Most first-time entrepreneurs underestimate the difficulty of starting a new trucking company. Setting it up correctly and adhering to state and federal rules is crucial to its success.
Before you hit the road, you must meet the following concerns and needs:
Attention: Failure to properly plan and meet these obligations might expose your company and personal assets to litigation and other problems.
Business Registration and Filings
- File your LLC business entity with the Secretary of State in your home state– Failure to register your business with the Secretary of State’s office in the state where it is situated might lead to problems later on. You might not be able to safeguard your personal assets from a lawsuit, or you might have problems with tax filings.
- Obtain and register for a Federal Tax ID number- It is strongly advised that you use a Federal Tax ID Number for your business rather than your personal social security number. Most states prohibit the use of duplicate names on business registrations. As a result, after your LLC registration with your state has been authorized and granted, you must get your Tax ID number.
- Apply for Your Federal DOT and Motor Carrier Authority numbers- These numbers are necessary in order for your trucking company to transport freight in the United States. The USDOT number will be used by regulators to track your company’s safety record and compliance with rules. The motor carrier (MC) number, also known as “operating authority,” specifies the type of trucking firm you run and the types of commodities you’re allowed to transport.
- Register your company with the Federal Motor Carrier Safety Administration (FMCSA) to acquire both the DOT and MC numbers
- Complete the Motor Carrier Identification Report (MCS-150) and Safety Certification Application
- Complete the FMCSA 10-day review period- After applying, you will obtain your MC and USDOT numbers, but the FMCSA must still examine your authorization request. This assessment includes a ten-day “mandated dispute period” during which your application is published in the Federal Register. This dispute time enables for public feedback from anybody who may object to your authority application.
- Complete your Unified Carrier Registration (UCR)- The UCR system is used to confirm that a motor carrier has active insurance coverage in each state where it operates. You must use your company’s USDOT and MC numbers to register. To discover more about UCR, go to the website of your home state’s Department of Transportation.
- Get an International Registration Plan (IRP) tag- Your truck(s) can operate in all states and most Canadian provinces with an IRP license plate issued by your company’s home state. A yearly renewal charge is required for the IRP plate. For further information, go to the website of the Department of Transportation in the state where your business is located.
- Understand Heavy Use Tax Regulations- The federal heavy-highway vehicle usage tax applies to any truck weighing 55,000 pounds or greater. Every year, you must complete and file a 2290 tax form with the IRS to pay taxes on your heavy vehicles. Visit www.irs.gov for additional information about the form.
- Obtain an International Fuel Tax Agreement (IFTA) Decal- The IFTA agreement streamlines the reporting of fuel consumed by trucks operating in the lower 48 states of the United States and several Canadian provinces. The IFTA decal grants your company a single fuel license and requires you to file quarterly fuel usage tax returns with the state where you are headquartered. To learn more about IFTA, go to the website of your state’s Department of Transportation.
- File a BOC-3 form- Registering an up-to-date BOC-3 form with the FMCSA is one of the requirements for obtaining interstate operating permission. The paperwork appoints a person to act as a legal “process agent” in each state where your company operates. Assume your business is headquartered in Missouri, but someone in Georgia sues you. In that scenario, you will require the services of a Georgia attorney who will receive the legal complaint and transmit it to you and your local attorney. Visit www.fmcsa.dot.gov for additional information about the BOC-3 form.
- Get a Standard Carrier Alpha Code (SCAC)- The SCAC is a secret code that is used to identify various transportation firms. A SCAC code is required if you want to transport military, government, international, or multimodal cargo. Visit the National Motor Freight Traffic Association’s website for additional information
FMCSA State and Federal Compliance
- File for your Interstate or Intrastate Operating Authority-The SCAC is a privately controlled code used to identify different transportation companies.
- Obtain proper permits-The FMCSA and several state agencies need a number of permits covering topics like as fuel, taxes, and insurance. Trips, dimensions, hazardous materials, and load-type specifications are all required. Inability to apply for and acquire Failure to get the necessary permissions may result in significant delays or possibly the impoundment of your vehicle (s).
- Obtain a Driver Qualification File- A Driver Qualification File (DQF) is required by the FMCSA to demonstrate that the individual operating a commercial vehicle is qualified to do so.
- Establish drug and alcohol testing and compliance- Drug and alcohol testing is needed by law if your driver is operating a vehicle that needs a commercial driver’s license.
- Enroll in the FMCSA Drug and Alcohol Clearinghouse- All trucking businesses and drivers are required by the FMCSA to register with the DOT Clearinghouse. The Clearinghouse’s mission is to keep track of drivers who have tested positive for drugs or alcohol or who have refused to undergo a drug and/or alcohol test when necessary.
Knowing how to start a new trucking company is only the first step. In order to be successful, your company needs to have a good retention strategy for the truck drivers/ owner-operators, as well as Dispatchers who know how to do their job. Here are some tips on how to become a successful dispatcher.