12 Steps to Starting an Owner-Operator Trucking Business

With the freedom to set your own schedule and great money-making potential, starting an owner-operator trucking business is an exciting venture. 

This guide provides the essential steps to help you launch your business. Whether you’re an experienced driver or starting out, jump-start your independent trucking career with these tips.

What is an owner-operator in trucking?

Owner-operators are independent drivers who operate and own their own trucking business. They might have regular shipping clients or use tools like the Truckstop Load Board to find work.

An owner-operator leases or owns their trucks and equipment. Many drive a single rig, but some have multiple trucks and employ other drivers.

Owner-operator vs. own authority

A trucking authority permits you to operate commercial vehicles for freight transport. If you’re a company driver wanting to go solo, consider obtaining your own authority. Having your own authority gives you the freedom to make your own decisions, but it requires business savvy. You will have all the responsibilities of owning and running a company.

Another option is becoming an independent contractor owner-operator. In that case, you own your truck but work under larger carrier operating authorities. Make sure you understand the benefits and challenges of both before you decide. 

Owner-operator vs. company truck driver

Owner-operators are self-employed and choose their own jobs. Company drivers work for a carrier that assigns jobs and pays them. In the United States, most truck drivers are commercial, while around 16% are independent owner-operators.

Both career paths are great ways to earn a living, but here are some differences:

• Equipment: A company driver uses equipment owned by their employer. An owner-operator owns or leases a truck and other equipment they need for the job.
• Dispatch: The company dispatcher assigns loads to a company driver. Owner-operators find and choose the freight they haul. They might look for spot market insights or lease freight with a trucking company. Many use load boards like Truckstop, which makes finding loads fast and easy.
• Operations: A company driver picks up and delivers loads assigned by the company. Owner-operators handle all small business operations. Tasks include finding and hauling freight, bookkeeping, paperwork, and finances.
• Expenses: Company drivers’ employers cover the cost of fuel, truck maintenance, repairs, and insurance. Owner-operators are responsible for all expenses of owning and running a trucking operation.
• Earnings: A company driver gets paid by the mile. They might receive a raise, bonus, or compensation for duties other than As business owners, owner-operators make money by negotiating rates with brokers. Brokers determine rates on a load-by-load basis or payment terms set by a contract.

How to start an owner-operator trucking business

Many owner-operators transition from company driving. However, you don’t need previous experience to start your own trucking business. Both jobs use the same driving knowledge and skills. Before starting the path to becoming an owner-operator, do the following.

Consider the owner-operator lifestyle.

Becoming an owner-operator is more than a career. It’s a lifestyle. Over-the-road (OTR) truckers might spend weeks on the road away from home. That makes it a difficult career choice if you’re a single parent or if you’re caring for an older family member.

As an owner-operator, you also don’t have the built-in resources of working for a large company. Be sure you’re ready to take on the responsibility of driving and running your own business. Unless you outsource, you must handle everything from invoicing to regulation compliance.

Take a look at your finances.

Before diving in, do your homework. Some of the expenses include:

• Licenses and permits
• Legal fees
• Insurance
• Living expenses
• Fuel and International Fuel Tax Agreement (IFTA) reporting
• Purchasing or leasing a truck and equipment

Building up emergency savings before you start your business is a good idea, especially if you have a family that depends on your owner-operator income. This creates a safety net if you have slow months or it takes a while to get regular loads.

Use a financial spreadsheet to determine how much you’ll need to make each month to cover expenses and put money in your pocket. You’ll have to estimate how much you can earn on your routes, so use low estimates to be safe. 

12 Steps to becoming an owner-operator

Ready to become an owner-operator? Here are the steps you need to take.

1. Create a business plan.

A business plan establishes how you will run your business. Financial institutions, investors, or partners will want to see this plan if you need funding. Most business plans include the following components:

• Executive summary: Write a short description of what your business does, who the business serves, and any features that set you apart.
• Company description: A company overview tells a story. Here’s where you give your mission statement, history, and objectives. Describe your long-term vision for your business.
• Market research: You must demonstrate knowledge of the trucking industry and your target market. Identify and analyze your competitors to see if you have a competitive edge.
• Service offering: Focus on the benefits, process, and details of the services you offer.
• Sales and marketing: Your marketing plan should include details about how you intend to find business. If you have a website, are active on social media, or belong to any networking groups, add them here. You can also add that you intend to find trucking loads on load boards.
• Financials: Include budgets and a financial plan.
• Organizational structure: List management and any employees. Make sure to highlight their expertise. 
• Funding requirements: If relevant, outline how much money you need to fund your business. Decide between equity or debt financing and explain what you’ll use the money for. 

2. Get a commercial driver’s license (CDL).

A valid commercial driver’s license (CDL) is crucial to becoming a truck driver. It can be a little more complicated than getting a regular driver’s license. Here’s a quick breakdown of the steps:

1. Get a CDL manual: Visit your local transportation website to get a CDL manual and check the state’s testing skill requirements. 
2. Obtain necessary endorsements: The driving you do may have special endorsements or restrictions. For example, hauling hazardous goods requires an extra knowledge test.
3. Decide on your license type: The type of CDL you need depends on what commercial vehicle you plan to drive. Choose between Class A (combination vehicles), Class B (heavy straight vehicles), and Class C (small vehicles). 
4. Get a commercial learners permit (CLP): A learner’s permit allows you to drive a truck accompanied by someone with a CDL. 
5. Complete entry-level driver training (ELDT): You must complete driver training before taking the CDL exam. You can find trainers on the Federal Motor Carrier Safety Administration (FMCSA)
6. Get a medical examination:Class A truckers driving across state lines need a medical examiner’s (ME) certificate before taking the exam. 
7. Take the CDL exam: The exam includes vehicle inspection, basic controls, and road tests. Check your state’s transportation website for any extra testing requirements. 

Once you have your CDL, you can legally drive a heavy commercial motor vehicle as a company driver or owner-operator.

3. Establish your business.

Per federal regulations, you must form a legitimate business as a legal entity to run your company. First, choose a company name that represents your business. Then, search your state’s secretary’s website to see if the business name is available. You’ll then need to decide on a business structure. If you’re on your own, you’ll likely create a sole proprietorship or a limited liability company (LLC):

• Sole proprietor: You make every business decision without input from a partner or board of directors. You have sole responsibility for all the business’s financial and legal aspects. If your business faces a lawsuit or you haveddebt issues, your personal assets may be at risk.
• Limited liability company: This separates business and personal liability to protect your personal assets. 

Other business structures include partnerships and corporations. Once you decide on a business structure, complete the application and pay the registration fee to submit it.

4. File for your U.S. Department of Transportation (USDOT) number.

Identify yourself as a carrier operating in interstate commerce with a USDOT number. You can apply for your USDOT number through the FMCSA website. Processing can take up to 30 days.

5. Get your trucking authority.

A trucking authority assigns you a motor carrier (MC) number to identify you as a commercial transporter. Your trucking authority gives you the freedom to choose your jobs and be your own boss. Keep in mind that the FMCSA plans to phase out MC numbers sometime in 2025. You’ll still need a trucking authority, but the MC number will be gone.

You can apply for your operating authority through the FMCSA website. The application involves completing forms and paying the relevant fees. Or, let Truckstop do the heavy lifting. Sign up for our Carrier Package to get your trucking authority and two months of Truckstop Load Board Pro free!

6. Decide whether to buy or lease a truck.

Buying your own truck requires a hefty capital investment. However, if you can afford a down payment and can get financing, buying may be a good choice.

Leasing a vehicle is cheaper, but you won’t own the truck. A lease-purchase agreement allows you to lease and own the vehicle at the end of the contract. 

To figure out which is best, answer these questions:

• How long will you keep the vehicle?
• Do the financing options work for your budget?
• Are there any tax implications or benefits?

7. Purchase truck insurance and liability coverage.

The FMCSA requires owner-operators with their own authority to have liability coverage. General freight carriers must have at least $750,000 in coverage. Most shippers and freight brokers require $1 million in coverage.

You can also purchase other insurance types to protect your business, such as:

• Cargo insurance
• Physical breakdown insurance
• Roadside breakdown coverage

Cargo insurance is essential for protecting hauled goods in the event of damage or theft.

8. Ensure regulatory compliance.

The trucking industry has many laws and regulations to comply with. These include:

• Unified Carrier Registration (UCR): Fees collected from interstate truckers fund motor carrier initiatives.
• International Registration Plan (IRP): You can travel across states using a single registration plate and certificate.
• Standard Carrier Alpha Code (SCAC): These codes identify U.S. transportation
• Electronic logging device (ELD): This recording device ensures compliance with Hours of Service (HOS) regulations. It also monitors driver and vehicle information.

9. Use load boards to find freight.

Once you’ve formed your business and obtained authority, you can look for loads. The Truckstop Load Board helps you find the right loads for you, helps you in load rate negotiations, and more, depending on the load board plan you choose. Look to Truckstop for the tools that help you spend more time trucking and less time on admin. Truckstop also provides a complete set of tools for managing your owner-operator business.

10. Increase cash flow with invoice factoring.

Factoring helps you increase cash flow by paying you quicker than it takes an invoice to go through a broker’s pay cycle.

A factoring company gets a flat fee in exchange for taking on your invoicing to brokers. You haul a load, submit the paperwork to a provider like Truckstop Factoring, and get paid within 24 hours of invoice verification. The broker pays the factoring company within 15 to 30 days.

11. Calculate your profit margin.

The key to a successful owner-operator business is its profit margin. To calculate your profit margin, follow the golden ratio:

Calculate your gross profit by subtracting your operating expenses from your revenue. For example: 

• $200 in revenue minus $150 in expenses equals $50 in gross profit.
• When you divide your gross profit ($50) by your total revenue ($200), you reach your profit margin of25 or 25%.
• The result is a ratio of 25%.

Most experts say a healthy business golden ratio is between 10% and 20%.

12. Track your financials.

As an owner-operator, you need a system to manage your finances. Track your income, expenses, taxes, fuel, and maintenance costs. Accurate financial records are essential for tax purposes and smooth business operations. 

You can manage finances with a spreadsheet or accounting software or hire a professional. Software programs available at Truckstop can also help you do this.

Mobilize your operations with Truckstop Go.

As an owner-operator, you need access to the best loads, rates, and lanes while on the road. The Truckstop Go™ mobile app empowers you to find what you need fast, wherever you are. Don’t leave home without it!