If you’ve been thinking about starting your very own business and are interested in driving and logistics, starting a trucking company or becoming a trucker might be the perfect career for you.
The trucking industry is one of the largest sectors of the economy in the United States. It employs nearly 1 million workers and generates $1 trillion in annual revenue. In fact, according to the Bureau of Labor Statistics, the average salary for a truck driver is about $53,000 per year.
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.
Here is a helpful guide to setting up your trucking business, as guided by a bookkeeper who has real experience in the industry:
(Additionally, it’s worth noting that K9 Bookkeeping has decades of experience in the trucking space and in helping businesses grow from the bottom up. Our team is always available to see how we can help you turn your dreams into a profitable reality!)
So how will you start a trucking business in 5 steps?
- Write a business plan
Writing a tracking business plan helps you focus on the core parts of your company. You should consider how much capital you need to invest in starting up a new trucking company versus how much money you already have invested in your current company.
A good business plan spreads your company’s founding, the needed capital to start the tracking business, financial lumps that reveal costs versus expected profits, and other strategy details.
A very important step at the beginning of the process of starting your trucker career is deciding whether you will be an owner-operator or a freight broker:
Owner-operators are independent contractors who own their trucks and operate under their authority. They may use a broker to help find loads, but they do not pay any commission fees to brokers.
Freight brokers are companies that act as middlemen between shippers and carriers. They charge a fee for finding loads and negotiating rates.
You will also choose a name for your business:
The business name is the first impression customers will have of you, so it is important to ensure that your brand and business name clearly expresses what you do and describes your vision for the customer. List the names that inspire you and clearly explain your business and values, and choose the best among them all.
Now that you’ve decided what route you want to take in the trucking industry and have a business name and plan in place, let’s explore the next steps.
- Register your business
To start a trucking company you will need to register your business with any local or state government that requires it:
Choose a business entity:
To incorporate a new business, you must first decide which type of business structure you want to use. This decision should be based on how much risk you are willing to assume and how much money you are ready to invest.
If you are planning to operate a small business, you may choose to form a sole proprietorship. Sole proprietorships offer the least protection against lawsuits and taxes. They require no formalities and do not require any legal documents. However, they are easy to set up and maintain.
On the other hand, if you want to create a large corporation, you may opt for a corporation. Corporations provide more excellent protection than sole proprietorships. They require a board of directors, shareholders, and corporate officers. Corporations also allow for additional forms of organization, such as subsidiaries and affiliates.
In order to protect themselves against lawsuits, truckers need to consider forming a Limited Liability Company (LLC). This is a separate legal entity from the driver himself. It protects the driver from being sued personally if he causes harm to others.
Consider speaking to a K9 Bookkeeping Account Manager to discuss which option is best for you.
Obtain business licenses, permits, and insurance
After making sure that your company is legal, now is the time to consider business licenses, permits, and insurance.
- Business licenses and permits:
The Federal Motor Carrier Safety Administration (FMCSA) regulates interstate motor carriers. FMCSA requires drivers to hold commercial driver’s licenses (CDL). Drivers who transport hazardous materials must hold hazmat endorsements to their CDL. In addition, drivers transporting dangerous goods must obtain a Dangerous Goods Endorsement to their CDL. 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:
The first step towards running a successful trucking company is to ensure you’ve obtained the correct type of insurance coverage. You’ll need to make sure you’re covered for any potential liabilities that may arise from accidents on the road. It’s important to note that if you’re transporting hazardous materials, you’ll need to carry appropriate insurance. This includes Public Liability Insurance, Cargo Insurance, Bobtail Insurance, and Physical Damage Insurance.
- Choose the right truck
Now that all the legal pieces are in place, you will pick the truck that will literally be the vehicle for your trucking business dreams.
When selecting your truck, some of the factors you will want to consider are:
- Price
- Comfort level
- Your preferred cab style
- Weather resistance
- Whether they have multiple dealerships across the U.S.
- Weight limit
- New or used truck
- Operating locally or long distances
Secure startup funding
Purchasing a commercial truck costs a lot, so you will likely need to secure start-up financing to start your own trucking business. You may need to consider the many financing options available to you.
A common question that is asked is: How much does it cost to start a trucking company?
Setting up a commercial trucking company can cost about $80,000. So, in addition to purchasing your truck, here are some other costs you’ll need to factor into your business budget:
- Registration and documentation
- Business permits and licenses
- Truck maintenance fees
- Accounting/invoicing software or virtual bookkeeper
Accordingly, you will likely need to seek additional funding to make your business plan a reality. Your K9 Bookkeeping Account Manager can help you apply for these programs, and determine eligibility for other funding schemes:
Look into these options to finance your business:
- SBA loans
The Small Business Administration (SBA) offers several types of loans to help small businesses grow. They include 7(a) loans, 504 loans, microloans, and others. Each type of loan has its own set of requirements and benefits. Check out our guide on how to apply for a business loan to learn more about these options.
- Commercial truck financing
You must first provide proof of income, assets, and liabilities to get approved for a truck financing loan. You may also need to show that you have enough cash on hand to cover the down payment and closing costs.
Once all these requirements are met, the lender will give you a quote for the exact price of the truck. If you accept the quote, the lender will make a loan offer based on the truck’s value. The loan agreement will include a set term and monthly payments. After the loan period ends, you’ll pay off the remaining balance plus any accrued interest.
- Small business term loans
Short-term business loans are easier to get than SBA loans because they have lower credit conditions and more accessible applications. However, it typically holds higher interest rates and lower loan calculations and must be repaid much more quickly.
- Hit the Road
Research driving and trucking opportunities and launch your career in this industry, knowing you’re fully credentialled and established!
We just went through a lot of information, and we have a ton of respect for all those intrepid truckers out there that are keen to manage their books themselves. For those who want to schedule a free consultation with their future full-time Account Manager to discuss how K9 Bookkeeping can help them focus on scaling up, call our team today!
Related: Why Should You Use K9 Bookkeeping?
We’re happy you found this article informative! Go back to our blog page to find more tips, tricks and guidance on bookkeeping, to ensure your business is financially sound and ready to grow to the next level.
Running a business is hard work, bookkeeping shouldn’t be.
Let our team of professional bookkeepers take care of your books and receive accurate, detailed reports every month. Our team of experts is laser-focused on the latest trends and premier customer satisfaction, so you can always be sure you’re getting the best care and service. Your personal account manager will focus on handling your books, leaving you to focus on growing your business and leading it forward.
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