What it really costs to start a trucking company

The paperwork

Getting your own operating authority is a sequence of small fees, and the total is measured in hundreds, not thousands. The current amounts change, so take them from the FMCSA and your state rather than from any blog - including this one. What you will be paying for:

• USDOT number and MC authority - the application fee, and then a wait of several weeks before it is active.
• BOC-3 - a process agent filing, done through a service, a small one-off.
• UCR - annual, scaled by fleet size; one or two trucks is the cheapest band.
• IRP plates and IFTA - apportioned plates cost real money, and vary a lot by state and by the miles you declare.
• Heavy vehicle use tax (form 2290) - annual, per truck over the weight threshold.
• Drug and alcohol testing programme - enrolment plus each test.
• The business itself - LLC registration, an EIN (free), a business bank account.

The step-by-step order, with what to do while you wait: the new authority checklist.

Insurance, the real number

For a new authority this is almost always the largest fixed cost, and it is the one quoted figure you cannot shortcut. Brokers will not load you without the filings in place, so it has to be bought before you earn anything.

• Primary liability - $1,000,000 is the standard most brokers require.
• Cargo - $100,000 is the common minimum; reefer and some commodities need more.
• Physical damage - on the truck, usually required by the lender if it is financed.
• Non-trucking liability / bobtail, and occupational accident or workers' comp depending on your state and how your drivers are set up.
• The down payment. Most new-authority policies want a substantial deposit up front, not a twelfth of the year.

Quotes for a brand new authority are at their worst in year one and come down as you build a clean record and a year of experience. Get three quotes, and ask each agent what specifically would lower it next year.

The truck

The widest line on the list. A high-mileage used sleeper, a lease-purchase, a newer financed truck and a cash purchase are four completely different financial lives, and the cheap one is not always the cheap one - a $20,000 truck with a $12,000 engine job in month four is a $32,000 truck that also sat for three weeks.

Whatever you buy, budget separately for: a pre-purchase inspection by somebody who is not selling it to you, the first set of tires, a major repair reserve, and the DOT annual inspection.

What it costs every month

The number that decides whether a load is worth taking is not the purchase price, it is your cost per mile. Count every fixed cost (truck payment, insurance, permits, parking, phone, software, accounting) and every variable one (fuel, tires, maintenance, tolls, scales, driver pay), then divide by the miles you actually run - loaded and empty.

Work out yours in a couple of minutes: cost per mile calculator. Until you know that number, every rate on a load board is just a number you feel good or bad about.

The gap nobody budgets for

This is what actually closes new carriers, and it is not on any startup cost list.

You pay for fuel on Monday. You deliver on Wednesday. You invoice - maybe. The broker pays on Net 30, so the money arrives five or six weeks after the fuel did. Meanwhile there is another load, and more fuel, and the truck payment, and the insurance instalment. Every one of those loads can be profitable and you can still run out of money in month three.

Plan for six to eight weeks of running costs in the bank before the first load, and then do the two things that shorten the gap:

• Invoice the day it delivers, with the rate con and signed POD in the same packet. Four days of paperwork delay is four days of your own money. See how to invoice a broker.
• Decide about factoring on purpose. It buys three weeks and costs a percentage of everything - worth it early, often not worth it later. The arithmetic: factoring vs quick pay.

The order to spend in

1. Business set up, EIN, bank account. Cheap, and everything else needs them.
2. Insurance quotes - before you buy a truck, because the quote may change what you buy.
3. Authority filings. Then wait, and use the wait.
4. The truck, inspected by your own mechanic.
5. Plates, IFTA, 2290, drug programme.
6. Working capital. Do not spend this on the truck.
7. Software - last, and it should be the smallest line on the page.

Figures and requirements change, and several of these are set by your state. Treat this as the list of things to price, not as the prices - and check every filing against the FMCSA and your state before you rely on it.