how to start a hotshot business

How To Start A Hotshot Business in 2022

Elena Hudgens
By Elena Hudgens 19 Min Read

Have you ever wanted to be your boss while taking in the sights of America? The freight business is the backbone of the American economy, providing more than 500 billion dollars per quarter and growing every year. 

It’s a lucrative business that pays well. On the other hand, traditional trucking is challenging to break into due to the restrictions. If you are planning to start a hotshot business, then this is a perfect article for you. This article is a simple guide on how to start a hotshot business.

What if there was a way to work in the trucking industry without all of the headaches? The good news is that there is a sure-fire way to work in the trucking industry, and you can get started in as little as a few days. What exactly is it, you might wonder? “Hotshot Trucking” is the answer to that query. 

However, there are a few prerequisites to meet before starting hauling freight. Fortunately, these prerequisites are simple to complete, and we’ll walk you through them step by step on how to start a hotshot business.

What Is Hot Shot Trucking, and How Does It Work?

Hotshot truckers are used by shippers and brokers who have tiny loads that need to be delivered rapidly. These drivers and operators are experts at delivering time-sensitive, project-critical loads such as agricultural machinery, construction equipment and materials, heavy machinery, and more. Instead of heavy-duty, Class 8 semis, hotshot drivers usually use super-duty pickups with trailers.

Hotshot trucking can be a lucrative business if done correctly. You have the option of becoming an owner-operator — that is, owning and operating a hotshot business under your MC number — or leasing with another firm. In this article, I’ll go through the steps on how to start a hotshot business.

Let’s get started on the specifics of how to start a hotshot business, now that you have a basic understanding of hotshot trucking:

1. Make a specialization choice

The first and important step of how to start a hotshot business is to make a specialization choice. If you’re new to hotshot freight carrying, you probably don’t have the necessary equipment to manage a variety of cargoes. 

The good news is that, depending on your equipment, you can specialize in the types of freight your transport.

Different types of trucks and trailers are available to handle various loads. Hotshot trucks are generally medium-sized, though larger than pickup trucks. Trucks are divided into three categories:

  1. The weight limit for Class 3 medium-duty trucks is 10,001-14,000 pounds. Contractors and last-mile delivery drivers primarily use this class, but it can also be used for lesser hotshot loads. 
  2. The weight limit for Class 4 medium-duty trucks is 14,001-16,000 pounds. Even though these trucks are more prominent, they are still non-commercial.
  3. The weight limit for Class 5 medium-duty vehicles is 16,001-19,500 pounds. Class 5 includes a lot of the smallest commercial trucks. Trailers can also be used for the following tasks:
  • Bumper pull trailers are typically less expensive and shorter. They’re popular with civilian drivers because they’re simple to operate. However, they can only transport a limited weight, usually less than 10,000 pounds.
  • Bumper pull trailers have a wider turning radius than gooseneck trailers. This can be advantageous when delivering to construction sites or other isolated locations with little turning room. They can frequently transport larger, heavier goods as well.
  • Tilt deck trailers tilt at an angle to make large loading cargo simpler.
  • Lowboy trailers feature a low center of gravity, making them ideal for transporting large loads.
  • Dovetail trailers are ideal if you’re moving vehicles or other wheeled equipment.

The advantage of launching a hotshot company is that you can opt to transport light cargo exclusively. Small refrigeration trucks or trailers could also transport medicinal or perishable items.

You can always change your mind but start with an industry you’re passionate about. Customers will be more likely to refer to similar projects if you specialize. Choosing your speciality may take trial and error before figuring out what works best for you in the lanes you want.

2. Create a limited liability company (LLC).

Next, an essential step of how to start a hotshot business is to form an LLC. A Limited Liability Company (LLC) should be formed and registered with your state. This is the initial step in writing your firm, and whether you’re operating alone or planning to invite others to join you, forming a legal company has many advantages, including:

  • Personal guilt is limited.
  • There will be less paperwork.
  • Benefits in terms of taxes
  • Flexibility in ownership and management
  • Profit distribution is flexible.

So, the benefits of beginning a hotshot business are listed above, which you should think about before getting started.

3. Become a member of the tax authorities

After establishing your LLC, the following step is to obtain a tax ID for your company. You can accept checks and other payment types directly to your company account if you have a tax ID or an Employer Identification Number (EIN). 

In order to do that, please follow the steps below: 

1) Fill out IRS Form SS4 and mail it to the appropriate address. 

2) Obtain a Tax Identification Number from one of these three entities – Local Area Unemployment Office (LAUO), Internal Revenue Service Center(IRSC), State Department of Labor and Industry.(SDLI): LAUO is required for filing unemployment claims; IRSC provides Federal tax ID numbers while SDLI only issues identification numbers in Pennsylvania.)

This brings us to the next step.

4. Open a bank account for your business

You’ll be able to reroute all of your business-related transactions to your business bank account if you have a separate bank account. This gives you the ability to keep track of your expenses while also sending and receiving payments.

This is a great way to keep track of how much you’re spending, as well as what you owe and own. It also alleviates some stress by not having to worry about payments coming in or going out on the same bank account where all other money goes through.

5. Apply for a commercial driver’s license (CDL) (optional)

Because you won’t be exceeding the gross weight limit set by the authorities in most situations, you won’t need a commercial driver’s license (CDL).

You don’t need a CDL if you meet the following criteria:

  • If you’re pulling a total weight of fewer than 10,000 pounds.
  • If the vehicle’s and trailer combined weight is less than 26,000 pounds.

Obtaining a CDL is a difficult task. You must enroll in a recognized training center, complete several weeks of training, and then apply for and pass the commercial driver’s license exam. As a result, it is preferable to skip this requirement in the early phases of your firm, but it is preferable to obtain the license once your company is up and operating.

6. Obtain an Employer Identification Number (EIN).

The next important step of how to start a hotshot business is to obtain an EIN. The IRS issues your business with an employer identification number or EIN. You can pay yourself and other employees if you don’t want to use your social security number. 

You can also provide yourself with benefits packages and contribute more to your 401k through your employer than you can as an individual. Consult a financial planner if you have any questions. You can get an EIN by filling out this form.

7. Obtain a vehicle information report (MVR)

In most states, obtaining a motor vehicle record is simple, but it’s a good idea to plan in case of delays. Although some jurisdictions now offer digital downloads and internet possibilities, there is usually a cost. Hotshot truck drivers in other states may need to pick up a physical copy or wait for it to be mailed. Here’s where you can learn more about obtaining your driving record.

Your MVR is a state-reported summary of your driving history. When you apply for insurance, it’s a good idea to know how excellent (or poor) your driving record is, because they’ll likely inquire about it. In the event that your business gets audited, you’ll need an MVR. Even if it is yourself, you must demonstrate that the individual is qualified to drive. You must pay a nominal cost to obtain your MVR. It used to be free, but now it costs between $10 and $20.

8. Obtain a Credential for Transportation Workers Identification (TWIC)

While the criteria for hotshot trucking do not require truck drivers to earn a Transportation Workers Identification Credential (TWIC), the credential can help you expand the types of loads you can haul. The Maritime Transportations Act regulates TWIC (MTSA). A TWIC allows you to enter local places, such as ports.

You’ll need a TWIC if you want to undertake any drayage trucking or transport containers between ports or secured warehouses. To obtain the certification, hotshot truck drivers must undertake a security threat assessment by the TSA, which includes a background check.

9. Obtain the Required Equipment

As you may be aware, hotshot trucking entails a significant amount of hauling and towing. So, the further step of how to start a hotshot business is to obtain the required equipment. If you want to save yourself a lot of trouble in the future, you should invest in a solid and trustworthy truck. 

To begin, you’ll need an excellent medium to a heavy-duty truck with plenty of power (about 400 horsepower) to tow at least a ton and a 30-foot gooseneck flatbed trailer. A good truck might cost anywhere between $15,000 and $60,000. 

If you currently own a truck and don’t plan on getting a CDL right soon, you can save money by renting one. An excellent trailer might cost anywhere between $7,000 and $25,000. It is on you to decide how much money you want to put into the company first.

10. Approvals from the government

If you want to drive interstate, you should register your business with your state’s Department of Transportation (DOT) as well as the federal government. The state will issue a DOT number, and the national government authority will issue a Motor Carrier (MC) number. The MC numbers need to be prominently displayed on the side of your car.

A DOT physical and a medical card may also require hotshot truck drivers. This is a medical, mental, and emotional assessment to guarantee that commercial truck drivers are physically, psychologically, and emotionally fit to transport cargo.

Suppose you operate a motor vehicle for interstate commerce in specific vehicle weight classes or move hazardous commodities. In that case, the Federal Motor Carrier Safety Administration (FMCSA) requires you to complete and pass a DOT physical to keep your commercial driver’s license.

11. Make sure you have the correct amount of insurance.

You’ll need a couple of different types of insurance. Your LLC will need business insurance to protect it from liability and other claims, as well as automobile insurance.

The price of hotshot truck insurance varies depending on a number of criteria. These factors are also influenced by insurance providers, however here are some of the most prevalent ones that influence the price of your insurance:

  • Your hot shot truck’s deductibles, if any exist. The larger your deductible, the cheaper your insurance will be.
  • The limitations that your company requires. This is dependent on your shipper, but the larger the maximum, the better, as many shippers would be pleased to know that you can transport $100,000 worth of merchandise.
  • Your own personal credit rating.
  • The protection you require. Each company’s insurance requirements are different. Make sure you’re not paying for coverage you don’t require.
  • The type of truck you operate.
  • For your business, the insurance agent and how insurance firms establish rates are important.

Quotes can start as little as $5,000 per year on average, however, prices may vary depending on the factors mentioned above.

Review your alternatives with an expert insurance agent familiar with the transportation business. An agent can assist you in conducting a business appraisal and ensuring that you have all you need to protect your business if something goes wrong.

12.  Apply For Permission From The Federal And State Government.

The state government grants permission in the form of a DOT (Department of Transportation) number, which must be applied for and received. To move freight in the United States, you must apply for and receive an MC (Motor Carrier) number from the federal government. On the side of your truck, you’ll need both a US DOT and an MC number.

Each of those two has a slew of standards that must be completed in order to be active or capable of hauling goods on a regular basis. There are two approaches to meet the standards of the federal and state governments. One is rather difficult, whereas the other is relatively simple:

  • You can start your own trucking company (hard). You have the option of going through the complete paperwork procedure of obtaining your own US DOT number and MC number for the LLC you established in the first step. This is a more difficult path to take. Because it is so time consuming, only a small percentage of people should take this path.
  • Transfer Authority to Someone Else (easy). You might be able to get approval from another company that already has a US DOT and MC number. What is the best way to use their US DOT and MC numbers? It’s known as “lease on.” Your truck is leased to them. They can also put their numbers on your truck because they’re leasing it. . Most businesses will charge for this service, but it is the most convenient option.

There are two techniques to meeting the federal and state government’s standards. One is a little more challenging, while the other is a lot easier. Depending on your sources, you can use one of two options.

13. Look for hot shot loads.

It would be best to get your vehicle going now that everything is in order. The last step of how to start a hotshot business is to find nearby loads from trusted and accredited suppliers is to use hotshot load boards. The most straightforward method is through this Truckstop.com Load Board. 

The more quickly you can locate loads, the more money you can earn. Deadhead runs, where you and your truck are driving without a load, can also be avoided using load boards.

Conclusion

It’s not easy to establish a firm from the ground up and accept profits right away. However, if you work hard, meet all of the standards, and stay motivated, you may get past the initial challenges and start expanding and earning while working for yourself.

Finally, there is no secret sauce to hotshot trucking; you need to put in the effort and gain expertise. However, if you have a solid plan in place, have done your research on how to start a hotshot business, and use the right tools, you can make informed business decisions and ensure that your firm is well-supported and positioned to flourish.

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Posted by Elena Hudgens
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Elena Hudgens is an entrepreneur with 10+ years of experience. She started her journey by building her own e-commerce website on Shopify and turned her $1000 savings to millions in just 2 years. Soon she started different ventures in which she failed and succeeded. And now, she's on a mission to help other entrepreneurs with her life and business lessons.
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