The trucking industry was booming throughout late 2021 and early 2022. While the market has since relaxed, forecasters still predict that demand will stay consistently strong for the next few years.
The trucking industry was booming throughout late 2021 and early 2022. High freight demand, supply chain issues and a shortage of drivers led to rates hitting historic highs. While the market has since relaxed, forecasters still predict that demand will stay consistently strong for the next few years.
If you're thinking of starting your own trucking business, it could be an ideal time to enter the market. Here are the steps to starting and growing a trucking business.
A business plan is the roadmap for running your trucking business. You should lay out how you expect to run everything, and outline your target results. Some of the parts of your business plan to consider are:
To launch a business, you need some type of legal business structure. There are a few ways you can go:
Sole proprietorship – This is the simplest type of business, but it's only available if you're the only owner. You don't have to formally set anything up. If you just start taking on clients for your trucking business, you're automatically working as a sole proprietorship. The downside is that there is no legal protection from this setup. If your business gets sued because of an accident, the person could go after your personal assets.
Partnership – A partnership is similar to a sole proprietorship but with multiple owners. These are relatively easier to set up and run for taxes, but you are also more exposed legally.
Corporation – Corporations require more legal work to set up and the taxes can be more complicated, but they create legal separation between your personal finances and your trucking business.
LLC – With an LLC, you get extra legal protection. This entity also lets you choose how to manage your taxes, using the other previously mentioned business structures. Since an LLC combines tax flexibility with legal protection, it could be an effective way start your trucking business.
Whichever entity you'd like, GovDocFiling can get you set up quickly with one online application. They will help launch your entity and get you the tax information needed to start your business.
You and all of your drivers would require your commercial driving licenses. Your business would need to obtain a United States Department of Transportation (USDOT) Number and a Motor Carrier operating authority Number (MC Number) from the Federal Motor Carrier Safety Administration. You must also receive operating authority from the DOT to determine what cargo you can legally carry.
With your business structure in place, you can open a business bank account. This would keep personal and business funds separate, so you can keep track. You should also consider whether you want to raise any extra money to launch your trucking business, like bringing on investments or securing loans from friends and family to go along with your own savings. Another option is to take out a small business loan.
You'll need to decide how many trucks you'll need for your fleet. You should also decide what type of trucks you need based on how you plan on running your trucking business, like if you want a van, a flatbed, or a refrigerated trailer. Another decision is if you plan on running day trips only or if you'd like a sleeper.
Next, decide whether you'd like to buy your trucks or lease them. Buying is more expensive - even if you take out a loan, your monthly payments will be higher than leasing. In exchange, your business owns the truck outright and once you pay off the loan, payments cease.
With a lease, you're simply renting the vehicle. You're paying less per month and don't need to make a down payment, but the payments keep going as long as you're leasing. Your business also doesn't own the truck as an asset (though the lease could give you an option to buy the truck at the end of the agreement.)
In case of an accident, you will need vehicle insurance to cover the damage to others and to repair damage to your trucks. You would also need cargo insurance to cover damage to any loads you are taking on for your clients.
You'll also need to decide whether you will hire any employees for your trucking business, such as other drivers or for backroom operational support. If you do, you will need to set up payroll to properly manage their taxes and give them their wages. A payroll app like Roll by ADP can quickly get you established, so you don't have to hire a professional bookkeeper. Click here for more information on setting up payroll for a trucking business.
With the previous steps, you've set the foundation of your trucking business. From there, you'll need to follow your business plan and work to scale up. Keep marketing your business and keep looking for new clients, and you'll be on your way to growth.
Watch out for other talented drivers who could potentially join your business as you can only handle so many trips yourself. Considering that there is currently a shortage of trained drivers, you may want to proactively hire. This way you'll be ready to expand, rather than waiting until you have too much business and need to turn additional jobs away because of a lack of staff.
Going into the trucking business for yourself can be challenging at first, but your long-term earning potential can end up much higher than driving for others. For more information on launching your own small business, check out the Roll by ADP blog.