Contracts for Trucks: Everything You Need to Know
Contracts for trucks are a vital part of doing business in the trucking industry.3 min read
2. Insurance Policies
3. Equipment Types
Contracts for trucks are a vital part of doing business in the trucking industry. Many assume that owning a trucking business is a simple process, but you must consider various factors before committing to this industry. Owners need business savvy and technical knowledge to be successful.
- Note: An important thing to consider is determining the purpose of your trucking business.
States also have certain laws regarding interstate commerce. Most businesses within this industry operate using one or more methods. The nature of the business depends on agreements in how businesses hire drivers. A driver can own the truck personally, which would make that person the owner-operator. A business owner may also hire the drivers.
The differences between owner and the subcontracted drivers breaks down to the following:
- Owner Drivers: Owner operators usually own and drive the trucks. They also own and operate the business. Such an operation gives drivers more options in how they manage the business. With that, drivers who own the business need additional capital and must meet various business standards.
- Subcontracted Drivers: Certain business owners opt to operate the business end and have others drive the trucks for them. The owner must employ drivers based on specific transportation jobs. Further, this type of business is better suited for owners with less working capital, and it comes with fewer requirements. With that, owners do not have complete control over the trucks, and hiring drivers may cut into business profits.
If you intend to hire drivers, mention that they will be hired as independent contractors for the position.
Every state has certain laws in regards to owning and operating a trucking businesses. The states also have differing laws for state-bound and interstate transportation of goods. You can get a sense of the following laws and guidelines that you may need to adhere to:
- International Registration: The registration is designed to maximize the use of interstate highway. Trucking owners need to complete the registration forms and pay the necessary fee.
- International Fuel Tax: Also known as an IFTA Decal, various states give an International Fuel Tax Agreement decal to trucks, depending on local regulations. Owners should research a state’s rules on getting this form of registration.
- Motor Carrier Authority: This truck may be registered online via online at the Federal Motor Carrier Safety Administration. Business owners may read the various requirements and download the application. They can then find out what permits they could need and get the USDOT number, Operator Authority number, among other permits
- Heavy Use Tax: Such a form may be downloaded via the IRS website. It determines the tax that needs to be paid, based on a truck’s weight and road frequency use. The IRS needs the form within the 120 days of the filing date.
- BOC-3: Such a form may be filed online at FMCSA. It gives the owner access to quicker processing times for services such as USDOT registration. Owners must pay a one-time fee of $75 if they choose this option.
When it comes to other requirements, drivers meet the following basic conditions:
- Drivers must apply for a commercial driver’s license (CDL)
- The vehicle in question should have a gross vehicle weight surpassing 26,000 pounds
- Vehicles with three axels or more have do not have minimum weight restrictions
Moreover, you should consider business insurance and review policies that protect their equipment and business. You should also determine the type of policy that would best suit their business model. You should also find policies tailored for commercial vehicles, but the nature of the business comes with risks in the form of road damage and accidents.
- Note: You should pick the right equipment and determine how much start-up capital necessary to afford the right type of equipment.
The amount of trucks and equipment bought will depend on various factors. Various goods also need certain types of equipment to maintain freshness and a quality, especially for any business transporting food. Owners who want to enter the food transportation business must consider refrigeration trucks to safely transport food items.
To find out more about contracts for trucks, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s lawyers will help aspiring truck owners draft a sound trucking contract to hire employees and obtain the necessary insurance to safeguard them legally. In addition, they will help you review any contracts so you may better understand your rights and enter into a legally-viable contract.