How Much Does It Cost to Start a Trucking Company?

Last Updated February 28, 2024

Starting your own trucking company is an exciting proposition. After all, successful owner-operators can make good money while enjoying the freedom that comes from deciding which loads to take and when.

However, starting a trucking company requires much more than a driver qualification file. One of the most important questions you’ll need to consider is, “How much does it cost to start a trucking company?” If you don’t have sufficient funding, you might be intimidated by the thought of launching your business.

From equipment and insurance to working with freight brokers, there are many expenses involved with starting and running a trucking company. By understanding what those costs are and how you’ll cover those essential expenses, you’ll be better positioned to make your new business a success.

Trucking Company Startup Costs

Owner-operator startup costs can vary but usually range between $10,000 and $30,000 for starting a trucking business with a single semi-truck. Let’s break down the total cost of starting a trucking company. Keep in mind that these numbers are averages, and your total expenses could vary:

Expense	Cost
Semi-Truck and Trailer Down Payment	$18,000
Insurance Down Payment	$4,000
USDOT Number	$300
Business Entity (LLC)	$200
International Registration Plan (IRP)	$1,300
Electronic Logging Device (ELD)	$100
GPS, Phone, and Other Equipment	$2,000
Total:	$25,900

Semi-Truck and Trailer Down Payment

Unsurprisingly, one of the biggest expenses for a trucking business is acquiring a semi-truck and trailer. New commercial trucks can cost anywhere from $80,000 to $150,000. While used trucks are cheaper, many still cost close to $100,000 depending on their size, age, and condition. Trailers typically cost $30,000 to $50,000.

Because of these high costs, new owner-operators typically need to finance or lease their equipment purchases. Financing usually involves a 10% down payment. When you finance your truck and trailer, you will eventually pay off your loan and own them outright. Leasing may be cheaper, but you are essentially renting your equipment with this option.

Insurance Down Payment

Commercial trucks are required to carry auto insurance and liability insurance, and the cost to insure a truck as a new driving authority can easily exceed $10,000. Because of this, insurance costs may also need to be financed, with a large initial down payment followed by a series of smaller monthly payments.

USDOT Number

A USDOT number is required for trucking companies that have a gross vehicle weight rating of over 10,000 pounds and are involved in interstate commerce. Many states also require a USDOT number for intrastate commerce. You can register for a USDOT number with the Federal Motor Carrier Safety Administration (FMCSA) for $300.

Business Entity (LLC)

Setting up your trucking company as an LLC is an important part of starting your business because it separates your personal assets from your business assets and liabilities. This provides much-needed protection for your home, personal savings, and so on in case your trucking company defaults on a loan or is sued. The cost to file for an LLC varies from state to state with initial filing costs ranging from $35 to $500.

International Registration Plan (IRP)

Like LLC fees, IRP costs can also vary from state to state. You file your IRP application in your base jurisdiction—or the state where you establish your trucking business. Costs can range from $500 to $4,000 for apportioned plates.

Electronic Logging Device (ELD)

Trucking companies are required to have an ELD installed and operational in each truck. These devices cover everything that would once have been recorded in paper logs and use real-time tracking to help you remain compliant with service regulations. Most ELD systems generally cost around $100, after which you pay a monthly service fee.

GPS, Phone, and Other Equipment

Obtaining a GPS, phone, and other trucking equipment is essential for keeping you safe and connected while on the road. Even items like a microwave or mini-fridge fall under this category. Total costs for necessary equipment can vary from a few hundred to a few thousand dollars, depending on the scope of the equipment you purchase.

How to Finance a Trucking Business

The cost of trucking hit a 15-year high in 2021, which requires many would-be owner-operators to obtain financing if they wish to start a trucking business. If you’re unsure how to start a trucking business with no money or minimal money, there are several trucking financing options to consider:

• Bank Loans: Traditional bank loans offer affordable financing with low interest rates and predictable payments, but they require a high credit score and have long wait times.
• SBA Loans: The U.S. Small Business Administration (SBA) offers several types of loans to help businesses cover startup costs. However, they have long wait periods and require good credit.
• Equipment Financing: Financing equipment purchases can ease cash flow problems and help you increase business revenue, but this option tends to have high interest rates and can only be used for equipment purchases (like your truck and trailer).
• Business Line of Credit: A business line of credit offers a flexible credit line where funds renew as you pay off your debt. Shorter repayment periods and minimum withdrawal requirements make this better for companies with high short-term needs.
• Freight Factoring: Freight factoring is an extremely popular option for owner-operators in need of funding for their trucking business. Because of its popularity, we’ll discuss this financing option a bit more in-depth.

Utilizing Freight Factoring for Owner-Operator Financing

Freight factoring is a process in which you sell your outstanding invoices to a factoring company. The invoice factoring company provides a lump sum of 80-90% of the invoice’s total value upfront. After the factoring company collects on the invoice, you receive the remaining balance of the invoice minus a small factoring fee.

Since factoring is not considered a loan, you are provided the money you need to run your business without going into debt. Of course, you need to have customers with outstanding invoices for freight factoring to serve as a useful financing solution. If you don’t have unfilled invoices, freight factoring isn’t an option.

How Freight Factoring Can Help Fund Your Trucking Business

Freight factoring can be a powerful part of your trucking business financing model, helping you manage both startup expenses and the ongoing costs of a truck driving career. It also alleviates several time-consuming accounting responsibilities from your plate.

1. Fund Growth

Business owners often have to wait for customers to pay invoices before they can afford the costs that are necessary to expand their business.

With freight factoring, you get cash right away, allowing yourself the opportunity to invest in growth without waiting for loan approvals or invoice payments. This can allow you to accept new loads, hire additional drivers, and grow your business at a much faster rate than if you had to wait for necessary funds.

2. Improve Cash Flow

Freight factoring can dramatically improve your trucking business’s cash flow by providing a cash advance on your unpaid invoices. Rather than waiting weeks (or even months) for an invoice to get filled, you can get the cash you need to cover business expenses in 24 to 48 hours.

Getting paid early helps you maintain a positive cash flow so you can cover daily operating expenses such as fuel, food, and truck maintenance. You don’t have to worry about putting off certain expenses until an invoice payment comes in.

3. Avoid Debt

Freight factoring enables you to avoid other financing options that incur debt. Even bank loans and SBA loans have greater long-term expenses than you would expect due to interest payments. With freight factoring, you don’t pay interest because it is not a debt. You’re not borrowing money—you’re getting an advance on an invoice.

Staying out of debt helps you save money in the long run because you won’t have to pay recurring interest charges. You also don’t have to worry about how missing a loan payment could hurt your credit score and financial standing. You’ll maintain equity in your trucking business even as you fund growth.

FAQs

How much money do you need to start a trucking company?

On average, owner-operators will need between $10,000 and $30,000 to start their own trucking company. Costs can vary based on factors such as the type of equipment you purchase and the type of truck you’re driving.

What is the cost of owning a semi-truck?

New semi-trucks cost $80,000 to $150,000 while new trailers cost $30,000 to $50,000. Many owner-operators finance their purchase and make a 10% down payment. After doing so, they make monthly payments to cover the loan. They will also be responsible for ongoing maintenance, fuel, and insurance costs—so ownership expenses can add up quickly.

How much does obtaining a trucking LLC cost?

The cost of obtaining a trucking LLC will vary from state to state. For example, in Montana, filing fees for an LLC only cost $35, while filing fees in Massachusetts are $500. Many states don’t charge recurring LLC fees after the initial filing fee, while others charge recurring fees ranging from as little as $7 to as much as $800 per year. Where you live will significantly affect the cost of your trucking LLC.

What are some common financing options to fund a new trucking business?

Common financing options for trucking businesses include bank loans, SBA loans, equipment financing for trucks and trailers, or opening a business line of credit. Trucking businesses with paying customers can also use freight factoring to receive advance payment on unfilled invoices.

How much do owner-operators make?

Owner-operators average $323,696 per year in income. However, it’s important to note that they are fully responsible for the expenses of their trucking business, which means actual take-home pay is much less than this. Total earnings can also vary based on factors like CDL class type, location, driving routes, type of truck being driven, and experience level.