Starting a Trucking Company: 3 Consideration for New Owners

Throughout the United States, many carrier employees and owner-operators are ready to take the next step and launch their own trucking companies.

They have the know-how and understanding of the industry, but starting a trucking company requires careful planning. There are three big considerations people need to think about before starting a trucking company.

Choosing a Company Structure

Starting a trucking company will involve registering your company’s name, getting a tax number, and choosing a company structure. For many, a sole proprietorship fits best. Many owner-operators already use this model because of its simplicity.

Business taxes are filed with personal taxes, but the one big drawback is that the business owner takes all responsibility for liabilities. A limited liability company (or LLC) may take more money and effort to get off the ground, but it also offers more legal protection than a sole proprietorship.

Corporations offer the most legal protection for trucking company owners, but they are also the most complex when it comes to costs and taxes. If you are starting a trucking company and want to choose the best company structure for its size, scope, and goals, consult with a business attorney before making a decision.

Starting a Trucking Company Requires Equipment

Every trucking company needs vehicles, tools, computers, and other equipment. For smaller trucking companies that want to keep costs low, leasing equipment is a viable option.

Equipment leasing agreements have low monthly installments, and maintenance is typically covered by the leasing company. The drawback to leasing is that the equipment is not considered “owned,” so it cannot be used as collateral for additional financing.

Purchasing equipment, on the other hand, gives you ownership of the vehicles, computers, and other tools used, but all maintenance and repairs are also the responsibility of the trucking company. Additionally, the cost of purchasing equipment can be a bit steep.

Working Capital and Cash Flow

Working capital is crucial to the success of anyone starting a trucking company. When you launch a trucking company and make those first few shipments, you may be waiting upwards of 30 days to receive payments.

To keep cash flow and working capital high, trucking companies use factoring. Factoring eliminates the waiting time for payments by turning unpaid freight bills into cash within 24 hours. This allows new trucking companies to maintain and grow operations during the first few years after the initial launch.

Express Freight Finance provides comprehensive factoring services nationwide to trucking companies of all sizes. If you are starting a trucking company, talk to the experts at Express Freight Finance to explore our cash flow and working capital solutions.