This page is general information about business structures. It is not legal advice. Your specific situation needs a conversation with a licensed attorney or CPA. Not a guide on the internet.
What follows is what most truckers encounter. Use it as a starting point for your own research.
Four structures exist. Most truckers use one.
| Entity Type | Formation Cost | Liability Separation | Tax Treatment | Common In Trucking? |
|---|---|---|---|---|
| Sole Proprietorship | $0 | None | 15.3% SE tax on all net | Uncommon |
| LLC | $50 - $300 | Yes | 15.3% SE tax on all net | Most common for new operators |
| LLC + S-Corp Election | LLC cost + $1,500-$2,500/yr | Yes | 15.3% on salary only | Common for established operators |
| C-Corporation | $100 - $800 | Yes | Double taxation | Rare for small fleets |
The LLC and S-Corp are not competing choices. You form an LLC with your state. Later, if the math works, you file IRS Form 2553 to elect S-Corp tax treatment on that same LLC. The state still sees an LLC. The IRS treats it differently. Two separate decisions made at two separate times.
Sole proprietorship offers no liability separation
Trucks weigh 80,000 pounds. Nuclear verdicts in trucking have increased 235% since 2012. Jury awards of $10M, $20M, $100M are no longer rare.
As a sole proprietor, there is no legal wall between your business and your personal assets. If a judgment exceeds your insurance coverage, everything you own is exposed. House. Savings. Retirement accounts (depending on state law).
An LLC creates that wall. It costs $50-$300 to form. Whether to form one is your decision, but you should understand what you’re choosing either way.
Most truckers form an LLC in their home state
The LLC is the default structure for new owner-operators because it does three things:
- Separates personal assets from business liabilities
- Costs almost nothing to form ($50-$300 in most states)
- Adds minimal ongoing complexity (annual report in most states, that’s it)
You may have heard that Wyoming or Delaware offer special advantages. For most trucking operations, that is not the case. Your USDOT number ties to your principal place of business. Forming in another state typically means paying fees in both states — your formation state AND your home state for foreign entity registration — with no practical benefit for a single-truck operation.
That said, some operators have specific reasons for forming elsewhere. If you think you might, ask an attorney. For the typical small fleet based in one state, forming at home is what most people do.
Start as an LLC. Add S-Corp when the numbers prove it.
- Form a plain LLC. Simple. Cheap. Liability separation from day one.
- Operate for at least a year. Learn your real income and expenses before optimizing tax structure.
- When net income consistently exceeds $85K, talk to a trucking-specific CPA about the S-Corp election.
- File Form 2553 if the math works. Your LLC does not change. Only the IRS treatment changes.
Adding S-Corp before you know your real income adds cost and complexity with no guaranteed benefit. The numbers have to prove it out first.
Next: Setting up your trucking business — the practical steps (EIN, bank accounts, bookkeeping) once you have decided on a structure.
LLC vs. S-Corp for Trucking: Which Business Structure Is Right? FAQ
Should I form an LLC or S-Corp for my trucking company?
Most owner-operators start with an LLC because it is simple, inexpensive ($50-$300), and provides liability separation. The S-Corp is not a different entity -- it is a tax election you can add to your LLC later (IRS Form 2553). Most CPAs suggest considering the S-Corp election when net income consistently exceeds $85,000 per year. This is general information -- talk to a CPA about your specific numbers.
Do I need to form my LLC in Wyoming or Delaware?
That is your call. Most truckers form in their home state because the USDOT number ties to your principal place of business, and forming out of state typically means paying fees in both states with no practical benefit for a small operation. If you think you have a reason to form elsewhere, ask an attorney.
When should I switch from LLC to S-Corp?
The general threshold most CPAs cite is around $85,000 in consistent annual net income. Below that, the compliance costs of running payroll and filing an S-Corp return ($1,500-$2,500/year) tend to eat the tax savings. Above that, the savings grow. This is a conversation for your CPA, not something to decide from a website.
Can I operate as a sole proprietor?
Legally, yes. Trucking is a high-liability industry -- trucks weigh 80,000 pounds and nuclear verdicts have increased significantly. As a sole proprietor, there is no legal separation between your business liabilities and your personal assets. An LLC creates that separation for $50-$300. Whether to form one is your decision.
Is this page legal advice?
No. This is general information about business structures commonly used in trucking. Your specific situation -- your state, your income, your assets, your plans -- requires a conversation with a licensed attorney or CPA. We are an insurance agency, not a law firm.
Planning your trucking company? Talk to an insurance expert first.
Same-day quotes. We explain everything. Licensed in 42 states.
Call or text: (208) 800-0640