Five Steps to Take Before Applying for a DOT Number

Thinking about starting a trucking company? Here's what to do before you start looking for a free DOT number.

Becoming an owner-operator can be a promising business venture for anyone interested in how to start a trucking company and ultimately be their own boss. But in order for the business to be successful, there are a few considerations to make even before applying for a free DOT number.

Here's where to start:

1. Decide on the right type of business entity and file it in your operating state
2. Choose whether your business will be participating in interstate or intrastate commerce
3. Consider if you want to run short or long haul
4. Determine what type of freight you're going to haul
5. Research the best commercial truck for your new business

Once you've made these decisions, then you can file a free DOT number with Foley.

But first, here's how you can work through all the above to start a trucking company.

Choose a Business Structure for Your Trucking Company

While there are multiple options when it comes to forming your business, the most common for trucking companies are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.

Sole proprietorships are owned and operated by one person, who is entitled to all profits, but that person is also responsible for all debts and liabilities. Partnerships offer the same elements, except they are owned and operated by two or more people.

If you choose to go the route of an LLC, you'll get the benefit of separating your personal liabilities from those belonging to the business. Single-member LLCs are taxed like sole proprietorships and multi-member LLCs are taxed like partnerships. Either way, your company's profits pass through to each of the members, and they pay income and self-employment taxes on their own shares. 

On the other hand, corporations are more structured in nature. Like LLCs, incorporating offers liability protection, meaning it's unlikely that you would be personally responsible for business debts or lawsuits. You can also add shareholders and gain funds from external investors. But corporations often require you to hold yearly shareholder meetings, file annual reports, and even issue written resolutions for significant decisions.

We highly recommend contacting a trusted accountant to help you decide what type of business structure would work best, then working with them to complete the process of filing and launching your new trucking company.

Decide Between Interstate & Intrastate Commerce

Very simply, the difference between intrastate and interstate commerce is:

• Intrastate - Staying within one state's borders
• Interstate - Crossing state or national borders

If you're starting a company that uses commercial vehicles but won't necessarily haul freight, like a garbage pickup or towing company, you may only need to operate within one state. You can also become an owner-operator and haul freight for companies within a single state. Staying within one state's borders typically means you need to follow fewer regulations as well.

But if you're planning on using commercial vehicles to haul freight across state lines and want to maximize your legal coverage area, types of eligible loads, and business opportunities, interstate commerce may be the right route for you.

Once you know where and how you're going to operate, you can then decide between short and long-haul trucking.

Consider Pros & Cons of Short v. Long-Haul Trucking

While you can change your mind down the line, it's best to decide if you're going to stay close to home or go over the road (OTR) while you're planning how to start a trucking company. The decision can impact what type of truck you purchase and the loads you secure.

If you're planning on sticking with intrastate commerce or simply want to avoid being away from home for days or weeks on end, short-haul trucking may be more appealing and realistic for your business. Short-haul carriers are considered those that travel 150 air miles or less by the Federal Motor Carrier Safety Administration (FMCSA). You can qualify for certain hours-of-service (HOS) exceptions as a short-haul carrier.

Long-haul trucking companies are ideal for those who want to participate in interstate commerce, experience traveling through numerous states or countries, and usually invest in trucks with sleeper cabs. Those going OTR still need to meet specific HOS regulations.

Have an answer to your desired hauling distance? Here comes the fun part: choosing a truck.

Research the Best Commercial Trucks for Your Business

The process of deciding on and purchasing your first commercial vehicle shouldn't be taken lightly. To help you do so, try answering the following questions:

• What's your budget?
• Can you afford a brand-new or used truck?
• Do you need a manufacturer's warranty?
• Should you finance or purchase a truck in cash?
• Do you need only a semi-truck or a tractor-trailer combo?
• Do you need a day cab or sleeper?
• Are you going to haul liquids or hazardous materials (HAZMAT)?

If you can answer these questions with confidence, it's easy to narrow down the best commercial truck for your specific business needs. Remember, your first truck should be reliable and affordable to ensure you can make the most profits as you're just starting out. Choose wisely!

Free DOT Number Filing with Foley

Once you've completed all these steps, you'll be ready to file a free DOT number. With Foley, applying for DOT numbers is quick, easy, and costs $0. Consider it another major milestone in how to start a trucking company!

And if you're stuck on any of the steps we've outlined above, talk to one of our DOT compliance specialists today. The Foley team is here to help smooth out the road toward becoming an owner-operator, small motor carrier, or business with its own fleet of commercial vehicles. Call us today or fill out the form below to get started!