It takes a lot of effort, time as well as financial resources to start a trucking business – no matter which state you live in. This tells that having to start a business is not a small thing, and especially when the situation with accompanied with a need to register with a motor carrier authority.
Structuring of the New Business
There exist three main types of structures set for doing business. The type of structure that’s most suitable depends on the type of business you do.
Limited Liability Company (LLC)
The businesses for which the LLC model deems the most suitable are the ones that are smaller in size. LLC structure helps such businesses to properly protect their personal assets under most circumstances.
When someone chooses to make an LLC company, then that person is not personally responsibile for any debt or liabilities.
This means that in case your business is under a financial crisis, that does not mean that the authorities will ask you to pay the debt using your personal funds. And it’s possible when your business is LLC.
Having to start your business as a corporation also gives you the benefit of keeping personal assets secure under many situations. But, this model is suitable for businessmen looking to grow into quite a large company.
This structure of business can put your personal assets at a risk – as you’re the one solely operating the business. A lawsuit can cost you your home or any personal savings – when operating on a sole-propreitor basis.
Choose the Ideal Tax Structure
Having a business gives you the advantage in terms of taxation benefits. You need to choose carefully before the USDOT registration process. Below are the most common tax structures.
- Disregarded entity
Extra Costs on Top of the Overall Startup Costs
The kind of structure you choose for your trucking company will have an effect on the other costs you’ll pay. Let’s see those costs:
USDOT Number & MC Number
It will incur an extra cost of upto $500 when you get to acquire a DOT and MC number by registering under FMCSA. This is the point where hiring a registration services provider can get a set extra expense of registering. Also, a professional services provider will assist you all the way in doing the paperwork correctly.
Drug and Alcohol Regulation Compliance
No matter the size of the trucking business you plan to run – it’s important to go through a necessary drug and alcohol testing.
Unified Carrier Registration
This is a registration whose cost depends on the number of truck your business has in the fleet.
There is a test called the entrant safety audit that all new trucking companies need to pass and this test is mandatory. There are also companies in the market that offer audit assistance packages.
Calculate Your Cost Per Mile
There are incidents of many trucking businesses not being able to take off and ended up in failures and shut downs – just because they did not understand the amount of money incurred on operating per mile.
Without the requisite knowledge – such companies go on to take loads without knowing the exact per mile costs – and end up not even being able to pay their operational costs. And all this soon puts them in a situation where a business has to shut down its processes.
It’s therefore essential to figure out the right way of calculating per mile costs – as doing so is very crucial to maintain the proper cash flow. It also helps you to know whether or not the prices being charged are giving you profits in return.