We’ve talked about the various costs that freight brokers incur, and the optional costs are almost limitless since there’s always a new tool or feature coming out that you can purchase. So let’s say you want to be a freight broker on a budget - what are the bare bone minimum costs and how much money would you need?
We’ll start with the licensed freight broker. There’s only 3 main things that you need to pay for to get licensed as a freight broker and run your own company. First is the cost to apply for your authority from the FMCSA. That’ll run you $300 as of this year. Make sure to check out our other content or our course for in-depth instructions on getting your authority. Next is your freight broker bond. The cost of your bond varies based on your risk level as a business owner, but we typically see new brokers paying between $1,500 and $3,000 their first year. Lastly, you’ll likely want to pay a process agent company to serve as your process agent in all 50 states. You can pay around $50 to knock this out, saving you the headache of having to manually identify someone in all 50 states. In this situation, you can expect to pay somewhere around $2,000 in your first year to get started. Keep in mind, we didn’t include extra costs such as load boards or a transportation management system. You can get your first month free for DAT’s load boards and AscendTMS’ broker software using the links below.
Freight Agents and W2 Brokers
So what can you do if you don’t have the money to start your own brokerage? You can go work for someone else, and that’s exactly what agents and W2 brokers do. They don’t have to pay to get a bond or their authority, they work under someone else's and typically receive a commission for their work. This is a great way to spend no money out of pocket and learn from a seasoned professional. The only downside is that you could earn less money in commission than you would if you kept all of your company’s profits. We break down the earnings between licensed brokers, agents, and W2s in our other content so make sure to check that out if you’re curious for an example of the difference. The benefits of working as an agent or W2 for a broker tend to outweigh the downsides especially if you are brand new. You pay nothing out of pocket in most cases and you’ve got the guidance and training from someone that’s already found success in the industry.
So, to answer the question, it could cost you nothing to start brokering freight, but you’ll have to find a brokerage company to work for. And for those of you looking to start your own brokerage business, you’ll need a little bit of startup cash to get things off the ground.