How to Start a Trucking Company

Start a trucking company by following these 10 steps:

1. Plan your Trucking Company
2. Form your Trucking Company into a Legal Entity
3. Register your Trucking Company for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Trucking Company
6. Get the Necessary Permits & Licenses for your Trucking Company
7. Get Trucking Company Insurance
8. Define your Trucking Company Brand
9. Create your Trucking Company Website
10. Set up your Business Phone System

We have put together this simple guide to starting your trucking company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Trucking Company Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a trucking company?

The average cost for starting a small trucking company is $200,000. A medium-sized trucking operation can cost up to $1 million and a large-scale operation can cost up to $5 million to start.

Aside from the basic corporate structure, your costs will vary according to the type of trucking operation you own. In general, expect to pay roughly $2,500 for liability insurance, permits, and licensing. An office facility and grounds for the trucks will cost about $40,000.

Trucks are expensive. A seven year old used semi truck can cost between $30,000 and $40,000. A near-new truck may cost up to $100,000. If you start with a small fleet, it may cost you around $600,000 to $1,000,000.

Costs for equipping the office with computers, printers, and furniture, telephones, filing cabinets, and other electronics will run about $5,000. Costs for accounting software and CRM, payroll software, and vehicle trackers should average $5,000 to $8,000.

Utilities should cost roughly $3,500.

What are the ongoing expenses for a trucking company?

Ongoing costs include fuel and salaries.

Fuel can vary month-to-month but, on average, it costs roughly $180,000 per year (for long-distance trucks) or $1.38 per mile to operate a truck, according to the annual Truckers Report.

Who is the target market?

Most shipping clients are commercial clients. Within the business-to-business space, clients tend to be manufacturing and industrial.

How does a trucking company make money?

The business makes money by signing service contracts with clients for shipping services. Some companies charge by weight or dimensions of goods being shipped. Other companies set up flat-fee service contracts for estimated weight or volume shipments.

How much can you charge customers?

Shipping contracts can vary by a lot which can affect profits and revenue. Yearly DAT Carrier Benchmark Surveys reveal small trucking companies can average between $16,000 and $20,000 per month in revenue. Owner-operated companies may bring in between $10,000 and $15,000 in revenue.

Average contracts may range between several hundred and several thousand dollars.

How much profit can a trucking company make?

Average profit for the trucking industry is between 6% and 8% of the annual income per truck. This means each truck brings in $100,000 in revenue per year, your profit after all expenses would be $7,000, on average.

The cost of fuel is the largest variable in the shipping industry. Fuel prices can dramatically shrink profits for a trucking company.

How can you make your business more profitable?

Increasing profits is difficult in the trucking business because so much of the profit is driven by fuel costs and truck maintenance. Developing a niche within the industry (like long-haul deliveries) has been proven to be the best way to increase revenue, however.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your trucking company is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

Trucks carrying cargo across state lines must be registered with the Federal Motor Carrier Safety Administration. Depending on the type of business you run, you may need a Federal DOT number and a Motor Carrier Authority Number, as well as other permits for carrying certain kinds of materials.

Your company will also likely need to fill out the Heavy Use Tax Form (2290) and comply with tax regulations regarding the heavy use of the nation’s public roads.

State & Local Business Licensing Requirements

In every state, it is necessary to obtain a commercial driver’s license when operating trucks for commercial purposes. Other state permits and licenses may be needed to operate a trucking business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

 

Service Agreement

Trucking businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your trucking business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Other Licensing

• Businesses are required to register vehicles which will travel across state lines for commercial purposes. Attached is a list of state requirements.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

This business is perfect for an entrepreneur who is knowledgeable about the shipping industry and enjoys working long hours.

What happens during a typical day at a trucking company?

A transportation manager or owner is responsible for planning and executing transport strategies and operations. As the owner of the company, you’ll find yourself on the front line organizing and optimizing operations all day, every day.

Depending on the nature of the shipping company, your daily responsibilities might include managing domestic vendors and collecting inbound moves. You may also need to manage shipments between distribution and fulfillment centers.

You also oversee the company’s transportation partners and maintain the required service levels for (inbound) new materials and raw materials shipments. Unless you have a robust accounting and finance department, your job will also involve cost control on operations.

What are some skills and experiences that will help you build a successful trucking company?

To own and run a trucking company, it helps to have experience in this business. If you are starting a one-man company, you’ll also need a commercial driver’s license and experience behind the wheel.

Successful truckers are those who like to work on their own, who can handle long hours behind the wheel, and who enjoy traveling the country. 

 

What is the growth potential for a trucking company?

The easiest way to start a trucking company is to hire subcontractors to ship goods for you. This dramatically lowers the cost because you don’t need to pay for trucks, salary and benefits for drivers, and insurance for the vehicles.

A larger scale operation can be built by hiring drivers directly and making them permanent employees. Using this method, it is possible to expand into many territories, eventually creating a national, or even international, company.