Guide
From One Truck to a Small Fleet
Going from one truck to two is the largest single step in a haulage business, larger in proportion than going from five to ten. Everything that was informal has to become a system, and four separate obligations arrive at once.
None of them are difficult on their own. What causes trouble is meeting them in the wrong order, usually because a customer needed the second vehicle running by the end of the month.
Last reviewed
Written by the HGV Accountants editorial team
- Who this is for
- HGV owner-drivers considering a second vehicle, and operators who have just taken one on.
- The problem
- The second truck is usually taken on because the work is there, and the work being there is the only one of the five things that have to line up.
The Order to Do It In
Check the licence before the truck
Vehicles have to be authorised on the operator licence. If your licence authorises one vehicle, a second one needs a variation, and that is an application with a lead time, not a form you send afterwards.
Work out the financial standing you will need
The requirement rises with each additional heavy goods vehicle. Work out the new figure and confirm you can evidence it before committing to the vehicle. The calculator does the arithmetic.
Decide the structure before the finance
An operator licence is held by a legal entity. If you are a sole trader and are likely to incorporate within the year, doing it before the licence variation avoids applying for a licence twice.
Set up payroll before the first payday
PAYE registration, real time reporting and automatic enrolment all start with the first driver, not at the year end. See HGV payroll and driver allowances.
Fund the gap
The second truck spends before it earns: deposit, insurance, fuel and a driver's wages, all before the first customer pays on their own terms. This gap is where most second trucks hurt.
The Cash Flow Gap
The arithmetic is unforgiving and predictable. The driver is paid weekly or monthly from day one. Fuel is paid on the card cycle. The finance payment starts immediately. The customer pays 30, 45 or 60 days after invoice, and the first invoice cannot be raised until the work is done.
That means a second truck typically needs somewhere between six and twelve weeks of its own running costs available before it starts contributing, on top of the deposit and on top of the additional financial standing. Working that figure out is the difference between growth and a very stressful quarter.
What Has to Change in the Books
The bookkeeping changes that make a two-truck business readable
- Every cost coded to a vehicle: fuel, tyres, repairs, insurance, finance and driver.
- Revenue coded to a customer and, where possible, to a vehicle.
- Payroll running properly, with allowances treated correctly rather than as cash.
- Fuel card statements posted as invoices, with the bank payment allocated against them.
- A monthly rather than annual reporting cycle, because a quarter is too long to notice a truck losing money.
- Financial standing tracked as a live figure, not recalculated when the licence is reviewed.
Sole Trader or Limited Company at This Point
Two trucks is the point where incorporation usually starts to make sense, for reasons that are only partly about tax.
- Limited liability matters more once somebody else is driving a vehicle in your name.
- Financial standing is often easier to evidence in a company, where the money sits in an account in the entity's own name and matches the Companies House record.
- Larger customers and pallet networks are more comfortable contracting with a company.
- Retained profit can fund the third truck without passing through personal income tax first.
- Against that: more filing, more cost, and a licence application rather than an amendment if the change happens after the licence is granted.
Common Questions
Can I put a second truck on the road while the licence variation is pending?
No. A vehicle has to be authorised on the licence before it is used. Operating an unauthorised vehicle puts the whole licence at risk, which is a considerably larger problem than a delayed start date with a customer.
How much extra money do I need available for the second truck?
Three separate amounts, and they are additive: the additional financial standing for the extra vehicle, the deposit and set-up costs, and enough working capital to run the truck through the gap between spending and being paid. The last one is the one that gets left out.
Should I employ a driver or use an agency for the second truck?
An agency costs more per hour and gives you flexibility while you find out whether the work is permanent. Employing is cheaper per hour and brings payroll, pension and holiday obligations. Many operators start with agency cover on a new vehicle and employ once the work has proved itself, which is a reasonable way to buy time.
Do I need to change accountants when I take on a second truck?
Not necessarily, but you should expect the reporting to change. If your accounts still arrive once a year as a single set of totals, they will not tell you which of the two trucks is working, and that is the only question that matters at this stage.
Related Guides
- O-Licence Financial StandingHow much has to be available, how it is evidenced, and what happens if the balance falls.
- HGV Payroll and AllowancesPAYE, employer costs, night-out payments and the conditions attached to paying them free of tax.
- Buying or Financing a TruckHire purchase, lease or contract hire, and what each does to tax, VAT and the bank balance.
A Fixed Quote for the Truck or the Fleet
Tell us how many vehicles you run, whether you are a sole trader or a limited company, and what is outstanding. We reply by email with a fixed price and the dates the work has to be finished by.
- A fixed fee agreed before any work starts
- Nothing charged until you accept the quote
- We tell you if you do not need what you asked for
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