How to Start a Trucking Company

How to Start a Trucking Company

1. Create a Business Plan

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).

2. Choose a Business Structure

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. Using an LLC formation service can streamline this process, leaving you with more time and energy to focus on running your business.

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 

3. Pick a Business Name

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.”

4. Register your Trucking Business

You can quickly set up an trucking business 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.
• 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.

5. Determine Business Costs

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.

6. Purchase the Necessary Equipment

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.

7. Market your Trucking Company

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 or ZenBusiness offers websites. 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.