Archive for the ‘Incorporation’ Category

New federal trucking regulations, aimed at increasing driver and driving safety, are set to take effect soon, possibly by October 2011. Unfortunately for many trucking enterprises, these rules will be extremely costly and disruptive to their operations. But for truck drivers who are independent owner/operators, this situation may present opportunities to capture additional business with these companies.

The proposed Transportation Department rules would reduce the daily driving limit from 11 to 10 hours per day, with a required 30-minute break after 7 straight hours on the road. Other new rules would require drivers to be off-duty for 34 straight hours (covering two nights) once the weekly driving limit is reached. Trucking companies that violate the new rules could be fined as much as $11,000 per incident.

Federal regulators say the new rules are needed to help prevent driver fatigue and accidents associated with it. Recently, a high-profile truck/train accident in Nevada, killing six people, garnered national headlines and calls for increased focus on driving rules. Meanwhile, the trucking industry opposes the new rules, citing the Transportation Department’s own data showing truck fatalities and accidents declining by nearly one-third in recent years under the current rules.

Under the new rules, shorter routes and adjusted workflows will be required to accomplish the same tasks and deliver the same shipments. This also will mean many trucking companies will need to bring on additional drivers to meet the new driving standards.

So what can independent owner/operators do to prepare for these upcoming changes? Here are a few ideas:

• Incorporate to make your services more attractive—When these trucking companies look to add drivers, they will likely prefer to work with incorporated entities and not Form 1099 independent contractors. And for good reasons. An independent O/O, formed as a limited liability company (LLC) or corporation, will reduce the trucking company’s liability for your driving, making you a more attractive partner. It also offers you important protections as well. Ultimately, every trucking company (large or small) should form a formal business entity to take advantage of the limited liability protections offered under law. All judgments and debts incurred by the business will be owed by the business alone, and will not be attached to the owner’s personal finances. Further, the use of 1099 independent contractors by employers is closely scrutinized by government authorities, so avoiding this arrangement also enhances your attractiveness.

• Update insurance coverage—As your formal business status changes, your insurance needs will likely have to be reviewed. Be sure all new elements of your operations are considered when making insurance changes, so you can maximize your proper coverage.

• Network with owners in the industry—All trucking companies will be required to follow the same new rules. So stay in touch with other owners grappling with the same issues. Maybe new partnerships could provide economies of scale, allowing more efficient scheduling and shared resources among companies to meet the limitations in the new rules? At the very least, you may learn some new best practices for dealing with the issue.

• Keep everyone informed—Ignorance of the law is no excuse for not following it. So be sure all drivers are aware of the new rules and are following them exactly. Institute internal controls and record keeping, ensuring your company stays in compliance and everyone is safe on the job. As leader of your organization, make sure you set the right example and others will follow.

John L. Duoba is the publisher and managing editor of Business Owner’s Toolkit at www.toolkit.com, and he has been know to frequent a Waffle House or two (or ten) in his interstate travels across America’s highways.

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