Start a trucking company by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. 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.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
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
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your trucking company is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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.
- 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.
Learn more about General Liability Insurance.
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.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a trucking company
Simple ways to market your business include setting up a website, handing out business cards at networking events, and hiring a business consultant to help you make contacts in the industry.
How to keep customers coming back
The trucking industry is very competitive, and as such, you will need to find a niche, or other way to bolster your business’ success.
Some of the areas you can specialize in include:
- For-hire carriers
- Courier firms
- Private carriers
- Refrigerated shipping
- Food trucks
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Trucking Company In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a trucking company?
Finding your first load to haul might be as simple as checking forums like NextLOAD.com or other paid forums and job boards. These forums help connect you to clients that need shipping services. They may not be the biggest clients, but it could help you get started. Once you get a few customers under your belt, you can establish relationships and longer-term contracts.
How and when to build a team
You can start a trucking company with a minimum of one person. A small company is considered to be roughly 10 people. At minimum, you’ll need:
- Chief Operating Officer (Owner)
- Front Desk Personnel
- HR Manager
- Business Developer
- Logistics Manager
As you grow, you can add more drivers to your team and expand operations.