According to statistics, the trucking industry was able to generate revenue of around $876 billion in the year 2021. This number shows that starting a trucking company can also enable you to earn amazing profits if you do things the right way.
You’ll need to follow the legal guidelines when starting a trucking company. Keep reading to find a basic introduction to how you can manage the legal processes related to your trucking business.
1. Encourage Drivers to Follow Traffic Rules
Truck accidents result in roughly 130,000 injuries every year. Negligence of truck drivers can not only waste your money but also damage your reputation and cost precious lives. When starting your trucking company, you need to create a plan on how you are going to avoid truck accidents.
You need to hire skilled truck drivers who know the traffic guidelines. Other than that, you also have to make them aware of who is liable after a truck accident, so they can better understand the legal regulations for truck drivers.
2. Manage Your Tax Issues
It’s important to write down how you are going to handle your taxes when you establish your trucking company. Ignoring the taxation guidelines can not only make it difficult to manage your financial workflow but can also cause the closure of your company.
Managing your taxes can take a lot of time and effort. If you want to invest your time in something more productive, you should consider hiring a taxation lawyer. Working with a lawyer can make it easier to avoid overviewing the complete taxation process and handling its intricacies.
You should avoid using your personal account to handle finances related to your trucking business. In some cases, you might not be able to file some documents without providing your business bank account.
This is why you should consider opening a separate bank account for your trucking business. This separate account will make it easier to manage your company’s financial flow and calculate your profits/losses.
Choosing the right bank account for your trucking business can get difficult. You should consider working with a lawyer who can help you create a business bank account.
3. Create a Legal Structure for Your Business
To properly manage all the aspects of your business, like personal liability and taxation, you should consider creating a proper structure when starting your trucking business. A business structure will help you streamline your business processes and manage your company correctly.
Here are the four types of business models that trucking businesses use commonly:
As a sole proprietor, you get the chance to be the sole “owner” of your business. This business structure doesn’t forbid you from hiring employees. There are certain tax benefits you can avail if you establish your trucking business as a sole proprietorship.
Choosing the partnership model to establish your trucking business is the best choice if you cannot manage your business alone. In this model, the profit/losses and the responsibility of managing the business are shared by the partner(s).
The LLC model can help you avoid debts or liabilities in the future. This model protects your personal property and ensures that any problems with your trucking business don’t intervene with your other financial matters.
Setting up a corporation for your trucking business can enable you to establish a board of directors with the help of your partners that oversees the matters of your company. This model is good for you if you don’t have time to work as a decision-maker for your trucking business.
4. Follow the Compliance Rules
You need to follow the compliance rules when establishing your trucking business so you don’t have to tackle problems in the future. Here are basic compliance rules depending on the type of business model you choose for your business.
Compared to other business models, you don’t need to fill in any specific paperwork when establishing your business as a sole proprietorship or partnership. You might only have to file a DBA if you consider using a fictitious name for your trucking company. The lack of paperwork makes it easier for you to focus on other aspects of your business.
The paperwork can get a bit complicated when it comes to forming your trucking company as an LLC. You will have to file Articles of Organization that completely outline details regarding your business. It’s better to get help from a lawyer if you don’t have time to manage this documentation alone.
Establishing your trucking company as a corporation requires the most paperwork. You will have to appoint a board of directors and also adopt bylaws for your corporation. Make sure you follow all the legal guidelines regarding establishing your corporation, so you don’t have to struggle with anything in the future.
5. Write Your Business Plan
Creating a trucking business from scratch is not a pipedream. Even if you lay down all the groundwork related to legal complications, you still have to write down how you will manage your business to avoid problems.
A simple business plan can help you outline the processes you will work on in the future. It’s better to create a business plan that can be changed according to the needs of your business. If you’re not confident writing about your business plan, you should consider reading this guide on writing one easily.
6. Get Trucking Business Licenses
You must acquire all the licenses for your trucking business to ensure that your company is run as per the legal guidelines. It’s better to get the help of a skilled lawyer who can make a list of the licenses you need depending on your area and also apply for those licenses.
Here is a list of common trucking business licenses:
- Commercial Driver’s License
- Federal DOT Number
- Operating Authority
- Unified Carrier Registration (UCR) system
- Heavy Vehicle Use Tax
- International Registration Plan (IRP) Registration
- International Fuel Tax Agreement (IFTA) Permit
Make sure you only start providing services to your clients after you acquire all the licenses required by your local bodies.