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What Does It Take To Start A Trucking Company?

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 step guide to starting your trucking company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

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 long it will take you to break even?

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.

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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 very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your trucking company is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.

You should also consider using a registered agent service to help protect your privacy and stay compliant.

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!

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

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.

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.

Step 7: Know Your Expenses

It’s important to know your trucking company’s business expenses. A profit and loss statement or bookkeeping software are two of the most effective ways to track insurance payments, truck maintenance and repairs, truck and trailer finance payments, fuel, office expenses, salaries, and other expenses. You can even track tax deductions, which can help you save money. When you have all your company expenses in one place, you’ll know exactly how much it costs to run your business. Knowing how much it costs to run your trucking company is important to ensure that your business is profitable. Setting a minimum amount for your cost per mile will help so you never get undercharged or come up short on a load.

Step 8: Save Money On Fuel

Fuel is a big part of a trucking company’s variable operating expenses. Getting a fuel card for trucking companies can help you control and manage your fuel purchases and save money at the pump. When you use a fuel card, you always get the cash price or better at thousands of truck stops. Using a fuel card also gives you other benefits like fuel management tools, IFTA reporting information, fuel theft protection, and more.

Step 9: Acquire the RIGHT Equipment

Learn More