AUTO TRANSPORT BUSINESS STARTUP
Part 1 of 2
How To Start An Auto Transport Business by Jay W. of Auto Transport Intel
NOTE: Due to the size of this blog, this post is ONLY STEPS 1-10.
CLICK HERE for STEPS 11-20.
How To Start A New Car Hauling Company
YES, you’ve finally made the decision to start a new Auto Transport Business but you can’t find all the information you need in one place, right? You’re ready to become a Car Hauler and Owner-Operator but nobody’s given you a road map or full answer. Well, I wrote this for you.
20 Steps To Become A New Car Hauler
First, I ask that you read all twenty steps before you finish step one – so you are not blind-sided later. Always be thinking about what’s coming next, so you can get to step twenty before you run out of time, energy, and most of all, money. Remember: this advice is based on research, experience and feedback. Every new business is a gamble. Verify everything. Assume nothing.
***Before you proceed, click here and download this 162 page PDF called “A Motor Carrier’s Guide To Improving Highway Safety” because the FMCSA and DOT will expect you to know it backward and forwards: https://www.fmcsa.dot.gov/safety/carrier-safety/motor-carrier-safety-planner
1) CREATE A LONG-TERM STRATEGIC BUSINESS PLAN
- What Are You Hauling? We all know that Auto Transport Business moves vehicles, cars, trucks, vans, etc. How many will you carry at a time? This will determine your Trailer Capacity – and size of the truck.
- Where Are You Hauling? If you plan to haul Intrastate (only within one state), some steps will differ from Interstate. Either way, you will need to become very familiar with Local State Transportation Laws and Business Operating Regulations. Click here to find your state and research local laws: https://www.usa.gov/states-and-territories
- How Are You Going To Get Your Loads? You must find out what the average load pays on routes you will travel. How will you obtain new orders and get paid to move those units? Are you going to rely primarily on Load Boards – or can you get direct access to Brokers, Dealers, and individual Customers?
- What Experience Do You Have? If you have no Truck Driving or mechanical experience, think about how you are going to get the experience to make car hauling work for you.
- What Equipment Do You Already Have? Most new car haulers at least start with a used Truck and Trailer. If you are starting from scratch, make sure you have plenty of money in your budget.
- Define Job Roles. If you are the owner, driver, dispatcher, and accountant, write it down and own it.
2) GET YOUR MEDICAL CARD
If you can’t get a Medical Card, you need to go back to step one. If you can’t physically drive, you will need to find a good, reliable driver to make money as an Auto Transport Business. Visit https://www.fmcsa.dot.gov/medical/driver-medical-requirements/dot-medical-exam-and-commercial-motor-vehicle-certification to learn how to obtain your new medical card.
3) DEFINE YOUR BUDGET & SET UP YOUR COMPANY
Every business needs working capital and a brand new Auto Transport Business can easily require a $100,000 initial investment. Whether you’re halfway there, you have an investor, you have a partnership, or you’re just starting out, consult with your Tax Professional to set up a new company, apply for an Employer Identification Number (EIN), register with the Internal Revenue Service (IRS), and set up a Business Checking Account. Click here to get started: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online This is also a good time to look into using QuickBooks Accounting Software https://quickbooks.intuit.com/
4) PURCHASE EQUIPMENT, INSURANCE & A LOT MORE
Now that you have a company and a business plan, it’s time to shop for equipment. NOTE! You should have your insurance lined up BEFORE you buy equipment. Do not buy the equipment you cannot insure! Since you are just starting out, we’re going to focus on Pickup Trucks vs. Semis as well as 3-4 Car Hauling Trailers instead of a 10-car stinger. Here’s a Shopping List (with an average range of cost):
- Truck: 3500 dually, price $40,000-$50,000
- Trailer: 3-4 car capacity, price $5,000-$10,000
- Insurance: $1M automobile liability + per vehicle cargo, $15,000-$30,000 annually
- Fuel: $1,000/week
- Maintenance: $5,000-$15,000 annually
- Business Expenses: $1,000 set up
- Central Dispatch Load Board: $1,000 annually
The most difficult item on this list to obtain can be inexpensive Motor Carrier Insurance. Not all Insurance Companies are equal as there are many parameters to consider when choosing coverage. Talk with several insurance agents to discuss what is going to work vs. what’s too expensive for your new Auto Transport Business (think $50K max cargo ins/vehicle).
5) APPLY ONLINE: USDOT & MC AUTHORITY
It’s now time for you to get very acquainted with your new boss, the Federal Motor Carrier Safety Administration (FMCSA). Visit https://www.fmcsa.dot.gov/registration/getting-started and closely follow their six “Steps In The FMCSA Registration Process“. Here you will apply for your USDOT Number, your MC Operating Authority, begin following State Registration Requirements and learn more about your new Safety Assurance Program. Important: Be sure to file Form BOC-3 with the FMCSA: https://cms.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/BOC-3%20Form%20508%20rev.pdf Also, if at a later time there are any changes to your basic Auto Transport Business profile information, be sure to update your registration with the FMCSA using the MCS-150 form https://www.fmcsa.dot.gov/registration/updating-your-registration
6) APPLY ONLINE: UNIFIED CARRIER REGISTRATION
Unified Carrier Registration (UCR) is a Federally-Mandated and State-Administered Program pertaining to all motor carriers engaging in Interstate Commerce. Click here to register: https://portal.fmcsa.dot.gov/UrsRegistrationWizard/ This is also a good time to apply for your Standard Carrier Alpha Code (SCAC): https://help.cbp.gov/app/answers/detail/a_id/498/~/how-carriers-apply-for-an-standard-carrier-alpha-code-%28scac%29-number which is a unique two-to-four-letter code used by federal agencies to identify your transportation company.
7) VISIT STATE CAPITOL: IRP & IFTA (APPORTIONED PLATES & FUEL LICENSE)
The International Registration Plan (IRP) relates to motor carrier highway usage and fees (or Cab Card) http://www.irponline.org/ To apply, a business owner must make a trip to the State Capitol to Apply in Person. During the IRP application, the International Fuel Tax Agreement (IFTA) application begins the process of paying Quarterly Taxes based on where fuel gallons are purchased versus where those gallons are consumed. Obtaining Apportioned Plates and a corresponding fuel license (IFTA sticker) are the result of properly completing this process.
Note: If your total Gross Vehicle Weight Rating (GVWR) is going to be over 55,000 pounds, now is the time to find out more about IRS Form 2290, Heavy Highway Vehicle Use Tax Return: https://www.irs.gov/forms-pubs/about-form-2290
8) EARN YOUR CDL A & Learn Loading/Unloading
To create a truly successful Auto Transport Business, you must learn best loading and unloading practices such as the proper distribution of weight on the trailer and best tie-down techniques. Furthermore, you really should earn your Class A Commercial Driver’s License (CDL A). Having a CDL will improve many aspects of your trucking business and ensures that a driver is legally permitted to operate any vehicle that has a gross vehicle weight rating (GVWR) of 26,001 pounds or more for commercial use. In fact, if the weight rating of the trailer is overrated over 10,000 pounds, most states and DOT officers will require the driver to have a CDL A. Visit: https://www.fmcsa.dot.gov/registration/commercial-drivers-license/how-do-i-get-commercial-drivers-license
9) PRE-EMPLOYMENT DRUG & ALCOHOL TESTING
Pre-employment drug and alcohol testing are required for every motor carrier operating under the authority of the FMCSA. When you think of the DOT, think “Zero Tolerance”. https://www.fmcsa.dot.gov/regulations/drug-alcohol-testing/overview-drug-and-alcohol-rules
In addition, your Auto Transport Business is responsible for maintaining an ongoing DOT/FMCSA Drug and Alcohol Testing Program which can be facilitated by a Consortium or Third-Party Administrator. You don’t ever want to be suspected of not taking these drug and alcohol testing and regulations seriously. Not testing may cost you your business. https://www.fmcsa.dot.gov/regulations/drug-alcohol-testing/what-are-consortiumthird-party-administrators
10) PURCHASE & INSTALL AN ELD IN THE TRUCK
The FMCSA ELD Rule is a December 2017 Legal Mandate that requires virtually all motor carriers to use an Electronic Logging Device (ELD) to electronically record Hours Of Service (HOS). https://www.fmcsa.dot.gov/hours-service/elds/faqs The ELD device is a piece of hardware that connects to a truck’s engine via the diagnostic port. Some ELDs communicate to a mobile app via Bluetooth which the driver will need to download and learn how to properly operate. NOTE: Only FMCSA registered ELD providers can be considered as authorized options for your Auto Transport Business. https://csa.fmcsa.dot.gov/ELD/List
NOTE: Due to the size of this blog, this post is ONLY STEPS 1-10.
CLICK HERE for STEPS 11-20.
BEST OF LUCK AND THANK YOU
I truly hope this article helps you. And if it has, or if you have further questions, please visit my YouTube channel at: https://www.youtube.com/c/AutoTransportIntel or send me an email. And again, I urge you to verify this information and double-check with the FMCSA, DOT, or any state law or agency for specifics and details of any licensing or regulatory process.
Disclaimer: Everything in this article is public information and its purpose is to help you get organized. As a result, I have not asked anyone to pay me for this advice so I cannot (and will not) be held liable for any errors or omissions contained herein by any individual or company.
In addition, I also want to give a very special thanks to my Owner-Operator friends for providing incredible feedback during the construction of this article. And to all the Auto Transport Industry and Community members who strive to improve our Ecosystem, I tip my hat and thank you as well. For the Greatest Success in Life comes to those who have built Great Relationships.