Thinking of starting your own trucking business? Running a successful trucking business can be rewarding, but it also requires hard work, dedication, and a solid plan. As an owner operator, there will be a lot of freedom when it comes to running your own operations. You can set your own hours, decide what loads to carry, and there’s no limit to your earning potential. However, there is a lot of paperwork that needs to be completed when you set up your business so you can ensure that your trucking operations are compliant with the Federal Motor Carrier Safety Administration (FMCSA).

Keep reading for a step-by-step guide on what you’ll need to do before finally making your new business official. 

What is an owner-operator?

An owner-operator plays a dual role in the business – they’re a truck driver who owns and operates their own trucking business. They are responsible for finding clients, hauling freight, and maintaining their truck. Owner-operators are essentially small business owners in the trucking industry. They have greater control over their schedule, the routes they take, and the types of loads they haul. However, they also assume all of the risks and costs associated with running a business, such as equipment maintenance, insurance, and fuel expenses.

Owner-operator vs. company truck driver

While both owner-operators and company truck drivers are involved in commercial trucking, there are some key differences between the two roles. Company truck drivers are typically employed by a trucking company and responsible for hauling loads assigned by the company. They do not own the truck and are not responsible for its maintenance or insurance. They are typically paid a salary or hourly wage and may receive benefits such as health insurance and paid time off. 

In contrast, owner-operators own their truck and are responsible for finding their own clients and hauling their own loads. They assume all of the risks and costs associated with running a business but have greater control over their schedule and routes. Owner-operators are paid based on the amount of freight they haul and are not entitled to benefits.

7 steps to becoming an owner-operator 

Step 1: Evaluate your finances & develop a business plan

The first step to becoming a successful owner-operator is to develop a business plan. Take a look at your finances to see if making the jump to owner-operator is feasible. For example, if you have a family to take care of and you anticipate business may be slow for the first few months, think about creating an emergency fund to help you survive some bumps in the road. 

Next you’ll want to do a breakdown of costs for the business when it comes to all the fees associated with registering a business, getting a trucking license, and all the necessary paperwork done. Once you have a total number in mind, you can start to understand how much you’ll need to invest. This is where a business plan will come into play. 

Your business plan should outline your goals, target market, pricing strategy, and marketing plan. It should also include financial projections and a budget for startup costs, such as buying or leasing a truck, insurance, permits, and licenses. While there are fixed costs that are easy to calculate, you’ll also need to consider some variable costs as well. One of the biggest expenses when it comes to running a trucking business is fuel – gas prices can be volatile at times so remember to take that into account.

Step 2: Obtain a Commercial Driver’s License (CDL) 

Chances are you may already have a commercial driver’s license due to your previous road experience. But if you don’t yet, you will need one before operating your business. The CDL is a specialized license that allows you to operate large commercial vehicles and the type of license you need will depend on the truck’s weight class.  

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Keep in mind that it's important to research the specific requirements for your state and obtain the proper training before taking the tests. 

Step 3: Officially Register your business 

Registering your business with the Department of Transportation (DOT), the IRS and the state is necessary before applying for any license or permit. This includes completing an bi-annual update, which is required every two years, and maintaining compliance with Federal Motor Carrier Safety Administration (FMCSA) regulations. As an owner-operator, you will also need to register with the Department of Transportation (DOT). Make sure to do these before accepting clients or you’ll risk incurring fines.

Step 4: Get your MC Number and Trucking Authority

To legally operate as an owner-operator, you will need to obtain a Motor Carrier (MC) Number and Trucking Authority from the Federal Motor Carrier Safety Administration (FMCSA). Your MC number is a unique identifier assigned to your business, and your trucking authority grants you the legal right to operate a commercial vehicle across state lines. To obtain these, you will need to complete an application process that includes providing information about your business, such as your business structure, tax identification number, and insurance coverage. Once you have obtained your MC Number and Trucking Authority, you’ll need to comply with FMCSA regulations, such as maintaining insurance coverage and reporting safety data through the Safety and Fitness Electronic Records (SAFER) system.

Step 5: File a BOC-3 Form with the FMCSA

Before you start operating your trucking business, you’ll need to fill out a BOC-3 form to show the FMCSA that you have a process agent in each state that you operate. The process agent can be an individual or a business that can receive legal documents in case there are any complaints filed against you and stay on top of legal communication so you don’t incur fines. A single BOC-3 process agent can represent you in all the states you operate within, which can help simplify the process. 

Step 6: Obtain your USDOT number, IFTA License & HVUT Certificate

To operate a commercial trucking business, there are several licenses and authorities that you will need to obtain.

USDOT Number: A USDOT (U.S. Department of Transportation) number identifies carriers operating in interstate commerce. This number is referenced when the Department of Transportation confirms your registration status, safety records, compliance reviews, ratings, and inspections. On the forms, you’ll be asked about your company operation, the type of vehicles you are using, the number of vehicles, etc. All interstate movers must have a USDOT number to operate legally in the U.S. You can check the status of any USDOT or MC number in the SAFER database here. 

International Fuel Tax Agreement (IFTA) License: This license is required for businesses that operate in more than one state and transport taxable fuel. It simplifies the reporting of fuel taxes for carriers by allowing them to report and pay fuel taxes to a single state. To obtain an IFTA license, you can apply through your base state's Department of Revenue.

Heavy Highway Vehicle Use Tax (HVUT) Certificate: This certificate is required for vehicles with a gross weight of 55,000 pounds or more that operate on public highways. It is an annual tax paid to the Internal Revenue Service (IRS). To obtain an HVUT certificate, you can apply online through the IRS website.

By obtaining these licenses and authorities, you’re ensuring that your business is legally authorized to operate as a commercial trucking business and complies with federal regulations.

Step 7: Invest in transportation management software

‍Investing in transportation management software (TMS) can be crucial for owner-operators in the trucking industry. A TMS can help owner-operators streamline their operations and improve efficiency, which can lead to increased profits and improved customer satisfaction. With TMS, owner-operators can automate many tasks, including load planning, dispatching, and tracking. This can save time and reduce errors, which can help increase on-time delivery rates and customer satisfaction. TMS can also help you manage their finances by tracking expenses, invoicing customers, and monitoring profitability. A TMS can also provide valuable data and analytics, which can help owner-operators make informed decisions about their business. For example, it can help identify areas where costs can be reduced, routes can be optimized, and efficiency can be improved. With this information, you can make strategic decisions that can help  improve your bottom line.

Step 8: File your tax returns on time 

Be aware of tax reports you will need to fill out regularly for your trucking business. The Heavy Highway Vehicle Use Tax is assessed on vehicles carrying a gross weight of 50,000 lbs or more using public highways. In this case, Tax Form 2290 must be filed in this case and submitted to the IRS. Owner-operators will also need to fill out a quarterly fuel report which determines if they need to pay taxes or are receiving a refund. The International Fuel Tax Agreement has made it easier to calculate fuel usage if you operate within the U.S. and Canada and create reports using  this online calculator.

The Bottom line

Becoming an owner-operator in the trucking industry is a challenging yet rewarding endeavour that can provide independence, financial stability, and a sense of fulfillment. By following the steps we’ve outlined, you can set yourself up for success and position your business for growth and profitability. However, it's essential to remember that success in the trucking industry requires more than just obtaining the necessary permits and licenses. It also requires a commitment to safety, compliance, and the wellbeing of your drivers. By staying focused on these principles, you can build a reputation as a trusted and reliable provider of commercial trucking services, and establish your business as a leader in the industry. 

If you think a Transportation Management Software could be the next step for your business’ growth or want to learn more about how Rose Rocket can help your business, book a demo with one of our logistics experts – as the #1 Rated TMS, we’d be happy to help you learn more!