If you’re wondering how to start a trucking company — or whether it’s even a viable option — start with some basic facts. According to American Trucking Associations, the U.S. trucking industry is a $791+ billion industry with 27% growth expected over the next decade. Why does this specific industry remain strong? Because the demand for goods is growing.
Plus, 72.5% of all freight in the United States is transported by the trucking industry. And don’t worry that trucking conglomerates will cut into your market share, because 91% of trucking businesses operate with six trucks or fewer.
In addition to the massive and lucrative market, there are a number of other benefits to starting a trucking company.
- You don’t need an advanced education or degree. You’ll need the right licenses and permits before starting your business, but no formal degree or higher education is required.
- As an owner-operator, you won’t have a lot of operational or staffing costs.
- You’ll have a flexible schedule.
- As your own boss, you’ll be able to pick and choose your routes.
- You’ll have a stable, solid income.
Not sure how to start a trucking company? From paperwork and determining your startup costs to purchasing equipment and finding customers, our step-by-step guide will get you rolling without needing to pump the brakes. No matter what state you live in, starting your trucking company is as simple as following these steps:
Checklist for How to Start a Trucking Company
- Create a Business Plan
- Choose Your Business Structure
- Determine Your Business Costs
- Create a <a href='https://www.zenbusiness.com/reserve-business-name/' >Business Name</a>
- Register Your Business and Open Financial Accounts
- Purchase Equipment for Your Business
- Market Your Trucking Company
There’s a reason most new businesses create a business plan as their first step: Business plans increase your chances for success. When you lay out how your trucking company will operate and grow amid the competition, you’ll have fewer surprises to trip you up. According to the U.S. Small Business Administration, basic components of a business plan include:
- Executive Summary
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
- Appendix (for supporting documents)
To avoid drowning in the details, set S.M.A.R.T. goals. The S.M.A.R.T. approach below will keep your plan and business from being too generic to drive value:
- Specific: Use action words to describe the steps you’ll take.
- Measurable: What metrics or data targets will flag your success or failure?
- Achievable: Make targets realistic and attainable.
- Relevant: Create goals that match your job functions.
- Time-bound: List specific time frames (e.g., by the end of first quarter).
When choosing a business structure, most small start-ups opt to create an LLC or a sole proprietorship. While a sole proprietorship requires less paperwork and lower fees to get off the ground, an LLC has distinct advantages.
When you establish an LLC, your liability is limited to the amount of your investment. As a member of the corporation, you won’t be personally liable for its debts. On the other hand, creditors can go after proprietors more fully. They can tap into your house, car, and other personal property to pay off debts incurred through business operations. So, even though you’ll have to cough up a little extra money for state fees for an LLC, it’s worth it for the peace of mind.
For business taxes, both types of companies must report income and expenses on Schedule C of Form 1040. You’ll pay taxes on your income, whether you take a paycheck or not. You’ll deduct business expenses from your gross income, so be sure to maintain good records and save all receipts in case of an audit. The tax filing process will change a bit if you’ve brought on multiple members as part of your LLC, so keep that in mind if this is your plan.
If you hire employees, both LLCs and sole proprietors must:
- Obtain an employer identification number from the IRS
- Withhold payroll taxes
- Pay payroll taxes
What about money to get you out on the road? Entrepreneurs looking to start a trucking company can expect an initial investment of $10,000 to $30,000. That covers vehicle down payments, insurance, permits, and a range of expenses specific to your state.
Before you acquire funds, calculate the fixed costs, ongoing expenses, and one-time costs. Fixed costs may include garage rental, monthly truck payments, and insurance. Ongoing costs could be fuel, utilities, taxes, and payroll. One-time costs include licensing or permits, signs, and office furniture and equipment.
Obviously, a lot depends on the size and type of truck you need (for example, refrigeration vs. standard freight) and whether you’ll lease a vehicle or purchase outright.
While a new commercial truck costs more, it also offers the assurance of fewer repairs and less maintenance, which can save money and prevent losses from downtime.
That’s not to say a second-hand unit can’t be well-maintained. If you do buy used, insist on a pre-purchase inspection for rust, mileage, body damage, hidden engine problems, and worn tires. Ask to review the truck’s maintenance and oil change history, too.
How do I fund start-up costs?
Once you determine how much financing you need, brainstorm and research funding options. Consider:
- Using a credit card or “business card.” Ask about fee structures, interest rates, late payments, and other terms before you sign.
- Selling personal assets (land, unused vehicles, or rental properties)
- Tapping into savings
- Borrowing from a retirement fund (be sure to understand the terms first)
- Home equity loan
- Bank loan or small business loan
- Government-funded assistance
- Non-government funding, such as fundraising platforms
- Borrowing from friends and family. Use a contract to spell out the details and ensure your relationship survives.
While fun names can be easy to remember, you want potential customers to find you. Your name should clearly reflect the general industry (e.g., trucking, hauling, freight) and the services you provide. So, while Thomas Enterprises is nice and simple, it gives no indication that you move goods from A to B.
Coming up with the perfect name for your LLC can be exciting, but legally, whatever name you choose for your trucking company must be one of a kind. Most states have an online business name database through their Secretary of State website. Search it to see if the name is taken. If it is, head back to the drawing board, because simply adding an “s” or altering the punctuation isn’t enough to claim your LLC’s name as unique.
Once you establish an original name, visit the U.S. Patent and Trademark Office website to ensure it isn’t trademarked.
Also check the availability of a domain name and register it. The more unique your business name, the more likely it’s already in use, but you can get creative by adding extra words. For example, “Thomas Timely Trucking” may translate to “ThomasTimelyTruckingLLC.com” or “ThomasTimelyTruckingOnline.com.”
You can quickly set up an LLC, open accounts, and get compliant by working your way through these instructions:
- Register your business structure with your Secretary of State.
- Get an Employer Identification Number. (See Step 2 above.)
- Obtain licensing and permits required by your state. Start with the list of state websites at the Department of Transportation.
- Sign up for general liability insurance rates. Commercial Truck Insurance HQ reports that most trucks hauling commodities must have a minimum of $750,000 of coverage. Review the insurance filing requirements on the Federal Motor Carrier Safety Administration website.
- Open a business bank account.
Don’t skimp on compliance. It may sound daunting, but in the trucking industry it just means dotting a few i’s and crossing some t’s. Look into a USDOT number, operating authority, heavy vehicle use tax, international registration plan, and BOC-3 Filing, among others.
If you’re not buying a truck outright, select a leasing financial plan. Most startup trucking companies will choose from these three options:
- Operating lease (full-service)
- Term rental adjustment clause lease
- Lease-purchase plans
What equipment will you buy? That depends on several factors:
- Are you driving within your state or across the country? (e.g., Do you need a truck cab with sleeper options?)
- What will you be hauling? (livestock vs. dry goods vs. refrigerated items)
- Will you need to store, repair, and maintain multiple vehicles?
You can always start with a single, basic vehicle and adjust your equipment inventory as you grow.
Marketing your new trucking business requires a mix of approaches, but you’ll want to create a website first. Wix and Weebly are two great, out-of-the-box options with premade templates. Claim your business on Google and add it to local business directories for a quick, high-return marketing jumpstart.
Promote your business on social media platforms too, like Facebook, Twitter, Instagram, and LinkedIn. Online freight boards can also help you find customers.
Print collateral like brochures, business cards, and direct mail can help you drum up business, but word-of-mouth promotion works best for most new trucking firms at first. Doing top-notch, thorough work for a few bread-and-butter customers is a solid way to build a deep client list fast.
There are five general classifications of trucking companies you can start. Browse this list and choose the one that best fits your interests, budget, capabilities, and time commitment:
- For-hire truckload carriers: Earn revenue by hauling freight for other companies.
- Private fleets: Work as a subcontractor for another trucking company.
- Less-than-truckload carriers: Transport smaller loads for home or business delivery across the country.
- Household movers: Help civilian, military, or business customers relocate locally or to another state.
- Inter-modal: Haul rail containers to and from a rail yard.
Starting a trucking company can be a high-risk venture, but with a large market (read: high demand) that’s continually growing, profits can be high. Once you establish your trucking business, expect to thrive in a well-paid profession where you set your own schedule and work as your own boss.
1 All prices and services presented above were reviewed and verified as of 11/2/19.
2 The Starter plan is $49/year the first year and increases to $119/year after that
3 This chart does not include state fees because those will vary in each state.