Starting a trucking company is a lifelong dream for many. However, the process can be complex, and involves business planning, registration, financing, truck insurance, and compliance with Federal Motor Carrier Safety Administration (FMCSA) regulations.
This guide will cover everything you need to know to get your trucking business off the ground, including how to finance your trucking company, manage trucking expenses, and choose the right business structure.
Step 1: Laying the Foundation for Your Trucking Business
Before you can start your trucking company, several foundational steps will help establish a strong business structure, financial stability, and legal compliance.
Create a Business Plan
A solid business plan is essential for structuring your company and securing funding. Your trucking business plan should outline:
- Company structure: Will you operate as a sole proprietor, LLC, or corporation?
- Business name: Choosing the right company name is essential for branding.
- Type of trucking services: Decide on the best trucking niche (long-haul, freight, refrigerated, flatbed, etc.).
- Business assets & expenses: Estimate the cost of purchasing a truck and trailer, truck insurance, and required permits.
- Funding strategy: Determine whether you’ll apply for a business loan or use alternative financing.
Register Your Trucking Business
To legally operate, you must register your business as an LLC or corporation. Forming an LLC helps separate personal and business finances, simplifying taxes and liability protection.
You’ll also need to apply for an Employer Identification Number (EIN) through the IRS website. This EIN is required for tax filing, opening a business bank account, and applying for business credit.
Open a Business Bank Account
Keeping personal and business finances separate is crucial for cash flow management and tax compliance. Opening a business bank account ensures smoother expense tracking, payments, and financial organization.
Obtain a Commercial Driver’s License (CDL)
If you plan on driving the truck yourself, you’ll need to obtain a CDL to legally operate vehicles over 26,000 lbs. Additionally, some states may require special endorsements depending on the type of trucking services you provide.
Step 2: Understanding Regulatory Requirements for Trucking Companies
Starting a trucking business involves significant paperwork and compliance requirements. Whether you handle it yourself or use a filing service, these are the essential permits and licenses needed to legally operate your trucking company.
Obtain Your DOT and MC Number
- A DOT Number is required for all commercial vehicles that haul cargo or passengers across state lines.
- An MC Number (Operating Authority) is required for for-hire carriers, those transporting regulated commodities, and passenger transport businesses.
Get Insurance for Your Trucking Business
Before the FMCSA approves your trucking authority, you must show proof of liability insurance. Minimum coverage requirements include:
- $750,000 for general freight
- $1 million for hazardous materials
New trucking businesses typically pay $5,000–$6,000 per year for insurance, with rates decreasing after the company is well-established.
Register for IFTA (International Fuel Tax Agreement)
The International Fuel Tax Agreement (IFTA) simplifies tax reporting for trucking companies that operate across multiple states or provinces. Registration is required for vehicles over 26,000 lbs.
Obtain a BOC-3 Filing (Process Agent Requirement)
The BOC-3 is a federally required form that designates a process agent in every state where your company operates. Without a BOC-3 filing, you cannot obtain your MC authority.
Register for the Unified Carrier Registration (UCR)
The Unified Carrier Registration (UCR) system replaces the Single State Registration System (SSRS) and is required for all interstate trucking businesses. Fees vary based on the number of trucks in your fleet.
Pay the Federal Heavy Vehicle Use Tax (Form 2290)
Trucking companies must file Form 2290 to pay the Heavy Highway Vehicle Use Tax. This tax applies to vehicles over 55,000 lbs. and is $550 annually for an 18-wheeler.
Enroll in a Drug and Alcohol Testing Program
To comply with FMCSA regulations, all truck drivers must be enrolled in a random drug and alcohol testing program before operating commercial vehicles.
Step 3: Buying or Leasing a Truck
One of the most significant decisions when starting a trucking business is whether to buy or lease a truck.
Buy vs. Lease: Which Option is Best?
- Buying a truck requires higher upfront costs but provides full ownership and control.
- Leasing a truck offers lower startup costs but often includes mileage limits and restrictions.
If you choose to buy a truck, ensure you have:
- A strong credit history for loan approval
- A down payment of 10-25% of the truck’s value
- Cash reserves for maintenance and repairs
Step 4: Setting Up Operations & Getting Your First Loads
Once your trucking business is registered and compliant, the next step is to secure freight contracts and start earning revenue.
Find Loads for Your Trucking Business
New trucking companies can find loads through:
- Load boards (DAT, Truckstop, 123Loadboard)
- Freight brokers
- Direct shipper contracts
Set Competitive Rates
Determine your cost-per-mile (CPM) by calculating expenses such as fuel, insurance, truck payments, and maintenance. Ensure your rates are profitable while staying competitive in the market.
Step 5: Understanding the Costs of Starting a Trucking Business
The cost to start a trucking company varies, but here are some essential startup costs:
- MC Number – $300
- Insurance – $5,000–$6,000 per year
- IRP Registration – $1,300–$3,500 per year (varies by state)
- Heavy Highway Use Tax (Form 2290) – $550 per year
- UCR Registration – $89 per year (for 1–2 trucks)
- BOC-3 Filing – $15
If you need working capital to cover startup costs, consider trucking factoring to get fast cash flow from unpaid invoices.
Step 6: Scale Your Trucking Business with Factoring
Many new trucking companies struggle with cash flow due to slow-paying freight brokers and shippers. Freight factoring allows you to get paid faster by selling unpaid invoices to a factoring company.
Benefits of Trucking Factoring:
- Get paid immediately instead of waiting 30–90 days
- Cover fuel, maintenance, and other expenses
- Avoid taking on high-interest loans
Is Starting a Trucking Business Right for You?
Starting a trucking company with one truck requires careful planning, regulatory compliance, and financial management. By following these steps, you can start a successful trucking company and grow into a profitable business.
Need financing to start your trucking business? Contact us today to learn more about freight factoring and working capital solutions!
