Updated, August 2024. Starting a trucking company comes with excitement and challenges, like any new business. However, the costs and requirements can be higher than expected due to its size, scope, and all the logistics needed to operate it. By learning about those costs before creating a trucking company, you can be in a much better financial position to follow your trucking dreams. But where should you begin?
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The Basic Requirements
Before you begin your journey to start a trucking business and become an owner-operator, know that start-up costs will generally be between $10,000 and $20,000 -- and that's before you buy a truck or any additional equipment. A breakdown of the expenses can help you decide whether to move forward or not. Remember that you'll have fixed and variable costs, so preparing for both is essential.
Here are some key areas you'll want to carefully consider to give yourself and your new trucking company the best possible starting point and a chance of success.
Business Registration is Necessary
You'll need to register your business with the state where you're located. You might also have to register with the city or county where you do business. While registration costs differ from state to state, you can expect to spend around $500 to complete all your registrations. That's a relatively small expense, but it's one that you'll want to budget for and keep in mind so you don't end up paying more than expected.
UCR and DOT / MC numbers Have Costs
The UCR (Unified Carrier Registration) fee is just under $70 for one vehicle and slightly over $200 if registering between three and five vehicles. Even though it doesn't cost much, it's a required registration. Every trucking company also needs a DOT (Department of Transportation) registration number, which is free. Still, if you want to move interstate loads, getting an MC Number is necessary, which currently costs about $350.
You Will Need a CDL License
A Commercial Driver's License (CDL) is required to drive a truck. If you're not the driver, ensure all drivers have the necessary licensing. Generally, the license costs about $200; however, acquiring it involves additional costs ranging from $1,500 to $8,000, covering training, written and skills tests, and licensing fees. Additional costs include medical exams and specific vehicle endorsements, such as those for Hazmat (H), Passenger transport (P), and transporting hazmat in a tanker (X). You can't use one endorsement for all and will need three separate ones to ensure you comply with all the laws. The cost of CDL endorsements can vary by state but typically range from $50 to $150 each.
Understanding the Need for an ELD
An ELD, or Electronic Logging Device, is required for all US-based commercial motor vehicles to be legally compliant as of 2020. These devices make compliance easier than ever before. Your trucking company and all its drivers can be sure they're logging their hours, meeting rest-to-drivetime ratios, and handling the loads correctly. Whether you're a single owner-operator or have a fleet of trucks, using ELD technology is an excellent way to help your company remain compliant. Costs start at $495 per truck per year, but the price can be higher depending on the provider and features offered.
Buying a Truck - New vs. Used
Should you buy a new or a used truck?
Used Trucks
You might think paying less would be a good idea, but you also have to remember the miles and the wear and tear these trucks undergo. Investing more in a new or slightly used truck can often translate to significantly lower repair costs. So, try to find a truck that's not too old and has excellent maintenance records. That can be one of the best choices when buying a vehicle.
Used trucks range from $45,000 to $175,000, depending on age, maintenance history, accident records, and mileage. Aim for a truck no more than five years old, with a reliable Detroit Diesel engine, and less than 600,000 miles. That way, you can expect to drive that truck for as many as ten years with minimal repair needs and lower insurance premiums. That doesn't mean the truck can't break down, but your chances of that will be far less. Avoid purchasing a truck over eight years old, as many insurance companies may not provide coverage.
New Trucks
The right truck would be the one that best fits your business. Consider the requirements and work it will endure, as well as your budget and personal preferences. When shopping around, keep score on engine power, fuel efficiency, safety features, durability, service and parts availability and costs, resale value, and training and support. Freightliner, Peterbilt, Kenworth, Volvo, and Mack are the most popular brands.
Read more: Back to Basics: Choose the Right Truck for Your Company.
Trailers Are a Big Expense Too
Brand-new trailers can cost between $15,000 and $100,000 depending on type, materials, and features. However, you can find used trailers that aren't as expensive. Just like with the tractor (the actual truck), you want to ensure you're getting a quality product that's not too old and cared for properly in the past. That will reduce the chances of road problems and keep your maintenance costs much lower than they might be on an older trailer that isn't as sound or high quality.
Insurance is Needed to Protect Your Investment
You don't want your trucks on the road unless properly insured. If you have a truck in good condition, you'll pay less for insurance. An older truck without current safety features and a higher chance of problems could cost you as much as $10,000 annually to insure. Driver experience affects the rate, and in some cases, you can use ELDs to lower your premiums, too. Not many companies will ensure large trucks, so when starting a trucking company, it's a good idea to shop around and compare quotes from different providers to find the right price and policy terms for your company's goals and needs.
No matter what you decide to do when starting a trucking company, remember that quality equipment and compliance with the law are the most significant considerations. When you have good equipment and all the registrations and licenses in place, you show that you're serious about the company and want to do things right. That will also help you get customers and keep you on the right side of the law.
The next step is to choose the perfect factoring company, one that'll become your most reliable ally and closest financial advisor. At Summar Financial, we offer the best factoring plans customized to the specific needs of your transportation company. Our goal is to provide you with the peace of mind you need so you can focus on your work and grow your business without worrying about cash flow. Our exceptional factoring plans, fuel card program, and weekly lines of credit will save you money and simplify your travels, giving you greater flexibility and convenience in your daily operations.
