Before you address the federal and state requirements that are specific to operating a trucking company, you need to follow the basic, traditional steps of starting a business. Here is what you need to do to legally establish your company and prepare yourself to manage it:
Determine Your Company’s Legal Structure
You must decide what kind of business entity you want to establish and the federal tax forms you will need to file. Your company could be a sole proprietorship, a partnership, a Limited Liability Corporation (LLC), a corporation, or an S corporation. There are advantages and limitations to each legal status, depending on the size of your company, your financial goals and if you plan on having employees. Many trucking start-ups prefer the LLC business model because there is less personal liability in running it. To learn more about business entities and how each one is taxed, refer to the Guide to Business Taxes on www.irs.gov. It is also recommended that you consult a lawyer or another professional advisor to help determine the best legal structure for your company.
Did You Know?
In 2014, commercial trucks moved 68.8% of all domestic freight.
Choose a Tax Year
You must identify a 12-month period for reporting your company’s income and expenses to the IRS. You can choose a calendar year or a fiscal year, which is 12 consecutive months ending on the last day of any month except December. You can find more information about selecting a tax year on www.irs.gov.
Register a Business Name
If you choose to name your trucking company anything other than your personal name, you need to register it with the proper authorities. Registering your “fictitious” or “doing business as” name can be done either at your county clerk’s office or with your state government, depending on where your company is based. Once you have registered your company name, that name must be used on all government forms, including applications for employer tax IDs, licenses and permits.
Get a Tax Identification Number
Most businesses need an Employer Identification Number (EIN), which is also called a Federal Tax Identification Number. If your company is a sole proprietorship, you can still get an EIN, but you do not have to have one. You can apply for an EIN online at www.irs.gov. You should also check with your state to determine if your company needs a state ID number or charter.
Register for State and Local Taxes
In addition to paying federal taxes, your trucking company will be required to pay state and local taxes. The most common kinds of tax requirements for businesses are income taxes and employment taxes, but each state and local entity has its own tax laws. To learn more about the tax laws that affect your business, look up your state on the Small Business Administration’s website at: www.sba.gov/content/learn-about-your-state-and-local-tax-obligations.
Know Your Responsibilities
Do you plan on hiring drivers or other employees? If so, your business will need an Employer Identification Number. You will also need to fulfill various tax and reporting obligations for the federal and state government. To learn more about your responsibilities as an employer, visit https://www.sba.gov/content/hire-your-first-employee.