What Is a For-Hire Carrier?

What is the Difference Between Driving For-Hire and Driving In-House?

Truck driver on freeway
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"For-hire" means that a person or company provides transportation of cargo or passengers for compensation. For-hire carriers require a Department of Transportation (DOT) number and a Motor Carrier (MC) Number.

This is often a third-party logistics company, who has a staff of drivers and handles shipping and transportation for customers selling products. For-hire services differ from in-house in that they serve a wide range of customers and decide whom they work with; in-house services are run by the manufacturers and are limited to that one company.

For-hire providers can be large organizations, small businesses or even single-driver initiatives.

Starting Your Own For-Hire Business

Because the marketplace is growing with new products, trucking remains a strong industry. The demand for drivers and for-hire services is very strong. While there is plenty of opportunity, there is also a great deal of competition. Thoroughly research your options before getting started.

The most basic form of for-hire requires owning your own truck and driving yourself. Many who use this business model also manage all aspects of the business themselves, from getting new customers to bookkeeping.

Other forms of for-hire businesses use subcontracted drivers. With this option, you don't actually have employees; instead, you have contractors. You contract with these truckers, who often have their own rigs, you run the business and manage contracts. While this option has less risk because of lower costs, you will also have less control over the business and may lose out on profits because you will have to compensate your drivers more as contractors.

 

Another option is to hire private drivers. You handle all operations and the business, use your own equipment and vehicle fleet but also pay higher insurance fees and other expenses. You have much more control with this option and greater opportunity for profit, but it requires more upfront and business costs.

 

Regulations, Insurance and Forms

On top of the usual steps to starting a business, such as setting up an employment identification number (EIN), there are other requirements for entering the transportation industry. You will need to secure a DOT number and MC number, complete a Heavy Use 2290 form, get the appropriate international fuel tax agreement decal and more. Each state may have additional requirements as well, so research your state's specific needs 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 ​ on results in high insurance costs 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.

Starting your own for-hire business can be lucrative, but you will face steep competition and significant startup costs. Make sure you research all of your options thoroughly and learn as much as you can before leaping into the industry. Choosing the type of for-hire business you intend to run is an essential aspect of having a successful company.