"Carrier for-hire" means that a person or company provides transportation of passengers, regulated property, or household goods for compensation. For-hire carriers transporting passengers or goods between states require a Department of Transportation (DOT) number and a Motor Carrier (MC) number. Some commercial carriers moving hazardous materials within a given state must also obtain a DOT number.
The For-Hire Industry
Many interstate carriers are third-party logistics companies with drivers who handle the transportation of goods to business customers selling products to retail consumers. For-hire services differ from in-house in that they serve a wide range of customers and decide whom they work with. In-house or private carriers are run by manufacturing and other companies and serve only their own companies' needs.
The for-hire industry has evolved in recent years, and providers can be large, interstate organizations; small local businesses such as taxi services; single-driver initiatives, like private limousines; or services such as Uber or Lyft. Not all of these for-hire providers require a DOT number but, when operating in a small geographic radius, may require permits from a local public utility commission or similar entity.
Starting Your Own For-Hire Business
Because the marketplace is continually growing with new products, trucking interstate cargo remains a strong industry. Additionally, the demand for local for-hire passenger drivers and services is very strong. While there are plenty of opportunities, there is also a great deal of competition, and learning all you can about the type of for-hire business you intend to run is an essential aspect of creating a successful business.
The simplest form of for-hire business requires only that you own your own vehicle and drive it yourself. Those choosing this business model also manage all aspects of the business themselves, from vehicle maintenance and getting new customers to bookkeeping.
To create a larger for-hire business with minimal start-up effort, hire drivers as independent contractors. With this option, you don't actually have employees or the human resources structure that comes with them. You'll manage these drivers, who often have their own trucks or other vehicles, run the business, and negotiate customer contracts. While this option has less risk because of lower personnel costs, you will also have less control over the business.
Another option is to hire private drivers. You handle all operations of the business and use your own vehicle fleet, but also pay higher insurance fees and personnel-related expenses. You have much more control with this option, but it requires more oversight and business costs.
Regulations, Insurance, and Forms
On top of the initial steps to starting a business, such as getting your employer identification number (EIN) and a business license, you'll have other requirements for entering the transportation industry. For interstate transport, you will need to secure a DOT number and an MC number, complete a Heavy Use 2290 form, get the appropriate international fuel tax agreement decal, and more. If you use your own vehicle for a local for-hire service, your vehicle may need to pass an initial inspection. Each state also has additional requirements, so research your state's specifics to make sure you are compliant with all regulations and laws.
You will also need insurance specific to your business needs. Operating commercial motor vehicles requires a particular type of insurance, and the minimum requirements can be expensive. If you do hire staff, you will also need to comply with all federal and state labor laws.