In short: Starting a logistics company in the UK usually means setting up a limited company, registering for the right taxes, obtaining any licences your activities require, arranging specialist insurance, securing premises or vehicles, putting systems in place and pricing your services on a realistic understanding of cost. The businesses that succeed are usually the ones that plan their cash and pricing properly from the start, because logistics commits to costs long before customers pay.
Logistics is a sector with plenty of opportunity. Ecommerce growth, changing supply chains and demand for specialist storage and delivery all create room for new operators. It is also a sector with thin margins, heavy fixed costs and significant regulation, where early decisions about structure, pricing and funding have a lasting effect.
This guide explains how to start a logistics company in the UK, step by step, from choosing your business model to winning your first clients. It is written from an accountant's perspective, as part of our wider work as accountants for third party logistics companies.
Starting a logistics company involves more than buying a van or leasing a unit. You are building a business that takes responsibility for other people's goods, commits to fixed costs before it earns income, and operates in a regulated environment. That means getting several things right at once: the legal structure, tax registrations, licences, insurance, premises, vehicles, systems, contracts, pricing and funding.
Most new logistics businesses begin in one of a few ways. A driver sets up an independent courier operation. A haulier starts with one or two vehicles and grows. An operator with warehousing experience opens a unit to serve ecommerce clients. A business with spare space starts storing goods for others. We look at these routes in more detail in our guide to what third party logistics is and how the 3PL model works.
The type of business you start shapes almost everything that follows, from licences and insurance to funding and cash flow.
A warehousing or fulfilment business stores and handles goods for clients. It needs premises, racking, handling equipment, a warehouse management system and staff, and its main risks are fixed costs and underused space. A courier or last mile delivery business moves parcels and small consignments, usually with vans, and its economics depend on drop density, route planning and vehicle costs. A haulage or transport business moves larger loads with heavy goods vehicles and must meet operator licensing requirements. A freight forwarding business arranges the international movement of goods, often without owning vehicles, and relies on customs expertise and carrier relationships.
Many businesses combine more than one of these over time. Knowing where you are starting helps you plan the first year realistically. Our guide to third party logistics explains the different types of provider and how each one charges.
Start with who you will serve and what you will do for them. A logistics business that tries to handle every type of client and product from day one usually struggles. Choosing a clear focus, such as ecommerce fulfilment for small brands, temperature controlled storage, pallet distribution in a particular region or same day courier work for local businesses, makes it easier to set up the right operation, price accurately and win clients who value what you do.
Most people starting a logistics business choose to operate as a limited company. A company is a separate legal entity, which offers the owners limited liability, an important consideration in a sector that involves vehicles, staff and responsibility for clients' goods. It is also the structure most larger customers, lenders and insurers expect to deal with, and it can offer flexibility in how profits are taken and taxed.
If you are starting with a business partner, a shareholders' agreement setting out ownership, decision making and what happens if one of you leaves is worth putting in place from the outset.
A limited company is registered with Companies House. Directors and people with significant control now need to verify their identity with Companies House as part of that process. Once the company starts trading, it must register for Corporation Tax with HMRC.
If you will employ staff, including yourself as a director on the payroll, the company needs to register as an employer and operate PAYE before the first payday. Workplace pension duties apply to eligible employees from the start. Getting payroll right matters in logistics because shift work, overtime, agency staff and seasonal peaks all add complexity, which we cover further in our guide to payroll for warehousing and logistics companies.
VAT registration becomes compulsory once taxable turnover passes the registration threshold, but many new logistics businesses register voluntarily from the start. Most of their customers are VAT registered businesses that can reclaim the VAT charged, and registration allows the logistics company to reclaim VAT on vehicles, equipment, fit out costs and fuel. The VAT position on services supplied to overseas clients can be more complex and is worth checking before you take on that work.
Which licences you need depends on what you do.
If you will operate goods vehicles over 3.5 tonnes, or vehicle and trailer combinations over that weight, for business purposes, you will normally need a goods vehicle operator licence from the Traffic Commissioner. Carrying goods for other businesses for payment requires a standard licence, which involves appointing a qualified transport manager, showing that you have enough money to run the operation safely, and meeting maintenance and operating centre requirements. Vans used to carry goods for hire or reward internationally may also need a licence.
If you will store goods in the UK on behalf of sellers based overseas, you may need to register with HMRC under the Fulfilment House Due Diligence Scheme before you begin that work. Operating without registration where it is required is a serious matter.
If you will move goods into or out of the UK, you will need an EORI number. Depending on your services, you may also need to consider customs authorisations, bonded storage approval or specialist permissions for regulated goods such as food, chemicals or pharmaceuticals.
Insurance is one of the most important, and most often underestimated, costs of starting a logistics business. Employers' liability insurance is a legal requirement once you employ staff, and motor insurance is required for every vehicle. Beyond those, most logistics businesses need goods in transit cover, warehouse keepers' liability cover for goods in storage, public liability insurance and, depending on the services offered, cover for contractual liabilities to clients.
Your insurance and your trading terms need to work together. Many operators trade on recognised industry terms and conditions that limit their liability for goods, and insurers will want to know which terms you use. Getting this wrong can leave a business exposed to claims far larger than it can absorb.
For a warehousing or fulfilment business, premises are usually the largest commitment. Check that the property has the right planning use for storage and distribution, and budget for rent, business rates, service charges, energy, racking, security and fire safety, as well as the fit out needed before you can operate.
For a transport or courier business, the key decision is how to acquire vehicles: buying outright, hire purchase or leasing. Each has different effects on cash, tax and flexibility. Our guide to fleet tax and capital allowances explains how vans, lorries and electric vehicles are treated and how the funding method affects the outcome.
Logistics runs on systems. A warehousing business needs a warehouse management system that can integrate with clients' sales channels. A transport business needs route planning, proof of delivery and, often, telematics. Every logistics business needs cloud accounting software that connects to those operational systems, so that billing is accurate and reporting is timely.
Setting up bookkeeping and cost coding properly from day one makes it far easier to see later which clients and activities are profitable. We look at the options in our guide to accounting software for logistics companies, and connecting the systems is the type of work our tech advisory team supports.
Pricing is where many new logistics businesses go wrong. It is tempting to win early clients with low rates, but prices set without an understanding of the true cost of the work tend to be repeated as the business grows. Build your rates from the bottom up: the cost of space, labour, equipment, vehicles, systems and overheads, plus a margin that reflects the risk you are taking on.
Most logistics pricing is built from several components, such as storage, handling, pick and pack, transport and additional services. Understanding the cost behind each one, and tracking the logistics and warehouse KPIs that show whether each client is profitable, gives you the confidence to price accurately and to walk away from work that does not pay.
A logistics business needs a clear financial plan before it opens. That means a profit forecast showing when the business is expected to become profitable, and a cash flow forecast showing how much money it will need along the way. The second is usually the more important. Wages, rent, fuel and carriers are paid quickly, while customers pay on credit terms, so a growing logistics business can be profitable and short of cash at the same time. Our guide to cash flow and working capital management explains why and how to plan for it.
Funding for a new logistics company can come from the owners' own capital, start up loans, bank lending, asset finance for vehicles and equipment, invoice finance once the business has customers, or outside investment. Lenders and investors will expect to see realistic forecasts and a clear explanation of the assumptions behind them.
Every client relationship should be underpinned by a written agreement covering the services provided, rates, payment terms, liability for goods, minimum volumes, notice periods and how prices will be reviewed. Clear terms protect your margin and your cash, and they make disputes far less likely.
Early clients often come from existing relationships and referrals. As you grow, a clear focus on a particular type of client or product makes marketing far easier, because you can show exactly how you solve their problem.
Starting a transport business follows the same principles, with a greater focus on vehicles, drivers and compliance. If you plan to run vehicles over 3.5 tonnes, the operator licence is the first priority, as it can take time to obtain and determines how many vehicles you can run and from where. You will need a transport manager with the right qualification, either yourself or someone you appoint, and systems for vehicle maintenance, driver hours and tachograph records.
If you are starting a courier business with vans under 3.5 tonnes used only in the UK, an operator licence is not normally required, which makes it easier to start. The financial disciplines still apply: understanding your cost per drop and per mile, planning for vehicle replacement and making sure your rates cover the true cost of running the fleet.
Many transport businesses start with owner drivers or subcontractors. That can keep fixed costs down, but the employment status of drivers needs careful handling, as it affects tax, National Insurance and employment rights.
The cost varies enormously with the type and scale of business. A single van courier operation can start with relatively modest capital. A warehousing and fulfilment business with its own unit, racking, equipment and systems needs considerably more, and a haulage business with heavy goods vehicles sits at the upper end.
Rather than a single figure, the useful question is what the business needs to fund before it becomes cash positive. That usually includes premises deposits and fit out, vehicles and equipment, systems, insurance, licensing, initial wages and the working capital needed to bridge the gap between paying costs and being paid. A properly built cash flow forecast answers that question far more reliably than any rule of thumb.
The most common mistake is underpricing early work to win clients, then finding that the rates cannot support the business as it grows. Close behind it is underestimating the cash needed to fund the gap between paying costs and being paid.
Others include taking on premises or vehicles too large for the initial client base, relying heavily on one or two clients, trading without clear written terms, choosing systems that cannot integrate with clients or with the accounts, and overlooking licensing, insurance or registration requirements until they become urgent. Most of these can be avoided with realistic planning and good advice before the business commits to its biggest costs.
It is also worth setting up reporting early. A business that can see margin by client from its first year, through proper management accounts, is far better placed to grow profitably than one that only finds out at the year end.
We work with logistics businesses from their first day. For new companies, that usually starts with the foundations: choosing and setting up the right structure, registering for Corporation Tax, PAYE and VAT, setting up cloud accounting and bookkeeping with the cost coding the business will need later, and building the profit and cash flow forecasts that lenders and investors expect to see.
This is the compliance and foundations stage of our 5 Stage Success Journey, followed closely by tech advisory to connect operational systems with the accounts. As the business grows, the same foundations support margin reporting, tax planning and, eventually, a business that holds its value. You can read more about how we support the sector on our page for logistics accountants and 3PL accounting.
It depends on what you do. Operating goods vehicles over 3.5 tonnes for business usually requires a goods vehicle operator licence. Storing goods for overseas sellers may require registration under the Fulfilment House Due Diligence Scheme. Moving goods into or out of the UK requires an EORI number. A warehousing business serving UK clients does not usually need a specific licence, but must meet planning, health and safety and insurance requirements.
Most people do. A limited company offers limited liability, which matters in a sector involving vehicles, staff and responsibility for clients' goods. It is also the structure most larger customers, lenders and insurers expect, and it can offer flexibility in how profits are taken.
Yes. Many courier businesses start with a single van. If the van is under 3.5 tonnes and used only in the UK, an operator licence is not normally required. You will still need suitable insurance, and your rates need to cover the full cost of running and eventually replacing the vehicle.
VAT registration is compulsory once taxable turnover passes the threshold, but many new logistics businesses register voluntarily from the start. Their customers can usually reclaim the VAT charged, and registration allows the business to reclaim VAT on vehicles, equipment and fit out costs.
Employers' liability and motor insurance are legal requirements where they apply. Most logistics businesses also need goods in transit cover, warehouse keepers' liability for goods in storage and public liability insurance. The right cover depends on your services and your trading terms.
Common sources include the owners' own capital, start up loans, bank lending, asset finance for vehicles and equipment, invoice finance once the business has customers, and outside investment. Lenders and investors will expect realistic profit and cash flow forecasts.
If you are planning to start a logistics, transport or fulfilment business, the decisions you make before you open will shape the business for years. Pulse supports logistics companies across the UK from our offices in Newton Aycliffe, Newcastle and London. If you are planning to start in the capital, our guide to 3PL accountants in London covers the particular costs of operating there.
Speak to our team about setting up your logistics company on the right foundations.