The trucking industry is vital to the American economy. Whether you have been in the business for years or are looking to get into it, owning a transport company is a tantalizing prospect. With trucks delivering 70% of all cargo in the U.S., there’s a significant potential for profit in becoming a business owner.
There are more than 800,000 professional truckers in America, shipping $700 billion in goods. The rise of e-commerce means more companies will be looking to deliver their products, so the demand for trucking will likely continue to grow. It may be an excellent time to get into the industry.
There are several choices you can make when considering how to start a trucking business. Here are seven of them.
1. Sole proprietorship
There are a few different ways you can structure your company. The least complicated is a sole proprietorship. In this option, a single person owns and operates the entire company, as well as accepts all its legal responsibilities.
Instead of filing the company’s taxes as a business, the proprietor includes them in his/her own tax return. Sole proprietorships are relatively straightforward, so you can set them up and register them without much complication.
The disadvantages of a sole proprietorship lie in liabilities. If you are the sole proprietor, you have to accept any liability personally. If a person or company takes legal action against your company, defending yourself will come out of your own pocket.
2. Partnership
If you are starting your business with one or more other people, you can register it as a partnership. Partnerships can be either general or limited; both having advantages and disadvantages.
A general partnership is essentially a sole proprietorship shared between two or more people. The business acts as an extension of its owners, so the owners accept all the liability. Sharing liability between more people may help soften the blow of any legal action taken, making a general partnership slightly safer than a sole proprietorship.
A limited partnership involves more legal paperwork but offers more protection. Partners are either general or limited, and limited liability does not include personal assets.
3. LLC
A limited liability company (LLC) offers more legal protection than a sole proprietorship or partnership. LLCs are usually a separate entity from the owners. If someone takes legal action against your trucking LLC, the outcome will affect your company’s assets, but not yours.
Filing as an LLC requires more steps and documentation that vary depending on your state. Often you’ll have to pay a fee to submit these documents. While it takes more work and money to get started, an LLC offers improved protection, which you may want in case of an accident.
Trucking can be a hazardous profession, so you may want more legal protection.
4. Corporation
Like an LLC, a corporation requires documentation outlining different people’s roles within the company. Corporations consist of stockholders who own the company, directors who manage it and officers who run its everyday operations.
To file as a corporation, your company usually needs to submit bylaws and articles of incorporation, though the specific requirements vary from state to state. Different taxes apply to corporations than other types of companies.
Corporations are the most complicated kind of organization in terms of legal work but offer the highest amount of protection. If you have multiple owners or plan to see substantial growth, a corporation might be your best option.
5. ESOPs
When thinking about how to structure your company, you might want to consider an employee stock ownership plan (ESOP) to give you fluidity and security. An ESOP provides your employees with a stake in the company. As shareholders, your workers will be more likely to put the business’s best interests first.
With an ESOP, employees will likely stay with your company longer and ensure its success. Trucking can sometimes have a high burnout rate, but having a share in the company will entice drivers to stay with you.
Employee retention isn’t the only advantage of an ESOP. Since your truckers will benefit from the company performing well, they will likely work harder, ensuring they deliver your clients’ products faster and more carefully. If you ever decide to sell the company, an ESOP will allow you to transfer ownership to employees easily.
6. Leasing equipment
After you’ve organized your business, you’ll have to decide how you want to obtain your trucks. You can either lease or buy your vehicles. By leasing, you can start using your equipment without paying the full price for it.
While you make monthly payments, the leasing company will cover any maintenance or repair costs for the trucks. Not having to cover insurance costs will save you money upfront.
The most significant disadvantage of leasing is that you don’t own your trucks, so the leasing company can enforce its own rules over their use. They can also refuse to lease to you again once your leasing period is up.
7. Buying equipment
Buying your trucks outright will be more expensive upfront, but does offer some advantages. Since you’ll own them, you can make any modifications you want. You can also leverage them by selling or renting them out, should you need the money.
If you buy instead of lease, your equipment will be harder to upgrade if it becomes obsolete. You’ll also have to pay for repairs yourself.
To determine what’s best for your trucking business, look at your assets to see what you can afford. You should also consult local business owners and legal advisors about the best course of action for your location and situation.
Get trucking
Once you understand all the options for starting a trucking company, your path should look much clearer. Get ready to pave your road to success.
William Wheeler
Whoever wrote this did a great job lol. Guy hasn’t got a clue!
Abe
Hey hey hey! Stay away from this business where drivers get zero respect and dignity from company owners, shippers, receivers and brokers even!! Dangerous business!! Don’t put more headaches in your life!! The overall trucking industry is tied with political party governing the country!! When republicans come, the trucking industry is down and when the democrats show up in capital, the business revives!! The trucks manufactured recently are also junk with waves of countless sensors to command you with abrupt “stop driving” warnings to leave you at the middle of the highways in the bush!! Dangerous job too!! In my area of Dallas,TX, I know 4 truck drivers died of trucking in 2019 only!! They don’t tell you the truth!!
MrBigR504
Thank you Abe for the truth! Nail on the head my brother! #44 got it all set up and #45 came behind him and fk’d it up……again!
Art
Thank you for this comment.
Why would anyone want to get into this business over other options?
Highly regulated, highly competitive, high injury risk (crashes), high health risk (sedentary)
This business does not respect people’s time.
$75k income over 80 hours per week
2 full time jobs at $20 hour.
CRAZY GOOD MONEY HUH?
YOU CAN FINALLY BUY THAT NICE CAR HUH?
WHEN YOU ARE HOME 1 DAY EVERY 2 WEEKS?
Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! IMHO
I say do not be discouraged from all the wrongs in this industry , learn from them .
Do not run away from this industry , change it and improve it .
Many of you in this industry have obtained experience over many years . Many of you know that the current structure is flawed . Many of you know it could be improved . Many of you know how to improve it . Unfortunately many of you have not united . You decide to remain divided . This truck driver division contributes to the hardship we are continuously experiencing .
This industry can be structured differently . It can be safer , more enjoyable , more efficient , and more prosperous for each and everyone of you . We have mistakenly always depended on others to come to our rescue and change it for our benefit . The opposite has occurred . We need to learn from this mistake to prevent ourselves from repeating it .
Now is our chance to do something different , better , and revolutionize this industry in the process . Realize that it is we that must commit , unite , and create that change together for it to occur in our favor . Nobody else will .
Do not be discouraged . Be encouraged !
For you are all the backbone in this industry . For without you it would not be . You just need to be reminded about the capability that each and everyone of you possesses . Unite this individualistic power you posses collectively into one for your cause . You will be astonished at what you can and will accomplish .
What have you to lose compared to what you will gain ? It’s time to stop complaining and to commence acting together for better . DECIDE & COMMIT ! That’s how change begins .
In my humble opinion ……….
Luis Lechuga
I disagree with this report. Where it says that leasing the Truck the driver won’t pay for maintenance and repairs, tell that to TRANSAM and DART and so many others and see if thats true ! They make the drivers pay the repairs and most maintanance. Wherever is your fault you will pay for it. Don’t do leasing without reading the contract, and if it says that the driver pay the repairs, don’t do it ! Or you will be soooooorry ! Good luck !
Paul
If there was not money to be made, then how would so many companies be able to pay their drivers? I have been making a living at it for 40 years, but not by reading articles about it, but by developing experience in all aspects of the business.
MrBigR504
You Tell’em old school! Nobody told them to haul for $1.00 a mile! Yeah all these new regs are fk’d up but that doesn’t mean you have to go out and pull cheap freight! Take off those damn flip flops and put your boots back on for goodness sake!
Crazy Train
Yeah…option #8…don’t do it….take your money and flush it…burn it…throw it out the car window…give it to someone irresponsible…give it to a crackhead…bury it then put the treasure map down the disposal so you can’t find it again…but don’t buy a truck now…all those other options I just named will leave you better off. 10-4?
Art
10-4
Jonathan Black
Trucking has turned into a joke! It humors me when magazine articles try to say otherwise. Some of the most wretched people I’ve ever seen/met have been in the companies, drivers, warehouses. Whoever would purposely get in this business needs their head examined. We’re nothing more than higher (sometimes) paid baggers. HEY MAGAZINE, tell the damn truth in these articles for God sake!
Joe C
Trucking is a crap business. Looking forward to being out of it forever.
Rudolph James Robert Wratten
Trucking is vitalvtobtge USA, but ONLY the largest companies even make waves when they go bankrupt.
Remember, you are on your own.
Quite a few company drivers should stay company drivers.
If you have problems with paperwork, stick with a company.
If you are that computer freak, always on top of everything, one of 2 things will happen.
You end up in the office at a company, or.
You buy trucks, running a company.
Remember, this person does not have time for your problems.
They are doing everything for everyone.
Your minor problems are taking up time, something in short supply.
This is a business.
Sujit Pannu
Lol…this is to the person who wrote this article, open up a trucking company and let me know 6 months later how did it go?
Art
+1
john
lolz bankrupt in 6 months