Steps to Start a Trucking Company in Tennessee
Do you need to know what are the steps to start a trucking company in tennessee? Next, we explain everything you need to take into account to start your business. Although it can be intimidating, the statistics are promising.
The logistics industry in the United States is highly integrated, linking producers and consumers through different forms of transportation, including trucks. Most of the goods consumed in the country are transported by trucks at some point. According to the US Department of Transportation, there have been 813.440 private carriers hired since February 2021.
It can be divided into three main sectors: full load (FTL), less load (LTL) and courier. Another encouraging fact is the size of the market, which has grown 1.6% annually. It went from $193.210 million in 2020 to 196.340 in 2021.
Meanwhile, the number of companies in the cargo market grew from 5.742.100 in 2018 to 6.389.000 in 2021. 91.5% of truck carriers in the United States work with six trucks or less, which means that the majority are small businesses. It is a very competitive area as there are no great barriers to enter it.
Sectors that depend on a trucking business
The most important sectors that depend on road transport are: Agricultural products (82,7%), dairy, fruits, vegetables and nuts (92%), pharmaceuticals (65%), wood and wood products (91.9%).
The biggest challenge trucking companies face is a driver shortage that has been exacerbated by increased shipping demand. Likewise, the increase in autonomous trucks has led to a change in the way the industry operates.
The trucking business is growing after the 2020 recession and the covid-19 pandemic. By 2030, it is estimated that the job growth rate will be 6% to be on par with the rest of the occupations.
According to the Tennessee Trucking Association in 2020, companies in the state generated 208.200 jobs. The average annual salary was $47.801. On the other hand, 90.5% of the communities in the state depend on trucks to move their merchandise..
It has geographical advantage to the state located between Kentucky and the Gulf Coast states, connecting the eastern coast of Virginia with the Mississippi River and Arkansas. In addition, several routes run to Gulf Coast ports to the south, and interstate highway junctions offer open routes to the west of the nation.
Steps to Start a Trucking Company in Tennessee
1- Write a business plan
It is advised that you develop a business plan to be a roadmap to the success of the company. This is perfected as it grows. The plan helps to organize, identify objectives, articulate the value proposition and identify possible problems.
2- Register the company with the state
Then legalize the business. Choose an appropriate structure, the most common in these cases are corporations and Limited Liability Company (LLC) that separate personal assets from the business.
Prepare paperwork, check name availability, appoint a registered agent, and file Tennessee articles of incorporation. You must do this in the Secretary of state.
3- Request the EIN
Next, apply for the Federal Tax Identification Number (EIN) at the IRS and register with the tax identification department from the state of Tennessee. This will help you open business bank accounts and stay current on federal and state taxes.
4- Get the licenses and permits for trucking companies
Get the business license and those required by the industry. Trucks must be inspected to receive the inspection tag or report that must always be on the vehicle.
They evaluate the brake system, coupling device, fuel system, lights, steering, suspension, tires, windshield, etc. The driver is required to have commercial driver's license and a health card that shows that you are in optimal physical condition to drive this type of vehicle.
Ask for the number of United States Department of Transportation (DOT Number). Through this they collect and monitor safety information, inspections, accident investigations, among others.
Likewise, the company must comply with the Unified Registry of Carriers (UCR) and pay annual fees according to the size of the truck fleet. The objective of this step is to validate active insurance coverage in the states where the service is offered.
As with the International Registration Plan (IRP), said registration can be completed in the Tennessee Taxpayer Access Point (TNTAP).
Register it before the Intrastate Authority also in the TNTAP. Additionally, heavy vehicle use tax or HVU must be paid if the vehicle equals or exceeds 55.000 pounds by completing the form 2290. With the proceeds, the government finances programs and road improvements.
How to work in all US states
To operate in all states, the District of Columbia and Canadian provinces that border the United States, it is necessary to belong to the International Fuel Tax Agreement (IFTA). The idea is to simplify the reporting of fuel use by carriers working in multiple jurisdictions. Presentations are made every three months.
Another requirement is the Appointment of Agents for Notification of Processes that assigns an agent to whom documents of a legal process facing the business are delivered. They demand to appoint one in each state in which it works and makes contracts.
Be aware that the US Department of Transportation mandates drug and alcohol testing of drivers. Real-time program violation information is provided to trucking companies and government agencies. These data are requirements to process the license and insurance. You can get more information at: https://clearinghouse.fmcsa.dot.gov/FAQ/Topics/General.
Remember that Tennessee law regulates a wide variety of aspects of the trucking industry. For example, it states that commercial trucks cannot weigh more than 80.000 pounds. Nor be more than 8 feet wide, nor more than 13 feet 6 inches tall.
In the event that the trucking company needs a permit to exceed the legal limits, it has the option of requesting it at the Oversize and overweight permit office. Finally, get commercial insurance that will be essential to start the job.
5-Look for financing
Equipment financing loans are ideal for buying used or new trucks or for upgrading the ones you already own. Qualifying for these is easier because the vehicles are used as collateral for the loan.
Look for alternative lenders that specialize in transportation financing. Similarly, there is the alternative of leasing. Be careful with finances, most trucking businesses fail because costs outweigh revenue. If you organize this aspect well, your idea will be profitable.
6-Create a website
Businesses need a website to publicize their services, make their contact numbers available, and ensure the business is legitimate. Inspire confidence among potential customers. Complement this channel by creating the brand's social networks and carry out a promotional campaign to attract customers.
Take advantage of the driver shortage, the industry's need for innovation, its ease of scaling, and its strength in the face of recession to start your trucking business in Tennessee. If you want to know details of the process in other states, we invite you to read our article how to open a trucking company in washington
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