It only takes a few steps to go into business for yourself if you have experience in hauling and trucking. Opening a trucking company in Texas can be profitable, but without the right legal counsel, things can quickly go wrong.
In this blog post, our Houston, Texas business formation lawyers guide you through the process of opening a trucking company, including the costs and benefits. With our firm’s guidance, you’ll be prepared to start a trucking company in Texas.
Benefits of Forming a Business for Drivers
Some trucking companies hire drivers as employees, but many owner-operators act as independent contractors. When you own a rig, you are a small business. You don’t have to register, but without a business registration, you’re considered a sole proprietor.
Forming a corporation or limited liability company (LLC) will help you protect your assets and manage your income. These statutory entities provide liability protection, meaning the owners can’t be held responsible for the business’ good faith obligations.
How Much to Start a Trucking Company
The cost to start a trucking company in Texas will vary with your business goals. A large trucking company with many employees will have higher start-up costs than a single owner-operator.
In any case, the costs to form your business will include:
- Filing fees,
- Business taxes,
- Insurance premiums,
- Licenses and permits,
- Marketing and branding,
- Office leases and utilities, and
- Equipment purchases.
When you start business planning, take some time to estimate these costs and forecast your revenue for the first year. Measuring your startup costs can help you plan how many miles on the road will generate a profit.
What You Need to Start a Trucking Company in Texas
Starting a trucking company is ideal for a driver with self-motivation and an entrepreneurial spirit.
If you have experience with the shipping industry and enjoy working long hours, you’ll likely succeed as a business owner. Much of your work will involve managing shipments and vendors, so be prepared to spend time on management and negotiations.
Steps to Opening a Trucking Company
Starting a trucking business is similar to starting any new business in Texas, with a few added details. Trucking is a heavily regulated industry, so it’s important for your business to meet legal requirements.
Step 1: Plan Your Trucking Business
Writing a business plan is a smart first step for every new business. Narrowing down your plans and setting them out in writing can help you focus your ideas.
In this step, you’ll take the time to estimate your budget and revenue. You’ll decide on the business name, branding, and how you’ll find customers. Outlining a business plan should get you ready to start your trucking company.
Step 2: Create a Legal Entity for Your Trucking Company
As mentioned above, forming a legal entity for your trucking company can provide you with personal liability protection. If you decide to form an LLC or corporation, you’ll need to register with the Texas Secretary of State.
When you register, you’ll provide the name and address of the business and pay a filing fee. You’ll also need the name of a registered agent who is authorized to receive service of process on behalf of the business.
Step 3: Register with the Texas Comptroller’s Office
In Texas, all registered businesses must pay a franchise tax. In addition, if your business hires employees, you must register to collect wage withholding.
Step 4: Open a Business Bank Account
Having a separate account for your business will help you maintain your limited liability.
As a business owner, it’s essential that you keep your personal finances separate from the business revenue. Plus, using a business bank account can help you protect your identity. It will allow you to accept credit cards and assist with tax preparation.
Step 5: Obtain Trucking Permits and Licenses
Texas requires trucking companies to maintain several licenses and permits.
You should expect to apply and pay for:
- MC numbers;
- USDOT filings;
- TxDMV number,
- Truck registration (a temporary permit from TxDMV or registration with the International Registration Plan (IRP)),
- State fuel use tax or International Fuel Tax Agreement (IFTA) license.
As the owner of a trucking company, it’s your responsibility to maintain your licensing requirements. Your legal advisor can help you ensure you have the licenses you need to operate legally.
Step 6: Get Commercial Trucking Insurance
Insurance, like licenses and permits, is required for you to operate your business safely and legally. If you experience a covered loss, business insurance can protect your company and its financial well-being.
Every business needs general liability insurance, which will protect you if there is an accident involving your rig. In 2013, the federal government set the mandatory minimum liability coverage for commercial carriers at $75,000.
The average cost of a crash is $18,000 for general freight carriers. Still, many crashes occur in Texas every year, with costs exceeding the mandatory minimums.
Step 7: Establish Your Brand
When you started out, you began generating ideas for how you wanted to present your company to your customers. Starting a brand includes making a website, business cards, and social media accounts.
Treating your trucking company as a legitimate business can help you maintain your company’s goodwill and public image. You might consider hiring marketing or design help at this stage.
The Curley Law Firm: Helping you Start Your Trucking Business
For over ten years, The Curley Law Firm has helped clients start new businesses and manage conflict.
Starting a trucking company has its own set of legal requirements. If you’re searching for how to start a trucking company in Texas, we’ll help you make a plan to keep your business in compliance. We can help you get your business up and running quickly and efficiently with our focus on clients and results.
You can rest easy knowing that you’ve hired a knowledgeable and personable attorney to support you and your goals. Contact us today for a consultation.