Advice for a newbie
- Thread starter Nichole
- Start date
This article answers your question.
You do not need to register with the state to be an independent-contractor truck driver. If you choose to do business under a name that is not your own (an assumed business name or a doing-business-as -- d/b/a -- name), and if your state requires you to do so, you will register that assumed name with the state.
Doing so does not have any impact on the business form you choose (proprietorship, partnership, LLC, corporation) or change any licensing requirements that may apply to you (CDL, endorsements). Registering an assumed name simply makes it an item of public record that you, the person, are doing business under that assumed name.
When Diane and I were in the business, we operated as a sole proprietorship under the business name North Star Freight Services. We were the licensed drivers. We earned the income. We paid the taxes. When we opened a bank account for the business and wanted the account to reflect the business name, the bank required us to register the business name with the state.
In a sole proprietorship, there is no financial advantage or significant financial consequence in registering a business name (though you will pay the registration fee and the cost of advertising if your state requires you to publicly advertise a notice of assumed name). We set up the business name simply because it seemed more professional to hold ourselves out to the marketplace as North Star Freight Services than as Phil and Diane. Naming the business also made it possible to maintain continuity of the business identity if we later decided to take on partners or otherwise change the business form and/or the type of services we offered.
Note that the business name decision is different than the business form (structure) decision. You can learn more about business form (structure) here.
You do not need to register with the state to be an independent-contractor truck driver. If you choose to do business under a name that is not your own (an assumed business name or a doing-business-as -- d/b/a -- name), and if your state requires you to do so, you will register that assumed name with the state.
Doing so does not have any impact on the business form you choose (proprietorship, partnership, LLC, corporation) or change any licensing requirements that may apply to you (CDL, endorsements). Registering an assumed name simply makes it an item of public record that you, the person, are doing business under that assumed name.
When Diane and I were in the business, we operated as a sole proprietorship under the business name North Star Freight Services. We were the licensed drivers. We earned the income. We paid the taxes. When we opened a bank account for the business and wanted the account to reflect the business name, the bank required us to register the business name with the state.
In a sole proprietorship, there is no financial advantage or significant financial consequence in registering a business name (though you will pay the registration fee and the cost of advertising if your state requires you to publicly advertise a notice of assumed name). We set up the business name simply because it seemed more professional to hold ourselves out to the marketplace as North Star Freight Services than as Phil and Diane. Naming the business also made it possible to maintain continuity of the business identity if we later decided to take on partners or otherwise change the business form and/or the type of services we offered.
Note that the business name decision is different than the business form (structure) decision. You can learn more about business form (structure) here.
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Which direction have you decided to go? Readers will be able to offer better travel tips (so to speak) if they know where you are headed.
A general thought:
It is often said that expediters should treat their business as a business, and most expediters would agree with that statement and may even say of course they do that. But do you really? What does it mean exactly to treat your business as a business? That question is not so easy to answer if you have never owned and operated a business before.
The trick is to separate yourself from the business and view the business as if you were another person or as if you were looking at the business from afar. Imagine that you are not looking at your business but at another expediter's business. If you were evaluating another expediter's business, like a banker or accountant or business consultant would, you would look at that person's time management, work habits, ongoing business skill development, bookkeeping practices and, of course, the books and records of the business itself.
Even if you operate a sole proprietorship, it's not about how you are doing, it's how the business is doing. It's not about how you feel or what you believe about how other people (dispatchers, shippers, EO forum participants) treat you. It's about the health of the business. You gauge that by looking at your business numbers (tax returns, operating costs, % of time in service, etc.).
There are expediters that will argue otherwise, but I suggest the most important number of all is the bottom line on your personal balance sheet. At the end of the reporting period (generally a year, more often if you wish), did your business revenue and expenses add to or detract from your personal net worth?
If a team was in business for say three years and that team's net worth stayed even or declined in that time, is that a business you would buy? Is that a business you would recommend the team continue?
Treating your business like a business is about the numbers. It is not about the emotional rewards of seeing the country or spending time together (two of Diane's and my reasons for getting into expediting). Expediting is a for-profit business and it should be treated as such if you want to improve your financial lot in life.
Well have decide to drive for an owner as a team. My husband will go out first as a co driver and learn the ropes for a truck that runs for Panther. After he successful does that I will join him by that time and we will run as a team. We are thinking in 3.years, if everthing is looking good finacially then maybe buying a truck. At that time we will run I am thinking as an LLC. We do have a name that we choose to use so dba will be done also. I intend to track all our profit and losses thru Profit Gauges to helps us watch our numbers and the bottom line. We hope to eventually have two trucks so that my sister and her husband can run for us as an independent contractor, while we are still out running ourselves. I have not work out all the details but I know a business plan is needed to help keep us along those guidelines and add or change as we need to. Since I consider a business like a life, it grows and changes with time. But the foundation will be there. I know its going take time and that we have. We dont have to be at home like that and we would prefer to be out two to three months then come home for a week but that also depends on how busy we are since trucking has it ups and downs times . I believe our plan is attainable and that we can successful achieve it. We also too, would love to have that time together and do some traveling while making money. After 23 years in the healthcare field then have to sit for awhile due to a injury (it will not interfere with me obtaining a medical card) I am ready to do something I have dream of but never thought was attainable, truck driving. My husband has been over the road for some years and he loves traveling. So we are fortuanate to have the same dream. Thanks again for the reply and we look forward to more advice.
When Diane and I were in the business, I wrote some pieces for ExpediteNow magazine, including a series entitled Business Planning for Expediters. Some of the material may be dated by now but you can still see it online by clicking the link. I did not finish the series (stopped writing, left the business), but you may find what's there to be useful.
Be careful to note an important difference between then and now. All expediters who were in the business then and remain in it now report that revenue has dropped. Expediters don't make the kind of money they used to. You can see that by noticing how sleeper size on custom trucks has declined in recent years and how the number of custom trucks has declined as well.
Diane and I saw the revenue decline coming. When it became evident that our business could not maintain its current level of profitability and fund a replacement truck at the same time, we got out. We were not willing to give up a very comfortable ride (custom sleeper, shower, full kitchen, lots of closet space, etc.) to maintain profits, and we were not willing to give up profits to continue in a very comfortable ride. While we built a 10-year truck, it would have to be replaced eventually. With revenue declining and new-truck prices seemingly skyrocketing, ten years on the road became enough.
I mention this not to discourage you from getting into expediting. I only mention it because the background financial assumptions I had when writing the business planning series may not be valid today. Back then, I assumed the money would be there to run a spectacular truck and put money in the bank too. That is not a correct assumption today. We spend $250,000 to build our truck. It would easily cost over $300,000 to build that same truck today.
Read the pieces with that in mind.
Be careful to note an important difference between then and now. All expediters who were in the business then and remain in it now report that revenue has dropped. Expediters don't make the kind of money they used to. You can see that by noticing how sleeper size on custom trucks has declined in recent years and how the number of custom trucks has declined as well.
Diane and I saw the revenue decline coming. When it became evident that our business could not maintain its current level of profitability and fund a replacement truck at the same time, we got out. We were not willing to give up a very comfortable ride (custom sleeper, shower, full kitchen, lots of closet space, etc.) to maintain profits, and we were not willing to give up profits to continue in a very comfortable ride. While we built a 10-year truck, it would have to be replaced eventually. With revenue declining and new-truck prices seemingly skyrocketing, ten years on the road became enough.
I mention this not to discourage you from getting into expediting. I only mention it because the background financial assumptions I had when writing the business planning series may not be valid today. Back then, I assumed the money would be there to run a spectacular truck and put money in the bank too. That is not a correct assumption today. We spend $250,000 to build our truck. It would easily cost over $300,000 to build that same truck today.
Read the pieces with that in mind.
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I don't think it is necessary for you to wait for him to learn the ropes. He already has OTR experience. When Diane and I began, neither one of us had any truck experience whatsoever. The motor carrier we started with (FedEx Custom Critical) required us to take a special road test with one of their approved driving instructors to verify we could drive a truck. The ink was still wet on our Class B CDL's. We had never even seen a loading dock close up.
After we completed our first run, and because we had coaching from our fleet owner, we knew a good share of what an expediter needs to know. After three runs, we had the paperwork mostly mastered. Road knowledge and a sense of business flow comes with time on the road. Waiting for one of you to acquire it before the other jumps in would do you little more good than if you both jumped in together; especially since your husband already knows a fair amount
We did not even know how to buy fuel at a truck stop when we started, and at that time, the carrier prohibited new fleet drivers from attending orientation. Back then, it was the fleet owner's job to train the new drivers. That changed years later and we were forced to attend orientation. It was kind of funny to us that when we really wanted and needed to go, we were prohibited, but after we had no need to go, we were required.
Your carrier's orientation and your husband's experience will give you a better start than we had. There is no good reason for you to hang back, especially with the business management skills you would bring to the truck.