How To Start A Transportation Business – A Comprehensive Guide

If you’re looking for a side hustle that you can do on your own time for potentially little investment, then you may want to look into opportunities with the transportation industry.  There are lots of products that need to be shipped, and lots of companies and people are willing to pay good money to move them.  Here’s everything you need to know about how to start a transportation business.

how to start a transportation business

Decide Your Transportation Market

There are a lot of different niches you could get into within the transportation industry.  

If you’d like to keep things relatively small and you’ve already got a truck or van, one of the easiest ventures to get involved in is as a delivery or courier service.  The site GoShare claims you can make an average of $42-$67 per hour plus tips by picking up jobs such as transporting packages or supplies, moving furniture, hauling large objects (such as boats), removing yard waste, and many others.

However, transportation doesn’t necessarily need to be limited to just moving “things”.  You might also decide to transport people such as a private taxi service or taking senior citizens to their doctor’s appointments.  You might also decide you’d like to get involved with bigger modes of transportation and purchase a commercial trailer or full-size moving truck.  Transporation could even mean starting a bike or scooter rental service in places that are popular vacation destinations or college towns. 

Create A Business Plan

Before moving forward with your business idea, you’ll want to make sure you’ve really thought through all of the details, including the financials.

The best way to do this is to write a business plan.  This is a formal way of defining what your goals are, who your customers should be, how you’ll market your business, etc.  You can find a ton of good tips at this article here from Entrepreneur.

An important part of your business plan will be to see if you’re actually going to make any money or not.  This is done by calculating something called ROI (return on investment) as follows:

ROI = [Revenue – Expenses] / Initial Investment = Profit / Initial Investment

Your estimated revenue will be based on how many hours you’re available to work and what kinds of rates you’ll be able to charge.  Your expenses will be regularly reoccurring purchases such as gas, insurance, permits, advertising, and even other employees (if you choose to hire any).  Your initial investment will be any up-front, large purchases such as a vehicle or loan to get your business started.

As a business, you’ll want a positive ROI of at least 15 to 30% (according to the site Small Business Rising).  If your ROI is below this range, you’ll want to re-examine your assumptions and perhaps look for ways to trim your expenses and initial investment.  If it’s negative, then this may not be a good business decision.

Setup Your Business Structure

If you plan to earn more than $600 this year, then you are legally required to report it to the IRS.  When you do this, they will ask you to identify your business structure.  The IRS gives you several options for doing this.

For most side hustlers, identifying themselves as a “sole proprietorship” is the simplest option.  However, as a business, it’s highly recommended that you form an LLC (limited liability corporation) since it will provide you with better legal protection.  LLCs can be set up easily through your local government or a service such as Legal Zoom for generally less than $100.  After creating one, you’ll also have to file for an Employer Identification Number (EIN) with the IRS.

Business Structure For A Transportation Business

Obtain Any Necessary Licenses, Permits, And Insurance

Depending on the type of transportation business you’d like to set up, you may be required to obtain certain licenses, permit, any insurance.

For example: 

  • If your clients request that you travel across state lines, you may need to obtain a commercial Department of Transportation Permit.  
  • If your vehicle qualifies as commercial, a special license may also be involved in your specific state.
  • If you decide to operate a larger vehicle (over a GVWR of 10,000 lbs), then you may require a chauffeurs license to be able to legally operate it.

To operate the business itself, your state or county might require you to register for a business license.  To find out, contact the business license bureau of your local municipal government office. 

Because you’re hauling goods for other people, you’ll need to purchase commercial general liability insurance.  If you’re transporting dangerous goods or even other people, then you may also require additional insurance policies.  Talk to your insurance agent to explore the options and know for sure.

Purchase Equipment

If you don’t plan to use your own personal vehicle, then you may wish to purchase one specifically for your business.  When you do, be sure to purchase it in the name of the business and not your own.  Keep records of all your expenses for the vehicle including maintenance since these can all be considered as possible tax deductions later on.

In addition, think about other types of equipment you might need such as a computer, cell phone, bookkeeping software, etc.  You may even need to purchase memberships or subscriptions to services that will help you get more jobs.

Promote Your Transportation Services

Once your business is established, it’s time to get to start getting clients.  There are several easy ways you can get started:

  • Word of Mouth – Start asking around among friends and see if there’s anyone in need of service. You can also consider passing out business cards.
  • Social Media – Social media sites are a wealth of job-finding opportunities.  A simple place to start would be to create a Facebook business page and start making daily posts with tips and offers for your services.  Be responsive when people reach out to you. 
  • Job Posting Sites – People make job postings all the time for random requests on places like Craigs List and Task Rabbit.  Check them out to see if you could perform any of them.
Promote Transportation Services

Work With Your Clients

As the requests from potential clients start to come in, begin by providing written quotes upfront.  Let them know exactly how much you plan to charge and agree on a final price.  

For the sake of your reputation, don’t exceed this agreed amount or try to coerce them for more.  If you encounter unforeseen challenges and additional costs, discuss these openly with the client and negotiate how they could be accounted for.

Above all, make sure you’re always keeping positive lines of communication going with your clients.  The goal is to turn them into reoccurring job opportunities and not just one-off gigs.  

If you run into problems or experience delays, be sure to let the client know this and when you can be back on track.  Be flexible and always try to be finding a solution that works for them.

Keep Up On Your Tax Records For Your Transportation Business

It’s important to report accurate financial figures to the IRS.  If you are ever audited, they would then require additional detail and want to validate all of your financial transactions.

The best way to prepare for this is to stay on top of your bookkeeping every week.  Get into the habit early by keeping detailed records and receipts for all of your transactions right from the start.  

The smart move would be to work with a tax professional at the end of the year who can help you file your taxes correctly and find the greatest amount of deductions possible.

Final Thoughts: How To Start A Transportation Business

It will definitely take some work to get your transportation business up and running. But now you know exactly how to get your business started and the things you’ll need to accomplish. If you want to learn more about starting a business, you may also enjoy our guide to the six best books on starting a business. All that’s left to do now is make use of this guide and start your transportation business!

DJ Whiteside

DJ Whiteside is a financial enthusiast who believes in helping other people to achieve financial independence. He’s constantly looking for practical ways to optimize savings, reduce spending, and create a lifetime of passive income. DJ holds an MBA from the University of Michigan, which allows him to take an analytical approach to financial topics. He has been a financial writer since 2011 and has self-published 5 personal finance eBooks relating to saving, retirement, and financial independence.

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