Starting a delivery business, moving service, or trucking company involves more than just buying a truck and finding customers. One of the first decisions you’ll face is how to set up your business legally. We’ve heard from other delivery professionals that a sole proprietorship or a limited liability company (LLC) are popular options.
The choice you make can impact your taxes, liability protection, growth opportunities, and credibility with clients and brokers which is why some delivery professionals talk to a licensed lawyer and/or accountant before making a decision. Below, we’ll review information about sole proprietorship vs. LLC for delivery professionals so you can better understand which option fits your goals.
What is a Sole Proprietorship in the Delivery, Moving, or Trucking Industry?
A sole proprietorship is the simplest business structure. You and your business are legally the same, which makes it easy and inexpensive to start. Many independent delivery drivers and small moving companies start this way.
Pros of a Sole Proprietorship
- Minimal setup costs and paperwork
- Income is reported directly on your personal tax return
- Good for small, part-time side hustles or local operations
Cons of a Sole Proprietorship
- No liability protection. Your personal assets are at risk in the event of accidents, lawsuits, or unpaid debts
- Limited credibility with brokers, shippers, and larger clients
- Fewer tax planning options as your income grows
What is an LLC in the Delivery, Moving, or Trucking Industry?
An LLC (Limited Liability Company) is a more formal business structure that creates separation between your personal finances and your business. Many owner-operators in trucking and growing moving companies choose this option because it offers both legal protection and tax flexibility.
Pros of an LLC
- Liability shield that helps protect personal assets
- More credibility with brokers, clients, and lenders
- Better positioned for growth, scaling, and hiring employees
Cons of an LLC
- Higher startup costs (state filing fees, annual fees)
- Requires more paperwork and compliance (operating agreements, annual reports)
LLC vs. Sole Proprietorship: Comparison for Delivery, Moving, and Trucking Businesses
Sole Proprietorship
- Liability: No separation, personal assets (house, savings, etc.) are at risk in accidents or lawsuits
- Startup Costs: Inexpensive, typically just a DBA filing and license
- Taxes: Income reported on personal return (Schedule C), all profits are subject to self-employment tax
- Credibility: May look less professional to brokers, shippers, and lenders
- Growth Potential: Best for one person operations or part-time side hustles
- Insurance: Requires commercial auto, cargo, and liability insurance.
LLC (Limited Liability Company)
- Liability: Protects personal assets, only business assets are exposed (if formalities are followed)
- Startup Costs: Requires state filing ($50 – $500+), annual fees, and compliance paperwork
- Taxes: Pass-through taxation by default, with the option to elect S Corp for tax savings as business grows
- Credibility: Seen as more professional and stable, often preferred by larger clients and partners
- Growth Potential: Scales easily for multiple trucks, employees, and long-term contracts
- Insurance: Same insurance needs, but LLC provides added liability protection
Which Structure is Best for Your Delivery, Moving, or Trucking Business?
- If you’re just starting with one truck or van and handling small, local delivery or moving jobs, a sole proprietorship may be a cost-effective way to test the waters.
- If you plan to expand your trucking company, sign contracts with freight brokers, or transport high-value goods, an LLC is usually the better choice. The legal protection, tax options, and professional credibility can help you secure more business and grow with confidence.
Disclaimer
GoShare is not a law firm or accounting service. This information is provided for educational purposes only and should not be taken as legal or tax advice. Every state has different requirements, and every business situation is unique. Before making a decision, we strongly recommend consulting with a licensed attorney and/or accountant to determine the best structure for your delivery, moving, or trucking business.