Starting your business and applying for motor carrier authority is a big deal. You need to be careful about the whole registration process as it impacts your business directly.
In this blog post, we will discuss the most important aspects you need to consider.
Costs of Taking a Start with Your Business
The expenses of starting up your business take a lot of financial resources. But the investment is worth it for your business in the long run. The initial expenses may include:
Your Truck & the Trailer
When opening up a trucking company – the biggest expense of all is the truck and trailer. If we look at many of the trucking businesses, we see that they started out with a lease-to-own option.
But there is a limitation to this option because you are limited to how much the lending party lends you. The highest amount most lenders agree to give is somewhere between $40000 to $50000 per piece of equipment.
Such types of loans are fully financed – meaning there is no need for a downpayment – which is a good thing. The only advance payment you need to give is that of the first and last month only.
However, getting a new truck will cost you more – but that allows you to avoid bad contracts.
No matter your state or location – your FMCSA and USDOT registration is a seamless process with the help of a professional registration services provider.
The expense of registration is based more on the state you reside in or the states you plan to run in. However, as a rough account – you can expect to pay somewhere between $1800 to $3000 on an annual basis upfront.
Insurance for Trucking
The expenditure incurred on your trucking business’ insurance will be somewhere in the range of $8000 to $12000 annually.
For the insurance policy to start – one-fourth of the total annual amount should be paid as a down payment.
It’s essential to know that most insurance providers will not get into a contract with a newly startup trucking company whose drivers have less than two years of experience. The same holds true for businesses that plan on getting two or more trucks in their very first year.
Who is Applying for Your Motor Carrier Authority
This is something you must also consider. There are two types of companies that apply for your motor carrier authority:
- The one that gets your DOT and MC number – and that’s all they do.
- The second is more of a full-service company. These companies will cater to all your needs surrounding the registration process which will save you time and effort.
Know the Cost Per Mile
The reason for the failure of many trucking companies is that they do not properly calculate their cost per mile to operate. Knowing the right way to calculate your cost per mile is essential. This way, you can maintain a proper cash flow and understand whether you are bagging any profits or not.
International Fuel Tax Agreement
As mentioned in the preceding point – it’s essential and beneficial to keep track of the miles your trucks travel and how much the fuel cost while traveling within or in-between states.
Then your business has to report the number of miles traveled to the state your business is based in.
It may seem like a daunting task to you – but you can easily do this. And to keep track and report – there are a lot of ways to do this. Things that will give you a lot of assistance in doing all the tasks are like using an electronic onboard recorder, trip envelopes, and more to make the reporting and calculation a seamless process.