Statistics reveal that the Canadian trucking industry delivers over 66 million shipments and generates more than CAD 39 billion annually.
The figures show how lucrative having a Canadian trucking business can be and why you shouldn’t think twice about starting your own trucking venture.
What’s more, running a trucking business has truckloads of meaningful benefits: You can make great money, have more personal time, and the opportunity for growth is massive.
If you’re sold to the idea of having your own trucking venture and wondering how to start a trucking business in Canada, then continue reading. This guide covers the crucial points you need to start your own trucking business, such as the requirements, processes, costs to consider, etc.
1. Plan out your trucking business
Planning allows you to evaluate your readiness to open a trucking company. It includes choosing your business structure, conducting market research, and formulating your general blueprint for your operations, income generation, and other business aspects.
Define your niche
Identify the specific niche you want to operate in by considering these questions:
- The geographic range of operations. How far from home do you want to cover with your trips? If you wish to stay near your family, go for short-haul trucking. Long-haul shipments can yield heaps of money, particularly for owner-operators, but at the expense of being away from their loved ones.
- Industries of interest. Which companies or industries in your target area of operations and freight lanes interest you the most? Is it agriculture, paper mills, oil and gasoline, food and beverage products, or others? If you put in plenty of time and effort learning about them, will you enjoy it?
- Industry knowledge. Are you familiar with your chosen industry’s goods and logistics operations? What do they need and require, and how can you fulfill them better than other trucking companies?
- Positive reviews. Among the countless industries you can pursue, which garnered positive reviews from other trucking companies?
- Ideal shippers and clients. Can you describe your target shippers and clients? What are their traits, industries they belong in, requirements, strengths, and downsides, etc.? How can your services support their transportation needs?
Create your trucking business plan
A business plan is a narrative document explaining your company’s goals, strategies, target market, and financial predictions. It helps you determine how to run your business by defining timely, realistic objectives, getting outside funding, quantifying your success, defining your operational needs, etc.
Your business plan also serves as your tool to persuade investors, lenders, and other stakeholders to support your trucking business.
Take time to think about how to start your trucking company in Canada, and put your trucking business plan on paper. Include critical details, such as your market analysis, positioning, and other figures.
You can even work with an industry expert to enhance your proposal and increase your investment approval chances.
Pick an ownership type for your trucking business
Next, select the legal structure that best supports your goals: sole proprietorship, partnership, or corporation.
A sole proprietorship generally has only one business owner taking charge of all functions and responsibilities, including legal debts owed to third-party creditors, revenue, and profit.
A general partnership is another type of proprietorship involving two or more owners who typically develop a partnership agreement describing their ownership shares, individual powers, capital contributions, profit allotment, and business operating procedures.
Lastly, a corporation is a legally established business that can possess assets and incur debt. They are regarded as entities legally detached from the business owners — so that even when the owners die, the company can still legitimately continue operating.
The first two business structures are usually simpler than corporations, but each one has its set of advantages, disadvantages, and implications. Carefully weigh them and decide before proceeding.
2. Choose your business name
Consider the following when choosing your trucking company’s business name:
- How you want your clients to perceive your trucking business
- Memorability, and
The last trait is critical not only because it can wreck (or boost) your branding and marketing campaigns, but you can also violate trademark rights by existing companies with business names that are the same or closely similar to what you want to use.
Search the internet, social media, and national name databases. For one, the Canadian government’s Nuans search tool lists similar provincial or territorial corporate names and trademarks (except for those in Quebec).
You can also look for registered trade names in other Canadian territorial and provincial databases if you’re considering operating there.
3. Register with the government
Start your business registration with the Canadian government by registering your business name (if it differs from your legal name as the business owner).
If you’re going for a sole proprietorship or general partnership, register your trade (or operating) name, get a tax number (also called a business number) for relevant taxes, and open a bank account.
For corporations, you also need to acquire a business number and register with a federal or provincial government office through articles of incorporation. These are documents explaining the business type established, directors, officers, and by-laws.
The registration process for corporations can get complicated, so consider consulting accountants and corporate lawyers before proceeding with it.
The business number and CRA number
Your business number is a special 9-digit number assigned to your company as a legal entity. It serves as your standard identifier when transacting with the federal government for taxes, payroll, export/import, etc.
It is also part of a 15-digit account number with the Canada Revenue Agency (CRA), from which you will need to register for the following:
- Goods and Service Tax (GST) / Harmonized Sales Tax (HST): for payroll deductions for your employees (if you’re hiring people);
- Fuel Charge (CT): to include fuel charges into your products and services; also mandatory for road and other carriers;
- Corporation Income Tax (RC): for corporation registration;
- Import-Export (RM): for bringing in or exporting products and services internationally;
- And other applicable CRA programs;
To get your CRA account number and, automatically, your business number (if you don’t have one yet), or solely get a business number, register online, by phone, mail, or fax.
However, if your physical office is in Quebec, file your returns at Revenu Québec with their forms (unless you have a selected financial institution or SLFI to process taxes for you).
Registration requirements and costs can also vary across Canadian provinces and territories, so be sure to check out your provincial programs for the exact list and figures.
4. Apply for permits, licenses, and industry law requirements
Aside from the trucking business number, CRA number, and CRA fuel charge program requirements mentioned earlier, comply with the following regulatory and industry requirements when starting your trucking company in Canada:
International Fuel Tax Agreement (IFTA)
IFTA is a cooperative agreement among 10 Canadian provinces and 48 American states that simplifies inter-jurisdictional commercial motor carriers’ fuel tax reporting and settlement.
Canadian trucking companies are mandated to register if they operate their commercial motor vehicles across IFTA-covered locations in Canada and the U.S.
IFTA also permits these carriers to get a single license plate issued by their home jurisdiction, drive in all member domains, and report and pay their tax returns in one jurisdiction only.
The total fuel tax is then divided among the provinces and states that your commercial trucks operated in or traveled through.
Commercial carriers should report the distance covered and the amount of motor fuel used or bought in every IFTA-member territory, province, or state.
Following are the jurisdictions not covered by IFTA and, therefore, do not require IFTA credentials:
- Canada: Yukon Territory, Nunavut, and Northwestern territories; and
- United States: Hawaii, District of Columbia, and Hawaii.
To register your trucking company for IFTA, visit your respective local jurisdictions and complete the requirements, such as application form, licensing fee, decal fee, etc.
National Safety Code/motor carrier safety fitness certificate regulations
Under the National Safety Code (NSC) and in line with the Motor Vehicle Transport Act, federally regulated motor carriers crossing provincial or international borders should acquire a safety fitness certificate before operating on Canadian roads.
This set of regulations also establishes jurisdictions’ standards to release or withdraw the said certificate from motor carriers.
Apply for a safety fitness certificate (which contains your NSC or safety code number) under provincial law if you meet these criteria:
- Operating within your base province only;
- Driving commercial vehicles with a registered weight of at least 11,794 kilograms; and
- Using a commercial motor vehicle with a manufacturer’s seating capacity designed originally for 11 persons or more, driver included.
- On the other hand, you can apply for a safety fitness certificate under federal law if you satisfy these conditions:
- Driving commercial motor vehicles across several provinces, territories, or states;
- Operating a truck, trailer, or a combination of these motor vehicles with a registered weight exceeding 4,500 kilograms; and
- Driving commercial vehicles with a seating capacity originally intended for at least 11 persons, including the driver.
Check with your provincial offices for the exact application requirements and fees needed to obtain your motor carrier safety fitness certificate.
Canadian ELD and Hours of Service rules
The Canadian Hours of Service rules regulate the number of hours commercial drivers can drive.
Overworking, which causes driver fatigue and drowsiness on the road, can lead to vehicle collisions, human injuries and fatalities, property damage, and other legal and national socio-economic repercussions. Hours of Service rules are aimed towards preventing that.
To ensure accurate and efficient recording of driving hours, the Canadian government mandates commercial fleets to use ELDs instead of paper logs, automatic on-boarding recording devices or AOBRDs (with exemptions), and other outdated mechanisms.
Choose the right ELD and fleet management system, so it’s easier to manage your trucking business. Operating in Canada, you’ll find these features helpful.
- Automatic and inclusive compliance to Canadian ELD requirements;
- French dashboard;
- French-speaking customer support;
- Bluetooth connectivity (practical, especially when traveling to remote areas with little cellular reception);
- Cross-border regulatory compliance (such as when driving to and from the US);
- Real-time, live-to-the-second GPS tracking, and more.
Their required insurance packages and amounts of coverage can vary, but they usually state these types:
- Liability Insurance is a mandatory protection scheme that settles all injuries caused by your motor vehicles, with a $1-million coverage for liabilities and property damage. If you are shipping dangerous goods (as defined by provincial regulations), you should have $2-million insurance coverage (or as determined by local provinces).
- Cargo Insurance is voluntary, but many freight companies prefer their partner trucking fleets to acquire one since it includes protection for the shipment that you are carrying.
Depending on your vehicle’s maximum registered weight, you will need $15,000 to $32,000 of cargo insurance. Check with your home provinces for exact figures according to your haul and transporting conditions.
They may list exemptions, such as if you own the shipment or you’re delivering specific types of loads that do not need insurance coverage in your provincial jurisdiction (e.g., coal, sawdust, concrete products, etc., for Alberta).
International Registration Plan (IRP)
IRP is a US-based reciprocity agreement among states in the USA, the District of Columbia, and Canadian provinces, including Ontario.
It recognizes the commercial motor vehicles’ registration by other jurisdictions and divides the licensing fees according to the total distance operated in each member jurisdiction.
The program is best suited for commercial carriers driving through two or more IRP jurisdictions. What’s more, it issues one license plate and one cab card only for every vehicle in your fleet.
IRP differs from IFTA in that the former relates more to vehicle registration in the mentioned locations, while the latter focuses on licensing, collecting, and distributing fuel taxes.
Register your fleet for IRP in your home state or provincial jurisdiction and inquire about its specific requirements, including information on:
- Adding, removing, or moving your vehicles during their registration year; and
- Changing registered gross vehicle weights within their registration year.
Specific permits by province and territory
Canadian provinces and territories can impose different requirements for opening your trucking business in the country. Search BizPal to see the needed permits, documents, and licenses specific to your areas of operation.
6. Calculate startup costs and plan for funding sources
Trucking startup expenses can vary depending on which Canadian (and US) territories or provinces you will primarily operate in and travel through.
Consider the following business needs when calculating your expenses for opening your trucking company in Canada:
- Registration, permits, and licenses. Check with your local jurisdictions to get the exact figure for every requirement.
- Commercial vehicles for your fleet. Get the average cost of the kind of motor vehicle you want to operate, and multiply it by the number of trucks you want to get upon launching your business.
Identify your trucks’ hauling capacities and horsepower and the range of model years you’ll willingly consider for your business.
If you have sufficient startup capital, you can even decide to buy new trucks with extended warranties to lengthen your asset lifespan. If you prefer saving up your funds, find five- to 10-year old vehicles.
Explore truck dealerships in your location and request price quotes on truck models you’re eyeing to get. You can ask for further discounts for procuring more than one truck in a single purchase.
You can even kick off by hiring owner-operators and building your company-owned fleet as you generate bigger revenues.
Take into account the size of staff you’ll need to start your trucking business and associated costs, such as salaries, benefits, recruitment costs, and others.
Think about the most integral roles and prioritize them when hiring. Depending on your set-up, these positions include drivers, dispatcher, HR personnel, bookkeeper, warehouse workers, salesperson, and receptionist.
If you can’t hire them for regular tenure all at once, contract them in specific timelines and at designated company milestones as your business grows.
Additionally, if you’re short of starting capital, the Canadian government provides financing programs to help you get grants, public funds, and other investments for your trucking company in Canada.
You can alternatively apply for loans and rent your trucks through full-service lease contracts. If you have a poor credit history, you can offer rent-to-buy arrangements for your vehicles.
Jumpstart your trucking business in Canada
Starting your trucking business might seem overwhelming. However, it can be very much worth it.
Carefully plan every aspect and gradually work on your requirements. Take one step at a time until you complete all of them.
Finally, partner with reliable service and software providers.
Call us at 855-434-3564 for more information.