How to Become an Owner-Operator
Getting started in the trucking industry is easier than many think. If you’re a driver who wants to take their career to the next level, becoming an owner-operator is a great idea. If you think that you need a huge transport company to have a career in trucking, think again. In fact, 91% of all trucking companies operate six or fewer trucks in their fleet. That means even if you just have one truck, you’re already poised for success in the trucking industry. However, just like when you started trucking, there’s a bit of a learning curve. You’re going to have to work hard and navigate through issues. However, with this quick reference guide, you’ll have no problems knowing the next step to start your own company today.
Make a Business Plan
Your business plan is an outline of how you plan to make your business successful. The most important thing you can do to be a successful business owner is to make sure you’re organized. A clear business plan is the first step to staying organized. Here you will outline your goals, your value proposition, and identify any potential obstacles down the road. You can always amend and adjust as needed, but having a business plan written out will help you get started in turning your dreams into tangible objects.
Establish Your Owner-Operator Company
There needs to be a line between your business and your personal life. When you structure your company as a corporation or LLC, you draw that line. Not only that, you also get legal advantages as well as tax advantages when you set your business up. It’s simple to set up. You’ll just need two things to start.
A Registered Agent
This is the point of contact between your company and the state. You’ll need to have a physical address, not a PO Box, to get legal notices, new state mandates, tax documents, and more.
An EIN
This is your employer's identification number. It’s like a social security number made especially for your business. You can get one from your bank and you will use this number to reference all your business taxes.
Find out what Business Licenses and Permits You Need as an Owner-Operator
You have your commercial driver’s license to drive, but you’ll need additional licenses and permits to conduct business. There are literally hundreds of thousands of filing jurisdictions across the country. Your county or state may have specific needs. However, for most drivers, you’ll need six main permits and licenses.
Your Commercial Drivers License (CDL)
Your CDL and registration are mandatory to drive for a commercial trucking company. Since you want to become a commercial trucking company, it is imperative to make sure your CDL is up-to-date.
A USDOT Number
This is the United States Department of Transportation number. The Federal Motor Carrier Safety Administration (FMCSA) uses this number for inspections, audits, and investigations.
A Motor Carrier Operating Authority (MC Number)
Depending on your business needs, you may need more than one MC Number.
BOC-3 Filing
You must file your BOC-3 filing with the FMCSA. You’ll only need to file one form, but on that form you must state every jurisdiction and state that you plan to do business in.
IRP and IFTA
The International Registration Plan and the International Fuel Tax Agreement are decals required for trucks that cross state lines. If your business takes you across state lines, you’ll need to obtain these decals for your truck.
Buy or Lease Equipment
The right tool for the job can make all the difference. Think about the cargo you plan to carry so you can make sure you have the right equipment. Are you transporting perishable items? If so, you may need to have a refrigerated compartment trailer. The important thing is to decide if you want to buy or lease. Many new owner-operators will lease as the initial costs come out a little cheaper. However, if you plan to make this a long-term endeavor, it is cheaper to buy in the long run.
Properly Insure your Business
Now that you have your vehicle, you’ll need to insure it. However, you’re also going to need to insure your business. You’ll need primary liability insurance, cargo insurance, physical damage insurance, and passenger accident insurance at the minimum. Talk to your insurance agent and describe your business needs to make sure you have full coverage.
Track your income and Expenses as an Owner-Operator
Unlike when you worked for a company, you’ll soon notice that expenses are part of doing business. You’ll need to make sure that these expenses are less than your income. That being said, you’ll want to keep some money set aside for any unexpected expenses. It may behoove you to invest in some bookkeeping software. Additionally, make sure you know when and how you get paid for deliveries. Make sure to keep detailed records of your payments and stay organized. Lastly, don’t keep your personal expenses separate from your business expenses. It’s best to open a separate account for each.
Market Your Business
Once you have everything set up, you’re ready to find cargo loads to ship. There are tons of freight boards for new drivers to find customers. Soon you’ll want to avoid the boards all together and start building relationships with companies. If you prove you’re a professional shipper who delivers on time and safely, you’ll get calls from companies to ship their goods.
When starting a business, it’s always an adventure. No two businesses are the same. You’ll want to make sure you stay in compliance and still manage your deliveries on time. If you need help getting your business off the ground, IRP Registration Services is here to help. We can make sure you get your IRP and stay in compliance. Our sister company, Global Auto Transportation, can help with a wide range of filings to get your new business off the ground.