For many truck drivers now may be the prime opportunity to start a trucking company as an owner-operator. The demand for trucking is currently on the rise. In fact the US Department of Labor predicts that employment for truck drivers will increase 21% between 2010 and 2020. Running a trucking company as an owner-operator can be both rewarding and challenging. Before making this decision, it is important to consider all the factors involved in starting your own trucking company.
Establishing a trucking company as an owner-operator comes with the responsibilities of being both a driver and a small business owner. Getting started requires start-up capital because owner-operator must meet various federal regulations. These requirements have associated costs ranging from simple registration fees to the cost of procuring and insuring a truck. As a driver, federal regulations require you have a commercial driver’s license (CDL) and endorsements that cover the types of freight you plan to transport. Drivers must also have an insured truck that is suitable for the proposed cargo and routes. There are also federal regulations that the business as a whole must comply with. Trucking businesses must be registered and bonded in order to legally provide interstate transportation services. In addition to meeting commercial transportation requirements, owner-operators must establish the trucking company as a business entity for tax purposes. After deciding whether you will register as a sole proprietor, LLC or corporation, you must obtain the business licenses and permits required by your state. Registering properly varies by state, but generally requires filing paperwork and paying fees. Once your business entity is established, the next step is setting up an accounting and invoice system for the company. These databases will help you keep on top of outstanding payments and will be very helpful for tax season.
Starting your own trucking company gives you more freedom and increased earning potential. Department of Labor statistics indicate that the average yearly salary of an employed trucker is just over $37,000. According to surveys from the Owner-Operator Independent Drivers Association (OOIDA), the average owner-operator, however, earned a median gross income of $160,000 in 2012. Choosing your own freight and routes gives you the opportunity to increase earnings by selecting cost-effective routes, specializing in pricier freight, and dealing with clients you choose. It is very important to remember that while owner-operators earn more, they are responsible for taxes and other operating expenses such as fuel, office-related fees and truck maintenance. Owner-operators also must also find their own jobs. One way to find jobs is through a reputable job board or bidding site. In addition to posted opportunities, networking with other owner-operators and previous clients is a great way to find leads. As your company proves itself through successfully completed jobs, your company’s name recognition will grow and business opportunities will increase. Additionally, owner-operators are responsible for ensuring that they receive payment for completed work. This means that being an owner-operator requires time devoted to customer service even after completing a successful delivery. Despite these challenges, another benefits to being an owner-operator is the freedom of a flexible schedule. According to surveys from the OOIDA, an owner-operator drives just over 100,000 miles per year. As an owner-operator, you set your own schedule and have the option of working only the jobs you want. Running your own trucking company allows you to work the hours that are the best fit for your lifestyle and needs.
Before you take the plunge talk to established owner-operators. They are a great additional resource for advice on the everyday ups and downs of having your own trucking company. Their experienced perspective will give you a realistic picture of the life an owner-operator has and what you can expect during the start-up process. They can also share tricks of the trade and dangerous industry pitfalls.
Here are a few links with additional information on how to start an owner/operator trucking company:
- Succeeding as an Owner-Operator (PDF): This white paper, published by the Used Truck Association, provides a brief overview on how to develop a successful trucking company.
- OSHA Trucking Industry Index: A detailed resource on federal trucking safety standards. It also provides links to federal training requirements, state-specific websites, and other relevant governmental departments.
- Occupational Outlook Handbook: Evaluate general trucking industry employment facts and statistics from the US Department of Labor.
- DOT Interstate Motor Operations Booklet: This guidebook lays out the rules and requirements of interstate trucking. It also provides contact information for applicable state and federal entities.
- IRS Trucking Industry Overview: A detailed, technical look at the tax and accounting specifics of running a trucking company.
- Advantages and Disadvantages of Being an Owner-Operator (PDF): This academic paper, produced for the Department of Transportation, uses numerous interviews with truckers in order to thoroughly explain their opinions on independent trucking and being an owner-operator.