The trucking business in the United States can be one of the most lucrative business opportunities with some of the highest potential in the world. This blog explains how to start a trucking company in the United States. We explain it in an easy and simple manner so that even a person who has absolutely no previous experience in the trucking industry can understand it and apply the knowledge.
Remember that Freightship offers a full range of services for the starting of and organization of new trucking businesses. It does not matter if you want to start with 1 truck or with 200 trucks, Freightship is here to make sure that you register and start your trucking business in the most professional way possible. We want to make sure that you do things right from the very start. Once the company is up and running we offer broker and dispatch services for loads to guarantee that your trucks are always loaded and that they are receiving the best freight loads in the United States
There are many people who have started in the business with one truck and in a relatively short amount of time have grown to have 10 or 20 trucks.
The founder of “Swift Trucking” based in Arizona started in the business as a truck driver delivering loads to Utah. In a short amount of time he and his wife had saved up sufficiently to start a small trucking company. As the time passed he began to increase his fleet and nowadays Swift Trucking has grown to over 16,000 trucks.
If you study the history of the trucking business in the United States, (which by the way is a relatively modern industry considering that it technically really started in the 1930’s), you will notice that there are thousand upon thousands of similar stories. Many of the largest trucking entrepreneurs in the industry have started with little capital and have rapidly grown and expanded their business into multimillion dollar companies. (Here you can see the story of one woman who started in the trucking business with close to nothing and now has a company worth over $400 million dollars)
The trucking industry is not an industry with low demand. Every single day hundreds of thousands of loads are moved all across North America, there is always demand for trucks as well as for drivers.
The key in this industry is to be very very very organized. It is so important that we are going to say it again, the key to this business is to be extremely well organized.
The company that knows how to organize itself and do everything right since the first day will have success almost guaranteed. Unfortunately many people that start up in the industry do not know how to get organized and their business fails in a short amount of time.
A lot of people ask, how can a business where you can gross close to $20,000 a month with one single truck possibly fail ? The response is the same, by not being well organized. The worst part is that in 99% of cases the people who are not well organized are not so because of a lack of intelligence but because of a lack of information on the subject. In other words, simply because they do not know what steps they have to take to get organized.
And that is Freightship’s goal with todays blog titled “How to Start a Trucking Company in the United States”, we will explain every necessary step that you need to start a trucking company in the most efficient and professional manner possible. If you follow these steps you will have a strong foundation to create and grow a trucking business of very high quality.
Without further ado, here is the list of necessary steps that you need to start a trucking company in the United States.
1.Company Registration and Permits
The first step, before anything else is to incorporate a company within the United States of America and register all of the necessary permits to transport loads legally within the U.S..
To register a company in the U.S. you need to register it first of all at the state level. For example, many of our clients reside in Florida or live in another country but they want to register their company in Florida. In this case we need to register the company name that they want their company to have with the Florida Department of State in Tallahassee.
If the Department of State declares that the name that you want is available then the name should be registered officially by your agent with the Florida Department of State. After the registration you simply need to wait until the name appears on their official website before proceeding to the next step
Once the name is on the official Department of State website the next step would be to register the TAX ID number. The TAX ID number is basically your registration at the federal level with the IRS or Internal Revenue Service. This number is necessary to open a business bank account in the United States and also to be able to pay taxes at the end of the year.
Even if you are not a citizen or resident of the United States Freightship can register your TAX ID number without any problem. The only difference is that if you are not a resident of the US then the process will usually take about 1 week longer then average. But the TAX ID number can indeed be registered and when it is you can take it to the bank to open a business account and you can operate like any regular American company.
Once the Tax ID number is registered then the next and final step is to begin with the registration of the MC and DOT number. This is the “Motor Carrier number” and “Department of Transportation Number” , respectively. These numbers allow you to transport loads legally within the continental United States. These are the numbers that you see on the side of every truck that rides on American highways. By law, each truck that transports cargo within the United States needs to have these numbers.
It is very important that before continuing with the additional steps you have all the company registrations completed and that you have also opened a business bank account for your new company. The idea is for all of the remaining expenses for your new business (truck, trailer, insurance, etc..) to be purchased from the new business account. The purpose of this is so that all these expenses can be considered as “deductibles” when it is time to do taxes at the end of the year.
2. Purchasing Truck and Trailer
The second step is purchasing a truck and a trailer.
Many people start in the business wanting to save a lot of money on the truck purchase of their first truck, this decision can many times turn out to be a fatal error. Any person that knows about the industry will tell you that any repair that you do “on the road” (in other words, outside of your home city) is going to cost you 5 or 10 times more then if it was done in your home city where the truck is based out of. There are some horror stories of people who had a small breakdown on the road and ended up having to pay close to $7,000 for a job that they could have gotten done in their home city for about $700.
One of the keys of the trucking business is to make sure that you are buying a truck that is in excellent condition. It is definitely worth it to pay more for a truck that you can be sure that is in great shape mechanically .
Freightship always recommends that you buy a truck that is no more than 5 years old, and always with less than 600,000 miles. We also recommend the brand Freightliner with a Detroit motor if it is possible.
If you buy a truck with these specifications it should last you around 8 to 10 years without any huge repairs. That is considering a preventive regular maintenance on the truck at least once a month
In reference to the trailer, if you are starting off in the industry we recommend you buy a 53 foot dry van trailer with air ride suspension. We recommend dry vans because first of all they have a higher volume of freight. More than 60% of the cargo that moves within the United States can be considered to be “dry van freight”. Second, dry van trailers are much easier to deal with and manage, they do not have a sensitive motor as does the refrigerated trailers neither do they have tarps and ropes to deal with as do the flatbed trailers. Lastly, finding drivers for dry van freight is much easier in comparison with finding drivers for refrigerated and flatbed trailers which is a much more specialized kind of work.
This second step of buying the truck and trailer is very important, make sure that the truck and trailer that you are purchasing is in good shape, it doesn’t matter if you have to pay more, it is definitely worth the extra money.
3. Insurance Policy
The third step is to insure the truck and trailer. The insurance that you are registering should be a total of 3 policy’s under one same umbrella.
The first insurance policy is the “physical damage”, this insurance covers the full cost of the truck. In other words if the truck cost you $60,000 then you should insure it for that same cost, $60,000
The second insurance is the “cargo Insurance”, the cargo insurance should be for a minimum of $100,000.
The third insurance is the liability insurance, this insurance covers any damage that the truck or driver can cause to a third party.The liability insurance should be for a minimum of $1 million.
These 3 insurances tend to come together. In other words, you will pay a flat monthly fee to have full coverage of truck, trailer, driver, cargo, etc. etc.
4. IRP Plates Registration and IFTA
The fourth step is the registration of IRP plates and IFTA for the truck. These are not the regular plates that a car uses, these are plates specifically for trucks that are going to run interstate. When you receive the plates you will see that it has all of the 48 states of the continental U.S. listed on it.
The plates will usually come alongside the IFTA, the IFTA is like the small sticker that is put on the back of cars. The only difference is that the IFTA sticker is for trucks and they are renewed every single year as long as you keep paying your fuel taxes.
The IRP and IFTA registration is also with the Department of State , this process tends to be the step that takes the longest amount of time. At least in the state of Florida you can sometimes wait up to 3 weeks before receiving your plates in the mail.
5. Factoring Company, Fuel Cards, EZPass/Pre-Pass and additional permits.
The fifth step which can be done simultaneously alongside the fourth step is registering with a factoring company and getting fuel cards, EZ Pass/PrePass as well as the additional permits.
- The factoring company is a company that pays you for the loads in less than 48 hours from the time of delivery. The majority of “direct clients” in this industry tend to pay within 20 or 30 days. Since many people who are starting a trucking company can’t afford to wait that long to get paid what they do is hire a factoring company. The factoring company buys the invoice for the load from you and they pay you within 48 hours, then the factoring company waits the 20 or 30 days that the direct client takes to pay and they make a 2% commission for basically financing the load payment for you.
- The fuel cards are like a debit or credit card that can be used exclusively at truck stops. These fuel cards are given to the drivers and they can fuel up at any truck stop in the United States. Please note that the fuel card is controlled by the truck owner and the driver can only use the card if previously authorized by the truck owner.
- The EZ Pass is used so that the drivers do not have to stop at the tolls. They pass by the tolls without stopping and then you as the truck owner receive a monthly statement for the toll costs of that month.
- Pre-Pass is very similar to the EZ Pass but instead of being used for tolls it is used for truck scales. So instead of having to stop at the scales the driver can just keep on going.
The additional permits are the permits for the states of New York/New Jersey, New Mexico, Kentucky, Oregon.These 5 states are not included in the original permits (see step 1 for reference) . For the truck to be able to enter these states you need to register these 4 additional permits. There is 4 permits for 5 states because the permits for New York/New Jersey come together.
6. GPS Installation and Truck Signs
The sixth step is one of the easiest. The GPS which is used to track the location of the trucks from your computer can be installed usually in less than 2 hours and it should be completed at least 1 or 2 weeks before the truck officially hits the road.
The truck signs , by law need to be placed on each side of the truck and should include the name of the company, MC and DOT number, City where the company is based, etc. etc. The truck signs can also usually be done in around 2 hours and is usually done on the same day as the GPS.
7. Driver Employment
The seventh and final step is one of the most important and that is the employment of the driver. This step is usually the last one because the majority of drivers do not want to wait until your company is finished getting set up to start working.
If you contract Freightship to help with the employment of the driver we first make sure to confirm that your company has everything setup before beginning the search for the driver.
The majority of the time in less than 2 weeks Freightship can have a driver ready to work. Remember that it is important that the driver comply with all the legal requirements before starting to work with your company. This means that the driver needs to have his or her drug test completed, driving history, medical card, employment application, etc. etc. All these requisites are already included in our original fee for driver employment services.
The driver employment is one of the most important steps because a good driver can be the difference between the success of your company and the utter failure of your company. It is important that the driver be a responsible person without points on their license and a clean driving record.
If you follow these steps and use our blogs for guidance you will know how to start a trucking company in the United States. Remember that although our blog explains these steps in a fairly simple fashion there is a large amount of paperwork and documents that are necessary for a lot of these steps. For this reason it is best to contract the services of a professional agency to help you with all of the necessary steps to start a trucking company in the United States.
Freightship has been helping trucking companies get set up since our foundation many years ago. We are the best in the industry within the sector of helping clients open and organize trucking companies. It doesn’t matter if you want to start with 1 truck or with 200 trucks , Freightship is here to make sure that your company is setup in the most professional manner. And once the company is set up we help out with the fleet management and day to day operations, more importantly we help out with the booking of the best loads in the industry via our broker and dispatch services.
If you want to contract Freightship for the setup of your new trucking company feel free to leave us a comment below or you can also send us an email explaining that you are interested in using our services, we will respond immediately with everything we need to get you started.