Owning a trucking company with CDL or without CDL has its pros and cons. With a CDL, you better know its challenges and can work independently to increase your profit margins.
Can You Own a Trucking Company Without a CDL? You can own a trucking company without having a commercial driving license (CDL). However, you will have to hire drivers with valid CDL to operate the fleet of trucks. Having a business as an owner-operator has its benefits like a thorough knowledge of the challenges, saving money by not paying drivers, and good relationships with customers. While operating a business without CDL will give you the freedom to focus on office work, complete and timely documentation, and expand the fleet to multiple trucks.
This article will guide entrepreneurs entering into the trucking industry regarding having CDL and its legal requirements. I have also added the pros and cons of running a business as an owner-operator with CDL.
What is CDL?
CDL is a commercial driving license mandatory to operate large, heavy-duty, or other specialized chemical or material supply trucks in the USA.
There are 3 CDL categories to permit various types of vehicles, from large trucks to passenger vans.
It can also vary according to the gross vehicle weight rating (GVWR) of the automobile you want to operate.
Moreover, you should be 21 years of age, pass a written examination and driving skill test to obtain the license.
It is a mandatory requirement for driving any commercial vehicle within your state or interstate highways.
Is it legal to own a trucking company without a CDL?
According to federal laws in the USA, it is fully legal to start and own a trucking company without a CDL.
However, you will hire drivers with valid licenses to drive your trucks to deliver goods and materials.
Moreover, in the absence of CDL, you will not be able to operate your trucks. You will receive trucking authority from the US government after completing all documentation with the US Department of Transportation, FMCSA, and insurance.
There can be a few additional requirements from the state authorities according to the types of material you want to transport and your operating range within state or interstate.
Why is it good to have a CDL for starting a trucking company?
Here is a brief list of the benefits of owning a business with valid CDL and operating your truck yourself until you expand the fleet.
Insurance is the mandatory requirement to get trucking authority to operate your business. Its coverage can vary according to the insurance company and the type of goods you want to transport.
Its scope can include the truck, cargo, driver, and any towing vehicle. If you’re going to own a tanker or drive hazardous chemicals, you will need special insurance for its safety and environmental protection.
Few insurance companies require auto insurance in the name of the owner. If you don’t have a CDL, you will need to hire drivers before the registration of your company.
It can put an extra financial burden and be challenging to persuade someone to work for you without a registered company.
Knowledge of trucking challenges
It is a business full of challenges on the road in the form of strict rules from the transportation department, road accidents, working hours restrictions, and strict timelines to deliver the goods.
An owner-operator has the experience to face such difficulties. Therefore, it is easy for him to resolve issues with his expertise.
Moreover, he has a good understanding of the federal and state laws and knows how to comply with them systematically.
Difficult to deceive by drivers
If you don’t have a background in the trucking or cargo industry, the drivers you employ will take you easily and try to trick you.
They can try to charge you higher in terms of the hourly rate and ask you to pay for non-existent road charges.
Moreover, they can also make lame excuses for the late delivery of goods. Drivers can come up with fake maintenance bills on the road and ask you to pay for them.
An owner-operator or the one with CDL has an edge in the situation and can quickly identify any lie or fake statements with his experience. Therefore, working with a company is good to know its ins and outs before starting your own business.
No need to hire a driver
Starting a trucking company by hiring a professional driver means an increase in your operational expenses.
You have to pay a share of your profit to that driver and manage his demands and requirements. However, it is a compulsory requirement if you own a fleet of more than one vehicle.
But a single truck owner should be owner operator to earn a reasonable profit.
Independent business operation
You can work independently on your own without waiting for somebody else to do cargo deliveries for you.
Therefore, it will ensure safe driving without any road accidents and damage to the cargo. In addition, it can result in earning a good reputation and saving in terms of insurance.
Timely delivery of goods
Entrepreneurs have good care of their startups and work hard to make them successful. Therefore, if you have CDL, you will try to fulfill your commitments with customers.
You will try to meet the timelines to secure the clients for future tasks. Moreover, you will communicate with customers better than a hired driver, resulting in the growth of your satisfied customer base and business growth.
Hired drivers can also use delaying tactics to increase their working hours, causing late deliveries. It can give you a financial loss and a bad reputation for your startup.
Pros of starting a trucking company without CDL
Legally you can start a trucking company without having a CDL. However, you will need to hire drivers or sublet your assigned tasks to drivers working as independent subcontractors.
Focus on business
If you hire a driver with a good driving record and reputation, he will perform the assigned delivery tasks professionally.
You can focus on your business, contact customers, and other office matters. At the company startup, you have more administrative tasks and require more time as you will learn.
Moreover, you have to take a record of all financial transactions and checkbooks.
Timely completion of documentation
At the startup of a trucking company, you have to manage a lot of documentation.
It starts from getting an employment identification number, US department of transportation number, motor carrier number, insurance, and leading to receiving your trucking authority.
Meanwhile, you have to deal with various legal matters and tax filing during the registration process and onwards.
Therefore, it requires plenty of time and resources to manage all this work. If you are a driver, then it will be difficult to tackle both tasks simultaneously.
However, without having a CDL, you can manage the documentation and hire drivers to deal with cargo shipment tasks.
Properly track the shipments
If you own a truck fleet and drive a truck, you can ensure the timely delivery of goods by yourself.
You will not have sufficient time to keep track of the rest of the drivers and their assigned tasks. Therefore, you can sit in the office without CDL, reply to customer calls, and inform them about their cargo deliveries.
It can also result in an increased customer base due to reliable operations of your company and good services.
Option to manage multiple trucks
Most companies have fleets of multiple trucks to cater to various assignments at a time. It will be challenging to address several vehicles at a time being an owner-operator.
Ultimately you will need to hire drivers. By engaging them, you will also want to keep track of their assignments, paychecks, and all transactions, including earnings and expenses, maintenance of vehicles, and many more tasks.