Becoming an owner-operator is an exciting step in your trucking career. You now have the opportunity to be your own boss, make more money, pick your own loads, and choose when you want to take time off. However, this type of career isn’t for everybody. There are many things you have to consider before making the jump from company driver to owner-operator. Here are five things all truck drivers should know before owning a trucking company.
Know how much it is going to cost
Starting a trucking company isn’t a cheap investment. There are a lot of upfront costs you’ll have to pay before you’re able to start driving. Some of these costs include the down payment on your truck, your license, plates, insurance, and permit fees. After these initial costs, there are other expenses you will face each month. These include fuel, maintenance, food, etc.
It is important you know how you are going to cover these costs before your business starts making money. The first six to 12 months will be difficult as you are trying to earn the money back that you spent on the initial investments.
One of the things ATBS does with each of their clients is help create a profit plan. This will help you keep track of both your business expenses and personal expenses. This way you will know how much money you’ll need to make each month to break even and make a profit.
The number one reason why new businesses fail is due to inadequate cash flow. Before you get started with your business, make sure you’re ready for this investment.
Know how you are going to be taxed
One of the biggest differences between company drivers and owner-operators is the way they are taxed. Many first-time owner-operators don’t realize they will have to start paying taxes on a quarterly basis rather than having taxes automatically withheld from their paycheck by an employer.
ATBS recommends that drivers set aside between 25 and 30 percent of their weekly income for quarterly taxes. This means you should keep all business receipts and documentation so that you are able to easily track your earnings. For more information about paying taxes as an owner-operator, check out this article from ATBS.
Know who your customers are going to be
When you start your own trucking company, chances are you will lease on to a carrier. This means they will provide you with potential customers rather than you having to go out and find them on your own. This doesn’t mean it’s still not important to know who your ideal customer will be.
First off, your customer will be determined by what type of operation you are. The type of customer a flatbed trucker will be delivering to will likely be different than that of a dry van driver. When you know your operation, you will know who your typical customer is going to be.
You will also want to determine how you can create value to your customer. Know what you do best and use that to your advantage.
While being leased on to a carrier, you may have little control over the rates. However, you are able to determine other things about your operation that make you stand out from the crowd. When you have decided how you are going to be unique, you will be able to find, and keep, customers who like how you operate your business.
Know the rules you have to comply with
Before you get started as an owner-operator, you’re going to need to know the rules and regulations you’ll need to comply with. Your truck must meet CSA safety standards in order to keep your business from being shut down.
Each driver is required to have a working Electronic Logging Device (ELD) in their truck. This will help you keep track of your Hours of Service each week. Finally, the CSA has a list of physical qualifications you must pass in order to qualify as a fit driver. It is necessary for any owner-operator to know all of these rules and regulations before they begin driving.
Know that trucking is a lot of hard work
Trucking is a lot of work. That’s not much of a secret. You spend a majority of your time behind the wheel, and when you’re done for the day all you want to do is relax. But as an owner-operator, you’re also a small business owner. That means no matter how tired you might be, you still have a business to run.
Outsourcing some of the day-to-day tasks will help reduce your workload and allow you to focus on what you love...driving your truck. ATBS has helped over 150,000 owner-operators with their accounting, bookkeeping and tax preparation. If you’d like to learn more about how we can help you get your business off on the right foot, give us a call at 866-920-2827.
This article was originally featured on ATBS.com.