How to Start a Trucking Company

Learn the business side of how to start a trucking company – legal structure,
startup funding, equipment financing.
Brian O'Connor
Oct 22, 2020

Many or all of the products featured here are from our partners who compensate us.
This may influence which products we write about and where and how the product
appears on a page. However, this does not influence our evaluations. Our opinions
are our own. Here is a list of our partners and here's how we make money.

When most people think about booming industries in the U.S., trucking might not be
the first one that comes to mind. But one drive on an interstate should tell you
all you need to know about the demand for trucking and haulage companies.

If you’ve been thinking about starting a business of your own and love driving and
logistics, a trucking company may just be the right fit. Just over 70% of all U.S.
freight moves through trucks, which means that there’s always a demand for trucks—
and, more importantly, trucking companies.

If you want to know how to start a trucking company, there are plenty of factors to
consider, including hiring employees, choosing your business entity, and securing
financing.

We’ll break down what you need to know about how to start a trucking company from
start to finish and help you make the right decisions to get your trucking business
in high gear.
How to start a trucking company in 5 steps

If you’re still with us so far, odds are you’re ready to take the plunge into
starting your own trucking company. Now that you’re convinced, let’s get into how
to start a trucking company by looking at the critical tasks you’ll need to
accomplish before you get on the road and join a great big convoy.
Step 1: Write a business plan

It might not seem like you’d need to write a business plan for a trucking company,
given that the underlying operating premises are somewhat straightforward. Writing
a business plan, however, helps you focus on the core parts of your company. A good
business plan lays out the reason for your company’s founding, the capital required
to get started, financial projections that display costs versus anticipated
profits, and other strategy details.

Writing a trucking company business plan keeps you focused on building your company
according to a blueprint, which is especially helpful as you get into the dirty
work of getting started and may not have time to refocus on your overarching
strategy. Just as importantly, you’ll also need a business plan as part of just
about any small business loan application. You’ll be glad you created a plan before
you start applying for funding, as the process will be smoother. To help you get
started, check out our free business plan template.
Step 2: Register your business

Once you’ve written a rock-solid business plan, the next step you’ll want to take
to start a trucking company is to register your business with any local or state
governments that require it.

Choose a business entity

You’ll want to take a look at the different kinds of business entities available to
you before submitting your paperwork. Each business entity offers various personal
liability protections, taxation methods, ownership structures, and other technical
differences. If you’re starting a one-person, self-owned trucking company, look
into limited liability companies (LLC) to protect your personal assets. If you’re
establishing your company with a business partner, you will also want to consider
the different kinds of LLCs designed for partnerships (limited liability
partnership) and corporations. There are other business entities out there as well
worth considering, but it’s best to start with these two categories and determine
from there whether or not you need to go with something different.

The process of incorporating your business is relatively straightforward, even if

it’s a little paperwork-heavy. Typically all it takes is some supporting
documentation about the company’s principals and founders, tax identification
information, a general business agreement, and a few other materials about your
soon-to-be company (which largely differ depending on the state you’re registering
in).

Choose a business name

Alongside registering your business, be sure to choose a unique business name. Your
business name will the first impression for potential clients, so make sure it
communicates your brand, specialty, and personality.

Also, be sure that your business name is not taken. Once you have a boil down your
options to a few names, do a quick secretary of state and U.S. Patent and Trademark
search to ensure the name you're considering are available for use.
Step 3: Obtain business licenses, permits, and insurance

Next, make sure your trucking company is operating legally. To do so, you'll want
to look into business licenses, permits, and insurance.
Kabbage Checking
Kabbage Checking™
NerdWallet rating

Business licenses and permits

Trucking companies face unique challenges and liabilities, which makes it crucial
that you line up all the required licenses and insurance policies as required by
your state of operation.

Most, if not all, states will require you to get a business license if you intend
to headquarter your business within its boundaries. You’ll need to get these
policies and licenses set up before your first shipment hits the road.

Another license you must secure is an International Registration Plan. This is

required if your truck is 26,000 pounds and crossing state lines. This allows you
to operate your truck in all states and some Canadian provinces.

As regulations vary by state, consult with your state’s guidelines to find out
exactly what you need to stay on the right side of local regulations.

Business insurance

Some types of insurance you’ll likely need to obtain include public liability
insurance, cargo insurance, bobtail, and physical damage insurance. If you’re
unsure about whether you're fully compliant with your business requirements, it’s
always a good idea to consult with a startup lawyer that's worked with other
trucking companies. Their expertise ensures you're taking all the legally required
steps before starting your trucking business.
Step 4: Choose the right truck
Your commercial truck will be one of your most significant investments when
learning how to start a trucking company—it’s essential that you choose the right
one for your business. When selecting your truck, you’ll want to consider some of
the factors:

Price

Comfort level

Your preferred cab style

Weather resistance

Whether they have multiple dealerships across the U.S.

Weight limit

New vs. used

Whether you’re operating locally or long distances

As with any vehicle you purchase, you should do a test drive. But if you want to
narrow down your brands, you’ll find that Kenworth, Freightliner, and Peterbilt
trucks can accommodate most of your trucking needs:

Buy vs. lease

This buy vs. lease debate depends on your buying power as a small business owner.
And there are several advantages and disadvantages that accommodate each route.
When you buy a truck outright, your payment is completed—no need to make monthly
payments. You can also use the built-in equity to trade in your truck in the
future. Of course, this also means a larger down payment—usually 10% to 25%—
depending on whether you buy new or used.

When you lease, you don’t own your truck. You must make regular payments and cannot
use the equity to buy a new truck. Also, you must abide by specific regulations,
including maintaining its condition and mileage restrictions. But leasing offers
some advantages—mainly, the lessor will often cover your maintenance expenses.

Whether you choose to buy outright or lease, you will still likely need to find
some way to finance your purchase.
Step 5: Secure startup funding

As we mentioned above, buying a commercial truck is no small expense. Thus, you'll

likely need to secure startup funding to get your trucking business off the ground.
Besides the below funding options, also consider opening a business bank account
and credit card.

How much does it cost to start a trucking company?

Trucking can be lucrative, no doubt. It’s also guaranteed to require a fair amount
of capital to start a trucking company—a commercial truck costs around $80,000,
after all. Then, of course, there’s the capital that goes into keeping your fleet
operating at peak performance. In addition to purchasing your truck, you’ll also
want to factor into your business budget:

Registration and documentations

 Business permits and licenses

Truck maintenance fees

Accounting/invoicing software

These expenses can tally up. According to the Small Business Administration,
trucking and transport companies took out an average loan of $106,000. So, if you
want to learn how to start a trucking company with no money, you won’t get very
far. You will likely need to seek additional funding to make your business plan a
reality.

The good news is that there are a ton of business loan options available to
trucking businesses:

SBA loans

You’ll find that SBA loans are increasingly popular due to their low interest
rates, high loan totals, and generous repayment terms. Moreover, the SBA guarantees
up to 85% of the loan’s total if the borrower can’t make repayments.

These loans are great to kickstart your trucking company but are notoriously hard
to get. You need a long and established credit history, a good credit score, and a
high tolerance for paperwork. If you think you can make the cut, check this full
list of SBA loan types.

Commercial truck financing

If you don’t qualify for an SBA loan, equipment financing loans are a great
alternative and also offer borrower-friendly repayment terms. Under this umbrella,
you’ll also find commercial truck financing for buying or leasing new or used
trucks or repairing or upgrading a truck you already own.

The way this type of loan works is you will approach the lender with a quote for
exactly how much your equipment (in this case, most likely a truck) will cost. If
approved, the lender then provides you with the appropriate sum of money, which
you’ll repay (plus interest) over a fixed amount of time.

Keep in mind that the truck serves as collateral, should you fail to repay your
loans. Because of this “safety net,” lenders are more likely to approve you for
commercial truck financing.

Small business term loans

Another option to help start your trucking company is a business term loan. A
lender provides a certain sum of money to the borrower to be repaid during a set
amount of time. The interest rate associated with the loan may stay fixed
throughout its duration or may vary based on economic factors.

While short-term business loans are easier to get than SBA loans—chiefly because
they have lower credit requirements and easier applications—they typically hold
higher interest rates, lower loan tallies, and must be repaid much more quickly.
4 reasons to start a trucking company

Here are the top four reasons why learning how to start a trucking company could be
your next business venture:
1. There’s a major shortage of drivers

The trucking industry is forecasted to need 100,000 drivers in the near future, and
companies are desperate to find drivers to fill the void. When you want to figure
out how to start a trucking company, this will likely provide you with a tactical
advantage, considering that you’ll be helping to fill a need for more trucks and
drivers.
2. There’s a need for innovation in the industry

Nearly any industry welcomes innovation—including the trucking industry.

Increasing efficiency within your fleet and establishing less fuel-intensive routes
and logistics helps you improve your value to your customers. This gives you a
competitive advantage, positioning your business for long-term success.
3. It's recession-proof

Trucking is the backbone of the country’s economy. As a trucking business owner,

you’ll play a pivotal role in getting goods to stores and warehouses. Also, the
trucking industry is largely recession-resistant—there is always a need for
trucking companies to obtain products and materials across the country.
4. It’s easy to start small (and scale)

You won’t have to invest as much into your trucking company before it turns a
profit, and you can better expand your business as demand—and your profit margin—
grows. Eventually, you can learn how to start a trucking company without driving by
hiring additional employees and drivers.
The bottom line

Learning how to start a trucking company can sound complicated. In reality, it’s
not dissimilar to the steps involved in starting a small business of any other
stripe. Your equipment costs may be a bit higher, and the hunt for talent a bit
more competitive, but the underlying principles involved in starting a trucking
business are still the same. With the right business plan, licensure, and financing
in place, you too can get the wheels rolling on your trucking business.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

About the author: Brian O’Connor is a freelance writer, specializing in finance and
business strategy. Read more
On a similar note...
How to Get a Business Loan in 7 Steps
New COVID-19 Relief for Small Businesses and the Self-Employed
Best Business Loans for Bad Credit
SBA Loan Programs: Types, Terms and How to Apply for Business Financing
Dive even deeper in Small Business