If you’ve got the vision and desire to start a trucking company, now is the time to make that vision reality. Starting any new business can be expensive and time-consuming. You don’t want to get overwhelmed by the paperwork and documentation before you even pick up a load.
That’s where CNS can help! As a leader in the trucking industry, we’ve helped many trucking startups and know what makes new companies successful. We’ve outlined the basic steps you’ll need to take to start a trucking company.
Our specialists can help you avoid getting bogged down in forms, because we take time to learn about your operation and help you become DOT compliant from the start. We won’t over-sell unneeded items or services that don’t ultimately help you get your business on the road.
Let us help you get started.
Step 1: Make a Detailed Financial Plan
A solid business plan will list expenses and revenue expected in your business. Be sure to include your own salary. Costs involved in a trucking startup include tractors, trailers, licensing, and registration costs. Also include the cost of insurance, and data tracking software and services.
The U.S. Small Business Administration website has downloadable templates to create your own business plan.
Step 2: Decide What Kind of Company You Want To Form
You may want a sole proprietorship, a partnership, or a limited liability company. Each of these has pros and cons, which vary by state.
To own and run a private company in the United States, you’ll need to form a limited liability company (LLC). This is a business structure that combines pass-through taxation (like a partnership or sole proprietorship), with the limited liability of a corporation.
CNS can prepare and file your LLC application with your home state. Or if you want to start a partnership or sole proprietorship, click here.
Step 3: Obtain a Federal Employer Identification Number (EIN)
This unique nine-digit number gets assigned to businesses in the United States by the Internal Revenue Service. Use this number to file your business tax returns.
CNS can obtain your EIN on your behalf. Click here to begin obtaining a Federal EIN.
Step 4: Become Compliant with Trucking Safety Regulations
- Obtain a USDOT Number
First be sure you even need a USDOT number. Obtaining a USDOT Number can be confusing and costly. Here’s where CNS can help by getting your number quickly and accurately. Click here to learn more.
- Obtain a Motor Carrier Operating Authority
Companies are required to have interstate operating authority (MC Number) in addition to the DOT Number if they do any of the following tasks:
- Operate as for-hire carriers (for fee or other compensation)
- Transport passengers in interstate commerce (or arrange for their transport)
- Transport federally regulated commodities in interstate commerce (or arrange for their transport)
CNS can file for your MC Number at the same time we apply for your DOT Number.
- File a BOC-3
A BOC-3 is a required United States filing that activates your Motor Carrier Authority. This filing assigns legal agents in the event court papers ever need to be served to your company by an outside state. It is required before federal operating authorities can be granted in the U.S.
CNS, unlike many of our competitors, does not charge an annual fee for a BOC-3 filing.
- Know the Heavy Use Tax (HUT) States
You may need to apply for further credentials if your company drives in the following states:
- New York
- New Mexico
- Plan to File Heavy Highway Use Tax (2290)
A trucking startup needs to be aware of special tax codes and procedures in accordance with State, District of Columbia, Canadian, and Mexican law. When a vehicle has a taxable gross weight of 55,000 pounds or more, the company has to electronically file a HVUT Form 2290.
Once this is filed, you will need to get a stamped copy of your Schedule 1. Companies are required to file all taxable highway motor vehicles registered in your name during the tax period when the truck first operated.
CNS can file your Schedule 1 with the IRS and provide you a stamped E-File copy. Click here to learn more.
- Secure a Unified Carrier Registration (UCR)
The Unified Carrier Registration (UCR) program requires ALL carriers (private, exempt, or for hire) to register their business with a participating state and pay an annual fee that is based on the size of their fleet.
Brokers, freight forwarders, and leasing companies also are required to register and pay a fee, unless they are also operating as a motor carrier.
CNS can complete your UCR filing after you obtain your DOT number. Click here to learn more.
- Get an International Fuel Tax Agreement (IFTA) Sticker
This agreement is between the lower 48 states and Canadian provinces and it simplifies reporting of fuel use by motor carriers operating in multiple jurisdictions. Alaska, Hawaii, and Canadian territories do not participate.
An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle. The carrier files a quarterly fuel tax report. This report determines the net tax or refund due and redistributes taxes from collecting states to states where it is due.
- Obtain an International Registration Plan (IRP) Sticker
This registration gives reciprocity between the United States and Canada without the need for additional registrations. Under this Plan, only one license plate and one cab card is issued for each fleet vehicle.
Step 5: Become Compliant with the FMCSA
Great job! Taking these steps gives you DOT and Operating authority. Now you need to become compliant with the FMCSA. These items need to be maintained through the year.
CNS has reliable, cost-effective packages that keep you compliant and up-to-date.
Step 6: Obtain the Correct Insurance
Different types of insurance are available and often required to cover certain aspects of your trucking company.
- Primary Liability – After applying for an MC Number, you will need to post liability insurance with FMSCA. You must carry at least $750,00 in primary liability coverage to cover damages or injuries from at-fault accidents.
- Cargo Insurance – This insurance covers damage to the freight and/or theft.
- Physical Damage – Provides coverage for truck damage when you are not liable.
- Non-Trucking Use (Bobtail) – Covers liability in accidents that happen when you’re not hauling a load for someone else.
CNS partners with premiere truck/passenger insurance agencies to obtain the best coverage at affordable rates. Click here to learn more.
Step 7: Use a Driver Qualification File (DQF) Service
Trucking companies need to keep impeccable records in the event of an audit. Physical or electronic driver files allow you to pull an MVR report, look at previous employer inquiries, PSP reports and more.
CNS has solutions to keep your Driver Qualification Files up to date with regulations and ready to help you pass an audit. All of our driver files are monitored by actual DQF specialists to ensure documents don’t expire. We communicate personally about soon-to-expire materials to avoid computer overlooks. Click here to learn more.
Step 8: Join the Mandatory Drug and Alcohol Consortium
Anyone holding a Commercial Driver’s License needs to have a pre-employment drug test and be enrolled in a DOT drug and alcohol consortium.
CNS offers a low-cost, DOT-compliant service that covers DOT random testing through the year. Our service gives you a secure portal to track test results. We also have personal representatives to call when you have questions. Click here to learn more.
Step 9: Install a Compliant Electronic Logging Device
Per a 2017 Electronic Logging Device mandate, non-exempt carriers are required to install an FMCSA-registered and compliant electronic logging device.
Today’s ELDs can actually help you grow your business. ELDs offer many fleet management features like diagnostic tools and advanced reporting. With their reports, you can maximize your fleet efficiency and simplify your operations.
Step 10: Make Your Trucking Startup a Reality
We at CNS are excited for your new venture to become reality. We’re here to help you navigate the path towards starting a trucking company.
Our services and compliance specialists are on hand to get you up and running as quickly as possible.
What can fleet managers do to encourage positive driver behavior?
Since most interstate trucking companies were required to add electronic logging devices (ELDs) to their trucks, back-office management has been given an opportunity to better manage their vehicles and drivers when it comes to violations, driving habits, audits, maintenance, and more.
ELD or telematic data management for trucking, construction, distribution industries, or corporate fleets should be formatted to highlight both efficiencies and deficiencies in simple customizable reports.
The best-practice telematics data management plan will measure the data over time to show trends and measure results. This is as simple as a Driver Scorecard for your fleet.
Create a Driver Scorecard from ELD data
ELDs gather millions of data points that include dates, time, longitude, latitude, engine power status, odometer, engine faults, critical events data, harsh braking, hard turning, hard acceleration, HOS violations, idling, speeding, and more.
Many ELD providers, including our partner Pedigree Technologies, have created driver and safety scorecards that are easy to set-up, manage, and pull reports.
For example, Pedigree driver and safety scorecards include stats, such as:
- # of HOS violations
- Idling > 20min
- Idling %
- Hard Braking event
- Speeding > 5mph
- Fuel Efficiency
- Heavy Acceleration event
These scorecards are point-based starting at 100 points and any selected stat can remove a certain amount of points based on the severity of the stat you are including in the scorecard. They can be customized further by adding a timeframe duration of the stat or distance traveled.
For example, a driver can lose 15 points for every time a hard-braking event happens every 100 miles, or a driver can lose 5 points for any Hours of Service Util. % is under 75% per day.
Scorecard reporting can be customized by timeframe (the previous 7 days or month), selected vehicle or vehicle types (semi/long-haul trucks, medium-sized trucks, construction vehicles, etc), and more.
The Pedigree ELD reporting tool also shows if the driver has performed better or worse over the previous week or month.
Does your ELD provider offer similar reporting tools? If not, learn more about Pedigree Technologies.
Use telematics data for customized video training
Using the telematics reports or driver scorecards can highlight which drivers are struggling in a given area.
For example, the driver scorecard can highlight a habit of hard acceleration and hard braking for one driver, while another driver has a habit of various HOS violations.
These red flags can immediately give the driver a defensive driving, fuel efficiency, HOS regulations, or driver ELD training in their video training schedule.
Customized training should also be measurable using quiz assessments to track driver performance and the ELD driver scorecard can be monitored for improvement after the training was completed. If their training assessment score is low or the habit continues, then the training needs to be retaken or a driver performance review could be scheduled.
Using telematics for driver incentive programs
Implementing ELD data management offers a range of cost-savings to your fleet, including decreased HOS violations and fines, decreased time spent by management monitoring driver behavior, decreased driver turnover or improved driver retention, and decreased risk of crashes and possible lower insurance premiums.
These savings can be given back to drivers through a driver incentive program.
Creating an incentive program around positive behavior has been shown to work for many fleets. Have your team discuss the various behaviors you want to reward and be creative on different ways to reward the good behavior.
For example, if a driver consistently has a great driver scorecard, or has shown improvement over time, the driver can receive a $50 gift card or add an hour of vacation time. The ideas here are endless.
Even a small investment to the driver’s benefit can go a long way.
If your fleet has a disciplinary policy, you can use the driver scorecard to measure clear expectations while drivers are on the road and what steps will be taken should a driver diverge from the policy.
Need help managing your ELD data?
Managing ELD data yourself can be confusing and stressful, and requires a much different back-office skill set than managing paper processes.
However, it does not have to be.
Whatever ELD system you have, we can manage it for you so you can start taking advantage of your ELD data.
What are CSA scores?
CSA stands for compliance, safety and accountability. CSA scores are a system used by the Federal Motor Carrier Safety Administration (FMCSA) to identify high-risk motor carriers.
How are my CSA scores calculated?
Your CSA scores are based on multiple factors called Behavioral Analysis and Safety Improvement Categories or “BASIC” categories. Roadside inspection violations, as well as investigation results, fall under 1 of 7 categories, including:
- Unsafe driving – moving and parking violations, such as speeding, improper lane changes, no seatbelt, cell phone/handheld device use, improper parking, etc.
- Crash indicator – DOT reportable crashes (injury, towaway or fatality)
- Hours of Service (HOS) compliance – falsifying your record-of-duty status, inadequate paperwork for ELD, driving, on-duty and rest break violations
- Vehicle maintenance – mechanical issues and not making required repairs
- Controlled substance/alcohol – driving under the influence
- Hazardous materials compliance – unsafe or incorrect handling and/or documentation of hazardous materials, including improper or inadequate placards
- Driver fitness – Unfit to drive due to physical health or lack of training (sickness, no medical card, driving a vehicle you are not qualified to drive (i.e.- tanker with no ‘N’ endorsement, etc.)
Each time you get a violation, depending on the category and severity of the violation, points are added to your CSA scores, and range from 1 to 10 (less to more severe).
The “safety scale percentages” (CSA scores) in each category are compared to other motor carriers with similar registration information and range from 0 to 100 percent. You want your percentage or CSA score to be as low as possible. For example, a 5% score in “vehicle maintenance” means that your company is safer than 95% of motor carriers on the road.
The chart below lists some of the top unsafe driving violations that will affect your CSA scores.
|Driving a CMV while texting||10|
|Speeding: 15+ mph over limit or in construction zone||10|
|Speeding: 11-14 mph over limit||7|
|Driving a CMV without a wearing a seatbelt||7|
|Failing to obey a traffic control device||5|
|Following too close||5|
|Improper lane changes, turns, or passing||5|
|Failing to yield right of way||5|
|Having or using a radar detector||5|
|Speeding: 6-10 mph over limit||4|
|Having unauthorized passengers||1|
Insurance premiums are a major contributor to trucking companies having to close their doors. As premiums increase, they will eventually get to the point of being unaffordable, causing many trucking companies to go out of business.
For this reason, it is important to note that receiving a warning for one of the above violations can still affect your insurance premiums. Just because you did not receive a ticket does not necessarily mean you are in the clear. In other words, a driver vehicle examination report, which is what an officer uses to report CSA violations, can be issued without a citation.
What do my CSA scores mean?
Your CSA scores are used to identify you as a safe driver or a high-risk driver, which can help or hurt you and your carrier in several ways.
- Insurance rates – The higher your CSA scores, the higher your insurance premiums, and the lower your CSA scores, the lower your insurance premiums.
- DOT audits and roadside inspections – The lower your CSA scores, the fewer compliance checks you will have, including DOT audits and roadside inspections.
- Clients – CSA scores are public and can be seen by current or potential clients. If you want to maintain or grow your client base, keep low CSA scores.
- Drivers – Having good CSA scores can help you retain current drivers and recruit new drivers. Good drivers want to work for a company that is safe.
How to check my CSA scores?
The FMCSA’s Safety Management System (SMS) website makes all data available and is updated on a monthly basis. To check the full details of your CSA scores, you will need your DOT number and your DOT pin number. This allows you to see “ALERTS,” which are a determining factor of FMCSA audit selections and are issued when a percentage score is over the limit for what the FMCSA considers safe.
Without your DOT PIN number, you cannot see percentage scores or ALERTS, as this information is not public, only the “raw data” is public. Your PIN is on the top left of your “New Entrant Audit” letter from the FMCSA. If you have this letter, it is important that you write down the DOT PIN.
If you do not know your DOT PIN number, contact us and we can retrieve it for you from the FMCSA for a very small fee.
If you drive under your carrier’s DOT number, your CSA score and any violations would be under their DOT.
How can I lower my CSA scores?
You can improve on your CSA scores by putting a system in place to check the BASICs regularly. Determine what categories you need improvement in and put training in place to improve in those particular areas.
Roadside inspections with no violations also cause your scores to lower faster. Violations will reduce in “severity” after 6 months, 13 months, and then are removed from your CSA record completely after 2 years.
If your CSA score is low, you can maintain it by hiring drivers with good PSP scores (the FMCSA pre-employment screening program, includes MVR information and all CSA violations a driver has had for 3 years), providing adequate on-board and recurring training, internal inspections, regular preventative vehicle maintenance, using an ELD solution to avoid maintenance violation, and consequences to drivers who receive violations.