How to be an Owner-Operator Truck Driver?
Does becoming an owner-operator seem like an exciting prospect to you? Before you head down this road, you need to know the nitty-gritty about this highly competitive industry.
Whether you are looking to lease your truck or planning to be a freight agent and manage other drivers under you, here is everything you need to know about being a successful owner-operator.
Do You Meet the Requirements?
First things first! You need to know if you have the necessary qualifications to become an owner-operator. Ask yourself if you are willing to handle all the responsibilities that come with the job. These include:
1. Applying for USDOT & MC Numbers
A USDOT number is mandatory in most states when operating a commercial motorized vehicle (CMV). Registration for a USDOT number can be done online by visiting the portal Unified Registration System and making a payment of $300.
If you plan to move commodities in your truck, you will need a Motor Carrier (MC) number. Map out a plan on what you wish to do as an owner operator to understand what needs to be done.
2. Heavy Vehicle Use Tax
If you own a heavy vehicle that weighs 55,000 pounds or more, you need to pay the HVUT tax and file IRS form 2290. You can e-file form 2290 electronically through an IRS approved e-filing service provider. Keep in mind that you must file form 2290 before the due date to avoid any penalties.
3. Intrastate Licensing Through State Driver Licensing Agency (SDLA)
You could use your vehicle for the following:
- Transport goods within a state but a part of the trip crossing state lines
- Transport goods between states and foregin countries
- Transport goods within the state but the freight begins or ends in another state
In any case, you will need to inquire with the SDLA to find out what information needs to be displayed.
4. International Fuel Agreement (IFTA)
The IFTA is an agreement that simplifies the quarterly fuel reports that truckers need to submit when operating multiple jurisdictions. If your vehicle meets the requirements, then you must display fuel credentials, place two decals on your vehicle’s exterior, and carry a copy of your IFTA license at all times.
Steps to Become an Owner-Operator
We’ve outlined the six simple steps that you need to follow to become a successful owner-operator.
Step 1: Decide The Type of Owner-Operator you Aspire to be
As an owner-operator, you should consider the following factors:
- What kind of freight do you wish to carry?
Some common goods carried by trucks include clothing, produce, building materials, vehicles, and hazardous substances.
- Are you willing to take up long hauls or short trips?
If the kind of goods you carry in your truck requires you to travel long distances, it would be best to evaluate the benefits and risks of driving long distances. Educate yourself on the health risks suffered by long-distance truckers and measures you can take to avoid them, and how you could make your journey safer and less tiring.
- How many hours are you planning to operate?
Understand how many hours you wish to operate in a day by factoring in the profits you could make from them.
Step 2: Evaluate the Pros and Cons
Becoming an owner-operator is exciting and must've crossed your mind multiple times. But before you make a decision, it's important to weigh the pros and cons. Being an owner-operator comes with pros such as independence to make decisions, flexibility to make your schedule, and greater profitability than truck drivers. But it also has cons such as more responsibility and stress and greater investment of time and startup costs.
Step 3: Obtain your Commercial Drivers License (CDL)
Getting your Commercial Driver’s License involves several steps. These include passing a DOT physical, figuring out the type of shipment goods you will be carrying in your vehicle, and answering the knowledge and road skills test.
Step 4: Invest Financially
Becoming an owner-operator involves dealing with hidden costs such as registration fees, license and endorsements, and 2290 tax. You will also have to make financial investments for maintaining your vehicle and equipment, insurance payment, and manage other costs such as loans and leases.
Step 5: Purchase a Truck
Carefully consider every aspect of your business and the purpose of your truck before making the purchase. For example, if you are planning to deliver and transport soft drinks and liquor, you need a heavy duty truck which has a long delivery trailer and roll-up doors. Similarly, a heavy duty hauling truck with a heavy duty hook and chain is used to haul heavy goods over a long distance.
Step 6: Obtain Insurance Coverage
If your coverage is limited, opt for additional coverage that includes non-trucking liability, physical damage, motor truck cargo, biohazard cleanup, and lease gap. You could also opt for liability insurance which covers property damage and bodily injuries to third parties when the driver is at fault. Bear in mind that whichever coverage you choose needs to be compliant with DOT regulations.
Start your Trucking Business the Right Way
The trucking industry is an elusive market. But with proper planning, you can reap all the benefits it has to offer. We hope that the above information was helpful for you in taking the first steps toward this new journey with the right information at your disposal. Good luck!