickup truck, or a semi-truck. These expenses are not cheap. But to offer expedited trucking services, you need a vehicle.
If you already have one, your startup costs can decrease significantly.
To acquire capital for your expedited freight business, you need to raise money from external sources. These could be your friends, family members, or coworkers, or it can be a business loan.
If you consider applying for a small business loan, thoroughly assess your current financial situation.
Once your business grows, you might need to hire more people. You may need an office. And you'll need to buy office supplies for it.
This will be required to run your trucking business efficiently.
If you plan to hire new staff upfront, make sure to hire someone who already has experience in this industry.
10. Get insurance to cover your business needs
Getting your business insured allows you to recover the financial loss in case of any unexpected damage.
Let's say that the vehicle or the customer's freight gets damaged due to a bad road or an accident. In this case, the insurance company may cover the financial loss to you as a carrier and to your customer for the lost freight.
This gives you and your customer peace of mind working together in the future again.
In a perfect world, you'd purchase all-in-one insurance to cover all the company's needs. But, this depends on your available funds.
Contact your insurance company to determine the coverage you may get for your business with the available funds.
11. Comply with federal and state regulations
Before you start operating in the trucking industry, your company needs to comply with the following:
- USDOT Number – The U.S. Department of Transportation (DOT) requires carriers to have a unique identification number. They and FMCSA use this number to identify, monitor, and collect safety information, inspections, crash investigations, inspections, audits, etc.
- Operating Authority (MC number) – All for-hire carriers must obtain an operating authority number from the DOT. This number dictates what type of cargo you can carry.
- Heavy Vehicle Use Tax – To fund highway programs, the federal government charges an annual tax on trucks exceeding 55,000 pounds.
- International Registration Plan (IRP) – IRP distributes registration fees based on distance traveled in each state or Canadian province. Contact your state’s transportation website to register.
- 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.
- BOC-3 Filing – Carriers must designate a process agent to whom court papers may be served in a legal proceeding. You need 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. To find available process agents, refer to the FMCSA’s site.
- Obtain your EIN to open a bank account. Your employer identification number, or EIN, is like a social security number for your business. This nine-digit number is required to open a business bank account and must be present on all tax filings for the life of your business. Apply for an EIN number here.
- Obtain a Standard Carrier Alpha Code (SCAC) from the National Motor Freight Traffic Association (NMFTA).
- Unified Carrier Registration (UCR) - The UCR system aims to validate active insurance coverage within every state the trucking company operates. Register your company in the program using your USDOT and MC numbers. Visit this page to check if you are required to register with UCR.
- Electronic Logging Devices - As per the ELD mandate, non-exempt carriers are required to install an FMCSA-registered and compliant Electronic Logging Device.
Failure in staying compliant with these requirements may result in the revocation of your corporation or LLC existence.
12. Market your business
When everything is set up, you need to find customers.
To find them, you need to market your trucking business.
Here's a list of ways to market your trucking services:
- Use vinyl stickers with all the company services and contact details on the body of your van or truck. This catches the people's eyes when the vehicle runs on the road.
- Consider placing an ad in your local newspaper or phone book.
- Personally, contact small businesses in your local area. Stop at their location and let them know that you are available. Make sure to specify the type of vehicle that you have and the type of freight that you can deliver. Make a list of the types of cargo that you plan to expedite for your customers. Also, set the geographical reach of your preferred routes.
- After informing local businesses about your trucking service, hand them your business card.
- Build an online presence that targets your local area. Build up social media profiles on Facebook, Twitter, LinkedIn, etc. Also, build a cheap website and optimize it so that it can be found on Google in your local area.
- After you have a happy customer, ask them for referrals.
13. Build your reputation
Once you have your first job set up, make sure to deliver on your promise.
Keep in mind that some of the customers may need moving service once again. And guess who they are going to call.
That's right! The expedited trucking company they had the best experience with.
Establishing repeat customers will help your business grow.
To achieve that, provide a high level of customer service. That means:
- Communicating with the customer every step of the way.
- Dressing professionally.
- Make sure your vehicle runs clean.
If you do a great job, they will use you again or will recommend you to their friends.
14. Make your trucking company profitable
Once all the logistical parts of an expedited trucking business are set up, you need to optimize every little part of the business to improve the trucking company profitability overall.