Please note before you read: This post is not financial advice or tax advice, but merely information for you to consider. If you are interested in starting a trucking business in Canada and are looking for an accountant, please contact us.
Why you should consider starting a trucking business in Canada?
If you’re thinking of getting into the trucking business in Canada, you’ve picked the right industry. Canada probably has THE most potential for starting a lucrative business as an owner operator truck driver for several reasons.
Reason Number 1 why Canada is the place to start a trucking business:
Canada is HUGE! And its cities are spread out over a long distance. To get from Toronto to Vancouver will take you 40 hours of drive time. That’s 4,381KM or 2,722 Miles according to Trippy. With huge distances between major cities, you get paid more and there is more demand for long distance truck drivers.
Reason number 2 why Canada is the place to start a trucking business:
Canada is rich in natural resources. There’s timber, precious metals, and oil. Canada’s population is largely concentrated near the U.S border, while its natural resources are much further north. This means the resources must get transported to processing facilities or to the U.S. Many truckers get paid extra to haul freight over ice roads or through isolated areas in the Northern part of the country. Not many truckers want to do this work because of the hazards, which means if you are willing to take these jobs, you have an opportunity to make more than you would hauling from city to city.
Reason number 3 why Canada is the place to start a trucking business:
Demand for truck drivers is growing and threats of driverless trucks are far less likely than the U.S. Canada’s population is growing and so is inter-city business. This means more shipping between cities in Canada. Winnipeg is in the center of Canada and is a shipping hub, where as Vancouver is a port city where many products come from Asia that need to be distributed by truck and trailer to facilities throughout the country.
As far as A.I., there is less of a chance that it will steal trucking jobs in Canada compared to the U.S. Harsh weather requires human judgement. Truck operators need to keep the brakes unfrozen, keep the truck heated, watch for ice and wind, deal with low visibility, and avoid hazards that would not be there in the southern states. Additionally, lithium batteries fail in Canada’s harsh winters making electric semi-trucks less of a viable option for the transportation industry in Canada.
What you need to start a trucking business in Canada:
A Canadian Class 1 License: A class 1 license allows you to drive any type of road vehicle (just not a motorcycle). You’ll need to take a knowledge test and a road test. Prerequisites are that you must be at least 18 years of age, have a medical examination completed by a doctor, already have at least a class 5 license (basic driver’s license), and complete the mandatory entry-level training.
Decide what kind of trucking you want to do (your niche market):
Do you want to do day trips as a short-haul trucker and be at home for night, or do you want to live life on the open road and come home for weekends in long-haul transportation?Do you want to have an adventure and work up north as an ice trucker or stick to the civilized parts of Canada?
- Do your homework and find a niche market that you would enjoy and that meets your income conditions.
Business planning and structuring:
You can set your business up as a sole proprietor, partnership, or corporation.
Sole Proprietor: Your business is not really separated from you personally. Higher taxes, least liability protection, one less tax return to file.
General Partnership: Not typical in the transportation industry. It’s basically a sole proprietor split between more than one person. Again, it doesn’t separate you from your business, but the liability is limited to half of the equity since you only own half of it.
Corporation: The company owns your trucks, bank account, and other assets, and loans/leases are in the company’s name. This offers liability protection and the tax rate is typically lower (assuming you are a Canadian resident). You can have one or more than one shareholder in a Canadian corporation. Money held in the company is taxed at roughly 11% (here in my province of Alberta). The only drawback is filing requirements, as you’ll have to file an annual corporate tax return. Need help filing a corporate tax return in Canada? We can help! Give us a call today.
You’ll most likely want to set up a corporation for your Canadian trucking business and pay yourself through the company via dividends or payroll. This usually involves filling these corporate forms; the articles of incorporation, the notice of address, and the notice of directors. Do you need help setting up your corporation? Give us a call and we can walk you through the process.
You can choose a business name, but some owner operator truck businesses simply use a numbered name (ex 2345678 AB LTD.) for the sake of not having to register a name. It’s up to you and if you have big aspirations, you’ll probably want to register a name. If you just plan on driving for a dispatcher forever, just go with a number name.
Decide if you want to purchase or lease a semi-truck, or subcontract for an owner-operator. You will make more if you use your own truck, but you may want to subcontract if you don’t want high maintenance costs or are temporarily unable to get financing.
Commercial vehicle insurance: You’ll need to be insured to truck in Canada. Since you are driving as a business and semi tractors are more expensive than a regular passenger car, not to mention you’ll be on the road all day, insurance is going to cost more than your passenger vehicle. In many cases, your Canadian logistics dispatch will take insurance off the taxable settlement earnings. You will need to talk with a dispatcher to see how insurance is dealt with.
Ok, Here’s How to Start Making Money as a Truck Driver in Canada
So once you’ve got all your ducks in a row, you’ll need to get out there and talk to dispatchers. You’ll know who these are because you’ve probably seen trucks on the road with these names on them. These will be companies like Rosenau Transport, Day & Ross, Westcan Bulk Transport, Trimac Transportation, or Petrogas to name just a few.
There are more steps once you are up and running, but this is a brief overview of the steps involved to starting a trucking business in Canada. If you are adventurous and would like to start your own business, these will be a general guidance of some of the things you can expect.
Conclusion
Starting a trucking business in Canada does take some startup cost and consideration, but it is not a difficult business to start. Talk to other truckers that are already in the transportation industry for ideas and advice.
Did we miss anything? Please feel free to add your comments! We appreciate it.
We specialize in accounting for trucking businesses. If you need help with bookkeeping and/or Canadian Income tax preparation, please give us a call to discuss. We offer services in Southern Alberta and remotely to anywhere in Canada.
0 Comments