How to Start a Cargo Van Business: 10 Steps and Costs

How to Start a Cargo Van Business

A cargo van business is the cheapest legitimate way into for-hire freight. You can buy a used Transit for the price of a hotshot trailer, skip the CDL, skip the ELD, and start moving expedited loads in a few weeks. That low cost of entry is real, and it is exactly why the lane is crowded. Cheap to start is not the same as easy to run at a profit. Van rates per mile are lower than a tractor-trailer's, the loads are small and usually one-directional, and the operators who clear money are the ones who treat fuel and deadhead as the costs that actually decide the month.

This guide walks through 10 concrete steps, real dollar figures, and a first-year profit and loss example so you can see what a single cargo van actually produces. For the wider independent picture, the owner-operator hub covers the whole landscape, and the owner-operator startup guide lays out the road for any first truck or van.

Step 1: Pick Your Business Model First

Most people buy the van first and figure out the work later. That is backwards. Your model decides your insurance, your hours, and your income. Most working van operators run one of these, and the best ones run two at once.

A dedicated or contracted delivery account is the steady base. Amazon DSP and Flex-style delivery, a standing courier route, or a medical and lab courier contract pays a predictable rate for predictable miles. It rarely makes you rich, but it covers the van payment and insurance while you build the rest.

Expedite and hot freight off the boards is the upside. When a shipper needs a pallet moved now and a full truck is overkill, that load goes to a van. It pays better per mile than dedicated work, but it is irregular and the deadhead can eat the premium. The cargo van loads guide covers where that freight comes from and which boards list it.

Final-mile, last-mile, and small-partial LTL fill the rest. Furniture, appliances, building-supply runs, and single skids that a box truck or van handles cheaper than a tractor.

The operators who survive year one usually pair a contract for the floor with expedite freight for the ceiling. A pure load-board van with no contract behind it is the most exposed setup there is.

Step 2: Register Your Business

Set up a legal entity before you buy the van or file for authority. An LLC is the standard choice for a one-van operation. It separates your personal assets from the business, costs $50-$500 depending on your state, and looks more legitimate to brokers, contract holders, and lenders than a sole proprietorship.⁶

You can file as a sole proprietor for free, but you get no liability protection. Rear-end someone on a delivery run and have the claim exceed your policy, and your personal assets are exposed. For the price of a state filing fee, the LLC is worth it.

Hold off on the S-Corp election until your net income clears roughly $50,000-$60,000. Below that, the payroll paperwork costs more than it saves.

Step 3: Get Your EIN

The Employer Identification Number is your business's federal tax ID. You need it to open a business bank account, file for operating authority, sign on with delivery contracts, and set up factoring. It is free, takes about five minutes on irs.gov, and you get the number immediately. Print the confirmation letter and keep it, because nearly every form after this asks for the EIN.

Step 4: Buy the Van

The four standard cargo vans are the Ford Transit, Ram ProMaster, Mercedes Sprinter, and Chevy Express. All four are rated under 10,001 lb GVWR, which is what keeps you off the CDL hook and out of the ELD mandate. Check the door-jamb sticker before you buy -- a few extended high-roof builds creep toward the line, and dual-rear-wheel cutaway versions can cross it.

A used van is the right call for almost every new operator. A clean Transit or ProMaster with 80,000-150,000 miles runs $15,000-$30,000. An older Sprinter with the diesel runs $10,000-$25,000 but watch the DEF and emissions systems, which are expensive to repair. A new van runs $40,000-$55,000 and the payment eats into a margin that is already thin, so new only makes sense with a contract behind it.

Roof height and floor length matter more than badge. A high-roof, extended-length van lets you stand up inside and fit more pallets, which widens the freight you can take. Pay $100-$200 for a pre-purchase inspection by a mechanic who knows the platform. The Sprinter diesel in particular can turn a cheap buy into a money pit.

To compare cost of ownership against a truck before you commit, run the numbers in the owner-operator calculator.

Step 5: Get a USDOT Number and Operating Authority

Running a van instead of a truck does not exempt you from federal registration. If you haul freight for hire across state lines, you need a USDOT number and FMCSA operating authority -- an MC number -- no matter that the van weighs under 10,001 lb.² The trigger is the operation (interstate, for hire), not the vehicle size. A cargo van running paid freight from Ohio to Indiana needs authority just like a tractor-trailer does. This is the single thing new van operators most often get wrong.

Apply through FMCSA's registration system. Request the USDOT number and the MC authority in the same application and pay the $300 filing fee. Processing takes about 3-6 weeks, and you cannot legally haul for hire until your authority is active.

Two exceptions are worth knowing. If you run entirely within one state, intrastate rules vary and some states require their own registration. And if you sign on with an Amazon DSP or a courier company as a contracted driver under their authority, they cover the authority and you may not need your own. Know which arrangement you are in before you file.

Step 6: File Your BOC-3

A BOC-3 designates a process agent in every state where you operate -- someone who can legally accept court documents for your business. FMCSA requires it before your operating authority can activate. National filing companies handle it for a one-time $30-$80 fee. File it the same day you apply for authority so it is not what holds up your activation.

Step 7: Get Commercial Insurance

Cargo van insurance runs less than a truck's but more than new operators expect, usually $4,000-$9,000 for the first year on new authority. Younger drivers, expedite work, and high-value cargo push it to the top end.

You will typically carry primary liability, cargo coverage, and physical damage on a financed van. Here is where the van model has a real edge: the federal financial-responsibility minimum is $300,000 for a vehicle under 10,001 lb hauling non-hazardous freight, against the $750,000 that applies to heavier trucks.³ That $300k is your legal floor. In practice, most brokers and shippers require a $1,000,000 liability limit before they will load you, and Amazon and the larger courier contracts often require $1,000,000 as well, so quote that limit even though the law asks for less.

Get at least three quotes from agents who specialize in trucking and understand the cargo van class specifically. A general auto agent will overcharge you or write the wrong coverage. For coverage types and the specific cost drivers on a van policy, see the cargo van insurance guide.

Step 8: Set Up Accounting and Bookkeeping

Open a separate business checking account on day one and run every dollar of revenue and expense through it. Mixing personal and business money can void the liability protection your LLC was supposed to give you.

Use simple accounting software -- QuickBooks, Wave, or a trucking-specific tool. Track fuel, maintenance, insurance, the van payment, tolls, and parking from day one. As a self-employed operator you owe 15.3% self-employment tax on net earnings on top of income tax,⁵ so set aside 25-30% of net income and pay quarterly estimates. Operators who skip this get a brutal surprise the following April.

One thing the van model makes easier: with no ELD and no federal HOS logging on a sub-10,001 lb vehicle, you have less compliance paperwork than a Class 8 driver.⁴ That is real time saved, but it is not a reason to drive tired or to skip the books.

Step 9: Find Your Freight Source

This step decides whether the business works. Where do the loads come from? Match this back to the model you picked in Step 1.

Dedicated and contract work is the steady leg. Signing on with an Amazon DSP, a regional courier, or a medical-lab account gives you predictable revenue and predictable miles. The rate per mile is modest, but the volume is reliable and you are not hunting for every load.

Load boards are the fastest way to find expedite freight and the easiest way to lose money if you do not watch your numbers. DAT, Truckstop, and the expedite-specific networks list the partials and hot loads sized for a van. The cargo van loads guide breaks down which boards and networks actually carry van freight, because the major boards bury it under truckload listings.

Expedite carriers and networks will lease you on under their freight and their relationships, which puts you to work fast while you learn which lanes pay. You give up margin for the steadier flow.

Most operators who last build the contract first for the floor, then layer board freight on top to fill the empty days.

Step 10: Set Up Factoring and Book Your First Load

Brokers and contracts pay on 15-60 day terms. You deliver today and see the money weeks later, but fuel and the van payment do not wait. That gap is the most common reason a new operation runs out of money before it runs out of work.

Factoring sells your invoices to a company that advances most of the value within a day or two for a 1-4% fee. Expedite freight and van loads have their own factoring fit -- see factoring for expediters for how the fee structures compare. If you have 60-90 days of expenses in reserve, you can ride the gap without factoring, but most new operators on board freight need it.

Before you accept anything, know your break-even cost per mile. Add monthly fixed costs (van payment, insurance, permits) and variable costs (fuel, maintenance, tolls), then divide by realistic loaded miles. A cargo van's total cost per mile commonly lands between $0.70 and $1.10 -- lower than a truck, but so are the rates, which is why deadhead is what decides the month. ATRI's annual operational-cost research⁷ is a useful benchmark for the line items. Our cost per mile guide walks through the math.

Then book the first load. Start short -- a 100-300 mile run lets you shake out the paperwork and the routing before you commit to a 900-mile expedite run. Check every load against your break-even number and account for the empty miles to your next pickup. A load that pays $400 to run out to a drop can lose money if you deadhead 200 miles home with nothing to haul back.

Total Startup Cost Summary

The low end assumes a cheaper financed van, lean reserves, and a contract that starts paying quickly. The high end is a higher down payment, fuller reserves, and expedite work that needs more cushion before the first checks clear. If you already own a suitable cargo van outright, you can launch closer to $6,000-$10,000 by adding only insurance, authority, accounting, and reserves. Either way, this is a fraction of the $29,000-$66,000 a hotshot or the six figures a Class 8 truck takes. For a fuller breakdown of either, the sprinter van business guide covers the diesel-Sprinter version of this same model.

Sample First-Year Profit and Loss

Here is an illustrative year for a single operator running a financed Ford Transit on a mix of a dedicated courier contract and expedite freight off the boards. These are example numbers, not a promise -- your contract rate, lanes, fuel prices, deadhead, and miles will differ.

That is a working first year for an operator still building accounts. Fuel and insurance together are nearly half of expenses, which is the van reality -- gas or diesel burn plus a new-authority premium. The path to a stronger second year is straightforward: a better-paying dedicated contract for the floor, more expedite freight at premium rates, fewer deadhead miles, and an eventually paid-off van erasing that payment. Operators who land a solid contract and run a tight second van clear $50,000-$65,000 in take-home; the ones who chase cheap board loads and run empty half the time often lose money. For the full method behind these figures, see the owner-operator startup guide.

Common Mistakes New Cargo Van Operators Make

Assuming no CDL and no ELD means no rules. Interstate for-hire freight needs USDOT and MC authority regardless of weight, and you still answer to the $300,000 financial-responsibility minimum and to load securement.

Buying the van before lining up the work. A van payment and an insurance bill with no contract and no freight behind them are just two bills.

Running on the $300k minimum when contracts want $1M. Quote the higher limit up front so you are not re-shopping insurance the week a good contract asks for proof.

Ignoring deadhead. Van rates are low enough that a 200-mile empty leg can erase the load that earned it. Price every run round-trip.

Going pure load-board with no contract. The steadiest van operators have a dedicated account paying the fixed costs while the boards add the upside.

Living off the gross. Self-employment tax and quarterly estimates are not optional. Set the money aside every week.

Next Steps

You have got the 10-step roadmap. Three things to do next:

1. Run your numbers. Plug your real van price, fuel, and expected miles into the owner-operator calculator and check the output against the cost per mile guide before you spend a dollar.
2. Decide where the freight comes from. The cargo van loads guide shows which boards and contracts actually carry van freight, and the factoring for expediters guide covers funding the gap.
3. Compare the platform. If you are weighing a diesel Sprinter against a gas Transit, the sprinter van business guide lays out that trade.

The cargo van is the lowest-cost legitimate door into freight, which means plenty of people walk through it. The ones still running in year three are the operators who paired a contract with the boards, quoted the right insurance limit, and treated fuel and deadhead as the real costs they are.