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Learning how to start a logistics brokerage? If you think you can do it, you’re right. You just need some guidance on how to do it correctly. This is the first in a series of articles which will explain how to start a logistics company. We will try to leave no detail uncovered. From officially forming a business, to scaling your enterprise and building the business of your dreams.

First, are you looking to leave an existing logistics company, and did you have a non-compete?

How to start aSetting up your business as a legal entity.

There are many benefits to officially incorporating your business as a limited liability company (LLC). Those benefits include:

  • Protected assets. LLCs provide limited liability protection to their owners who are typically not personally liable for the business debts and liabilities of the LLC.
  • Pass-through taxation. LLCs generally don’t pay taxes at the business level. Any tax due is paid at the individual level.
  • Increased credibility. Showing you’re official will give you credibility with shippers, carriers and the entire industry. And credibility in freight brokerage is really important.
  • Limited compliance requirements. LLCs face fewer state-imposed annual requirements and ongoing formalities.
  • Flexible management structure. In an LLC, owners can establish any organizational structure agreed upon by the company owners.
  • Few restrictions. There are few restrictions on who can be an LLC owner or how many owners an LLC may have.

Source: http://www.bizfilings.com/learn/creating-llc.aspx

How to start a logistics brokerage: Selecting a business partner(s).

It’s not impossible for you to sell to customers and also broker the freight, but you might want to consider starting the business with a partner. This way, one can focus on getting customers, and the other can focus on finding carriers. But this way you both can work on getting customers when there are no loads to be covered in the earliest of days. If you want to figure this out later, you can form an LLC and then add in your partner(s) in the operating agreement.

More importantly, you may want to spend time with someone before deciding you could go into business with them. This is a big, big decision and not one that should be taken lightly. Be particularly careful of getting into business with a friend, or someone whom you like to hang out with. When things get tough, are they going to have the grit to grind through long days and “get shit done”, with you?

Before selecting a partner, spend some time being honest with yourself about your own strengths and weaknesses. What are you good at? What are you not good at? Do you have relationships that you can leverage to benefit the business? What do you have a lot of experience doing, and what do you want to get away from doing? Once you’ve determined your strengths and weaknesses, you will then be in better position to figure out what you need most in a business partner as you figure out how to start a logistics brokerage.

 

Create an operating agreement.

What is an operating agreement?

“an agreement among a limited liability company members governing the LLC’s business and members’ financial and managerial rights and duties. Many states in the United States require an LLC to have an operating agreement. LLCs operating without an operating agreement are governed by the state’s default rules contained in the relevant statue and developed through state court decisions.”

Source: https://en.wikipedia.org/wiki/Operating_agreement

You’re going to want an operating agreement that spells out the details of how things will work if you’re going to partner with someone to build your new business. The operating agreement will be used to define your organization’s operating terms and help protect your legal rights and responsibilities. Protecting yourself is imperative when learning how to start a logistics brokerage. Having a written record that outlines your company’s management policies and procedures will allow you to get down to business. Maybe most importantly, the operating agreement should spell out how you and your partner(s) will divide the profit.

There are many templates available if you Google “how to create an operating agreement”. Work with a good attorney to get things squared away. You want to know you haven’t left any stone unturned. Operating agreements can be tricky and may be written in “Legalese”. Again, you want to make sure a trained professional has walked you through every piece of language in the contract. If you’re strapped for cash, try LegalZoom. It’s about $160 for a 6-month subscription, which includes unlimited calls with an attorney.

 

Next: How to Start a Logistics Business: Structuring Your Operating Agreement

 

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