Business Entity Options for Trucking Companies
When starting a trucking company, one of the key decisions you need to make is choosing the right business entity. This choice will have long-term implications for your company’s structure, liability, and taxation.
What Should I Know About LLCs?
LLCs are directed at the state level — all 50 states have their own laws that mandate how LLCs operate. However, the IRS, for federal tax purposes, does not recognize an LLC. So if you set up an LLC, you will also need to decide how you will be taxed.
Reasons for Establishing a Business Entity
There are two main reasons businesses choose to spend the time and money to create a business entity for their trucking company with the state:
- Protect their personal assets.
- Take advantage of specific tax savings.
Best Business Model for a Trucking Company
The best business structure for a trucking business depends on the type of work they do and their growth plans. An LLC or corporation is a good option for small businesses that hope to expand and grow into larger ventures, while a sole proprietorship may be a good option for small businesses that don’t expect to expand beyond a handful of employees.
Comparison of Business Structures
- Start-up costs include buying truck, insurance, LLC, or corporation.
- Costs range $10,000-$20,000.
- LLC filing costs $50-$800 depending on state.
- Incorporating runs $1,000-$2,000.
- Many truckers set up as LLCs.
Important Steps for Starting a Trucking Business
- Write a business plan
- Legally establish the company
- Obtain necessary licenses and permits
- Buy or lease appropriate equipment
Revenue Potential in Trucking Business
Owning a trucking company can be highly profitable. The average trucker earns around $54,000 yearly in wages and another $6,000 in profits. With experience, trucking company owners can earn over $100,000 yearly while paying drivers to do most driving.
Factors for Success in Trucking Business Launch
With proper launching informing people the trucking company is open, success factors include:
- Good location and reliable trucks
- Competent, hardworking, trustworthy staff
- Deliberate marketing approach
- Encouraging word-of-mouth promotion
- Leveraging online and offline platforms