Starting a trucking company can be an intimidating business operation. But with help from trucking industry experts, it doesn’t need to be. Whether you have been a company truck driver or are a new owner-operator, starting a trucking business can be a beneficial move.

Multiple steps need to be followed to start a successful trucking business and avoid mistakes that will cost you. The following content will provide detailed information on how to start a trucking company.

Develop a Business Plan

When starting a trucking company, the first thing that must be done is developing a plan for your business. For both large and small businesses, a business plan must be made. This plan outlines everything that the trucking company wants to accomplish. A clear plan will explain how the trucking company will operate and will set guidelines for success.

How to write a business plan:

  • Executive Summary – This section sets the plans and goals of the business.

  • Company Description – Describe the company in detail, how it will operate, and why it is unique compared to competitors within the trucking industry.

  • Pro Forma – This section is a financial statement that sets our preliminary budgeting for the trucking company. It is imperative to determine what amounts of cash flow and revenue are needed for the business to compete and grow.

  • Services – Outline the services of the business including pricing, materials, and industries.

  • Market Analysis – Go into details here about the target market, including size, customer base, and geographical region. Also, be sure to include an entire overview of the industry.

  • Sales and Marketing – Identify a strategy of how to gain market share. Include a sales plan and implementation in this section as well.

  • Final Projections – Present financial goals and predict profits, cash flow, and sales forecast. Also, include a 5-year plan of business growth.

Good companies become great companies by adapting to the market, using comparative advantages, and positioning themselves with customers with similar characteristics and cultures.

Choose a Business Entity: Sole Proprietorship or Limited Liability Company

It’s a good idea to decide what business entity to form at the beginning of the process. The two most common entity’s in the transportation industry are Sole Proprietorship and Limited Liability Companies (LLC).

Sole Proprietorship

This is the most common business structure as it’s the easiest one to create. Under this entity, the sole proprietor owns the business himself. The trucking company’s profits and losses are treated as income and losses of the owner on their income tax return.

The biggest concern of a sole proprietorship is a liability. If a lawsuit is filed against a sole proprietorship, it is essentially being filed against the company’s owner and not the business itself. The owner is completely liable for the lawsuit.

Steps to help when forming a sole proprietorship:

  • When forming a sole proprietorship under a name other than the owner’s name, a “Doing Business As” (DBA) Certificate must be filed. DBAs are filed at the local clerk’s office where the trucking company will operate.

  • Start the business. There is no additional paperwork that needs to be filed – it’s a quick and easy setup.

Limited Liability Company

A Limited Liability Company (LLC) has a lot more protection than a Sole Proprietorship but is also an unincorporated business. Since there is no corporate tax for an LLC, all profits and losses are reported on each member’s individual tax return. An LLC is not completely separate from its members, but the members are not liable for lawsuits filed against the business. This is the biggest advantage compared to a sole proprietorship.

Steps to help form an LLC:

  • All documents must be filed within the state that the trucking company will be operating in. Documents that need to be filled include Articles of Organization and an Operating Agreement.

  • Create an Operating Agreement. This works as an internal document that outlines how your business will run, the business you decide to operate, payroll and share of profit and losses. Some states require you to have an operating agreement, but you don’t need to file it with them. Articles of Organization is a required document from all states.

  • Start the trucking company!

Buying or Leasing a truck

Some truck drivers may already own a truck before starting their own businesses, but that is not always the case. Deciding whether to buy or lease a truck is the next big decision that needs to be made. This decision will come down to personal preference and financial situation.

Buying a Truck

From a long-term perspective, purchasing a truck is a great option, and you’ll save thousands of dollars in the long run. A big advantage with an owned truck is the trucking insurance premiums will be lower than with a leased truck.

However, buying a truck required a large

down payment. Usually, the down payment for a new truck is 10% of the purchasing price and 25% for a used truck. So, for a $100,000 new truck, the down payment would cost $10,000. If buying a truck isn’t in the budget, then leasing one is the next best option.

Leasing a Truck