Learn about the legal aspects of starting a trucking business, as well as startup and equipment financing.
Trucking may not be the first thing that springs to mind when most people think about flourishing industries in Canada. However, a quick trip down the interstate should tell you everything you need to know about the demand for hauling and trucking services.
A trucking firm may be the appropriate fit for you if you’ve been thinking about starting your own business and enjoy driving and logistics. Trucks transport about 70% of all freight in Canada, implying that there is always a demand for trucks—and, more crucially, trucking firms.
There are many variables to consider while learning how to start a trucking company, including employing staff, choosing a business entity, and obtaining funding.
We’ll walk you through all you need to know about starting a trucking firm, from beginning to end, so you can make the best decisions possible.
In 5 easy steps, learn how to start a trucking business
If you’ve made it this far, you’re probably ready to take the jump and start your own trucking business. Now that you’ve been persuaded, let’s look at how to establish a trucking company by examining the important chores you’ll need to do before hitting the road and joining a massive convoy.
Step 1: Writing a business strategy
Given that the basic operating premises are quite straightforward, you might not think you’d need to prepare a business plan for a trucking company. Writing a business plan, on the other hand, allows you to concentrate on the most important aspects of your firm. A strong business plan explains why your company was founded, how much money it would take to get started, financial predictions that show costs vs expected revenues, and other key specifics.
Writing a trucking company business plan keeps you focused on establishing your firm according to a blueprint, which is especially useful when you’re just getting started and don’t have time to refocus on your overall strategy. A business plan is also required as part of almost any small business financing application. You’ll be glad you made a plan before applying for money since it will make the process go more smoothly. Check out trucking bookkeeping services.
Step 2: Create an account for your company
After you’ve established a strong business plan, the next step in starting a trucking business is to register your firm with any local or state governments that require it.
Select a legal entity for your company
Before submitting your application, you should research the various types of business companies accessible to you. Personal responsibility protections, taxation procedures, ownership arrangements, and other technical variables vary for each business entity. Consider forming a limited liability company (LLC) to protect your personal assets if you’re beginning a one-person, self-owned trucking firm. If you’re starting a business with a partner, you’ll want to think about the numerous types of LLCs available for partnerships (limited liability partnerships) and corporations. There are several other company entities worth considering as well, but it’s better to start with these two and see if you need to go out from there.
Even though it’s a touch paperwork-heavy, the process of establishing your firm is very simple. Typically, all you need is some supporting documentation regarding the company’s principals and founders, tax identification information, a general business agreement, and a few additional materials concerning your soon-to-be firm (which will vary depending on the state you’re registering in).
Choose a company name
Along with registering your firm, make sure to come up with a unique name for it. Your company name will give potential clients their first impression, so make sure it reflects your brand, specialty, and personality.
Also, double-check that your company name isn’t already in use. Once you’ve narrowed your possibilities down to a few names, check with the secretary of state and the Canada Patent and Trademark Office to see if the names you’re considering are available.
Step 3: Obtain all necessary permits, licenses, and insurance
After that, double-check that your trucking company is operating legally. You’ll need to look into business licenses, permits, and insurance in order to do so.
Permits and licenses for businesses
Trucking companies have particular obstacles and risks, so be sure you have all of the necessary licenses and insurance policies in place, as required by your state.
If you plan to base your firm within the state’s borders, most, if not all, states will need you to obtain a business license. Before your first shipment hits the road, you’ll need to set up these policies and permissions.
An International Registration Plan is another license you’ll need. If your truck weighs more than 26,000 pounds and crosses state lines, this is necessary. This allows you to drive your vehicle in all provinces as well as some states in the US.
Because province restrictions differ, review your state’s standards to learn exactly what you need to know to stay on the right side of local laws.
Insurance for businesses
Public liability insurance, cargo insurance, bobtail insurance, and physical damage insurance are all likely to be required. It’s always a good idea to contact a trucking accountant who has worked with other trucking companies if you’re concerned about whether you’re entirely complying with your business requirements. Their knowledge ensures that you follow all of the legal requirements before launching your transportation company.
Step 4: Select the appropriate truck
When learning how to establish a trucking company, one of your most important assets will be your commercial vehicle, so make sure you buy the proper one. When choosing your truck, keep the following elements in mind:
- level of comfort
- Your selected mode of transportation
- Resistance to the environment
- Whether they have many sites across Canada.
- a weight restriction
- Buying new vs. buying secondhand
- Whether you’re working on a local or long-distance basis,
You should take a test drive before buying any automobile. However, if you want to narrow down your options, Kenworth, Freightliner, and Peterbilt trucks can meet the majority of your trucking needs.
Step 5: Obtain venture funding
As previously said, purchasing a commercial truck is not a cheap investment. As a result, you’ll almost certainly require beginning capital to get your trucking company off the ground. Consider creating a company bank account and credit card in addition to the funding possibilities listed below.
What is the cost of starting a trucking business?
Without a question, trucking can be profitable. Starting a trucking firm will almost certainly necessitate a significant amount of capital—after all, a commercial truck costs roughly $80,000. Then there’s the financial investment required to maintain your fleet running at top efficiency. In addition to acquiring your truck, you’ll need to account for the following expenses in your business budget:
- Documentation and registration
- Permits and licenses for businesses
- Fees for truck maintenance
- Software for accounting and invoicing
These costs might add up quickly. Trucking and transportation companies took out an average loan of $106,000, according to the Small Business Administration. You won’t get very far if you want to learn how to establish a trucking firm with little money. To make your business strategy a reality, you’ll almost certainly need to seek more money.
The good news is that trucking companies can take advantage of a variety of business credit options, including:
- SBA loans
- Commercial truck financing
- Small business term loans