Any business in the transportation industry is sure to thrive as long as it is properly managed. There is always the need for people, goods, and equipment to be moved from one location to the other. Haulage is especially very profitable because it offers a higher return on investment compared to other businesses in the transportation industry. Haulage involves moving of goods and raw materials from one end to the other; it may be raw materials from the ports to the factory where it would be used; or finished goods from the factories to the end users.
Due to the level of risks involved in haulage business, there are a lot of legal requirements which need to be met. Some of them include-:
Top 10 Legal Requirements for Starting a Trucking Company
1. Company Registration-: First, you have to register your business with the agency in charge of business registration in your country. If you live in Nigeria for instance, the Corporate Affairs Commission (CAC) is where to register your company. You can either register a business name or incorporate your company in Nigeria depending on how large you expect your business to grow but it is always advisable to incorporate your business so that you can be on a safer side and also to accommodate for growth.
This is very necessary especially if you want to work interstate. Failure to do so might lead to embarrassment by law enforcement agencies. It’s easy to register your business in Nigeria; you can walk into the nearest CAC office or engage the services of an experienced lawyer or accountant to do it for you.
2. Obtain Insurance-: You cannot do without insurance in haulage business. This is due to the high level of risks involved in the business. Accidents may occur causing you to lose your vehicle or even the commodities which you have being contracted to transport. In Nigeria, there have been cases of tankers carrying petroleum products falling and spilling its contents which resulted in fire; burning a lot of properties belonging to other people. Such occurrences cannot be predicted but the effect could be reduced through insurance.
3. Driver’s License-: The type of license required for drivers of heavy duty vehicles is different from those of regular motor vehicle drivers. Hence, you would either have to obtain heavy duty vehicles driver’s license for your employees or employ people who already have such license. The most important thing though, is to hire only people who are professional drivers and experienced. This would go a long way to reduce accidents as a result of recklessness and vehicle damage. These licenses can be obtained from the motor vehicle licensing authority in your country after your drivers have been tested and confirmed to be capable.
4. Motor Vehicle License-: You would also need some licenses for your motor vehicle. In Nigeria for instance, you would need certificate of road worthiness, Niger Delta permits, Custom papers if your vehicles were imported and local government permits. These permits are usually obtained and renewed on a yearly basis and are to be obtained for every vehicle in your fleet.
5. Registration with trade unions-: You may also be required to register with some certain trade unions. If you want to go into petroleum haulage in Nigeria, you would be required to register with the Petroleum Tanker Drivers Association which is the umbrella association for people involved in petroleum transportation business in Nigeria. You may also need to register with the National Union of Road Transport Workers in Nigeria (NURTW), National Union of Petroleum and Gas Workers (NUPENG) and NARTO.
6. Contractual Agreement-: A lot of companies find it more cost effective to engage the services of haulage companies to transport goods and commodities for them while paying them on a monthly basis. If you are going to be working with one of such companies, you would need a legally binding agreement signed between you and the company. This agreement would spell out all the terms and conditions of the contract and also specify modes of payment and conditions of exit. This agreement would serve as a protection for both parties.
7. Lease / Hire Purchase Agreement-: Buying your own truck is expensive and a lot of people in the haulage business opt for leasing vehicles or buying on hire purchase. These two methods offer flexibility in the methods of payment such that you can pay for the vehicles from your earnings. If you opt for this method of financing, you would have to enter into an agreement with the seller. This lease/hire purchase agreement would also spell out all the terms of conditions that both parties have agreed to.
8. Fire and Safety Regulations-: If you are going to be working with oil companies like Total or Oando, there are strict safety regulations which you would have to adhere to strictly to prevent against fire accidents and explosions. You may also need to hire a safety officer or a safety consultant who would be in charge of advising and overseeing operations in order to ensure adherence to safety practices.
9. Taxation-: Another important legal requirement for haulage business is taxation. You would have to register with the Federal Inland Revenue Services for payment of income taxes, Value-Added Taxes (if applicable) and other applicable taxes. You would also need to register with the State Inland Revenue services for payment of Withholding taxes and employee taxes.
After registration, you should ensure that you pay all taxes as and when due. Employee P.A.Y.E taxes are to be filed on a monthly basis and so are Value-Added and Withholding taxes. As for income taxes, they are to be filed yearly after preparing your financial statement and that is why it is important for you to always keep adequate financial records.
10. Employee Health, Welfare and Safety-: Lastly, you would have to take steps to protect your employees. Some of the ways you can do that is to obtain insurance for your employees especially the drivers. You should also obtain health insurance for them so that they can be well taken care of in case they fall sick or there is an accident.