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Couriers are more in demand than ever before, as interest to shop online increases. If you're considering starting your very own courier service, here's what to consider when setting up a new courier business.
What you will find in this post
Courier drivers are in more demand than ever before. Covid impacted the way people shopped and has changed consumer behaviour. The world was already heading towards a truly digital world, however, the onset of the virus escalated digitalisation, tenfold. People were forced to shop online, anything from essentials to luxury items. Businesses had to make their online processes more user-friendly and efficient to keep afloat. This not only proved to be more cost-efficient but also very convenient for the customers. A lot of big brands closed their expensive high street shops and set shop online. Online shopping is here to stay, and the demand is just going to get bigger as technology improves. As demand increased, logistics companies found themselves inundated with work to cater to online shopping and had to start outsourcing it to self-employed courier drivers or to small logistic companies. This is excellent news for those looking to start a courier business. One thing is sure; you won’t be out of work; as demand for online shopping continues to grow, more opportunities will come your way, in such abundance that you may find managing it a monstrous task. Let’s look into some key things you would need to consider before opening up a courier business.

Is it a match made in heaven?

I can’t tell if you will match with the courier business. However, I can tell you what the courier business is about, so you can decide if it’s the right option for you to pursue. Let’s look at the long list of preferences this business is looking out for in its potential matches:
  1. You don’t need to be a Business or MBA graduate;
  2. Prior courier experience would be helpful but not needed;
  3. Have a sound sense of direction (Pppsssssst – check out google maps)
  4. Have exceptional organisational skills, ensuring packages are delivered on time while keeping your mileage and related expenses low;
  5. You must have meticulous record-keeping abilities. (Look into management software.)
  6. Efficient time management skills.
  7. Some level of physical strength, although not looking for the world’s strongest man. – That’s a relief!
  8. A knack to communicate with your customers. Although there is not much conversation needed, be polite and to the point. Building a professional rapport with your customers will help with repeat customers.
If you think this business is up your street, then let us explore a little further, shall we?

How do I start?

Easy tiger! She is not someone you can wrap around your arm and go off to the sunset at first sight. First of all, you need the proper equipment. (Sigh – we’ve all heard that one before!) It goes without saying that you need a van. The most popular ones used in London are small transporter-type vans, designed explicitly for courier work. You can find a list of them here. If you can grab hold of an electric one, you will certainly save in the long run. We have recently written a blog post about all the money-saving advantages of opting for an electric vehicle. Furthermore, you would need equipment to secure your parcels and transport them to and from your van. You can find a whole list of equipment needed here. If you think you will struggle to purchase all of this, there are lease or finance options available. If even that is a bit of a stretch, then simply starting on a rental van can serve you well in the short term. It is worth mentioning that rental vans are always in high demand, so it’s best to book them in advance. I would also like to point out that if you’re not looking to dive into the deep end just yet, starting work as self-employed can be beneficial. Amazon will provide you with a van, petrol, and uniform. All you have to do is drive for a set day rate. If you prefer to start slightly bigger, then there are several franchise opportunities out there to explore. Now that we know you are the right fit and have all the necessary equipment, let’s look at how to run a courier business.  

Writing a business plan

‘By failing to prepare, you are preparing to fail’ Starting any business needs some level of prep work. First, you must understand what you’re getting into and have sound knowledge of your industry. This can only be done through research and planning. Business plans, by nature, are designed to outline all the pros, cons, and likely success of the venture. This will help you gain much-needed start-up funding and help you a long way in making sure you are headed in the right direction.

Things you must consider when writing a business plan

Executive plan – This section will explain what kind of business you are in, your target market, and some financial highlights. This is a brief synopsis of your entire business plan, and maybe a good idea to write it last. So often, investors will look at this first and make a judgment before they delve deeper into the rest of the document.
Market Analysis – Here, you will provide info on the current need for courier services based on the market trends.
Competitive Analysis – Understanding what your competition is doing not only helps what is required of you to make your business a success but also will help in outlining what your niche could be. This could be in the form of being a cost leader or serve the high-end market by improving the quality of the service.
Marketing Strategy  – How do you intend to gain clients. It could be through online marketing or a more traditional approach. Outlining your revenue stream will help the investor understand the potential of your business.
Sales Strategy – Making sure you are competitive yet profitable needs to reflect At your prices. Prices can be changed as your business evolves, but you need to have some sort of pricing strategy in place to start with.
Financial Projections – Without understanding where you are currently or in the next five years, it would be difficult for the investor to understand if your business is viable or not. Detailed financial projections are also vital for yourself, as they will help you benchmark against your actual figures.
You can find more guidance in our post about business plans.

What Business Structure should I choose?

The most popular business structure for anyone looking to start a courier business is to start as self-employed. This is probably the easiest and more hassle-free than other business structures. Once your revenue reaches a certain amount, you can think of registering yourself as a limited company (ltd).

Accounting and Taxes for courier companies

Having to deal with tax returns is a pain for any business. However, it is a necessary evil and something you can’t get away with. As a self-employed courier driver, you can keep all of your business profits after tax has been paid. However, ensuring your tax returns are done on a timely basis is essential. As mentioned earlier, you must be organised, and therefore keeping your receipts, invoices and any transaction that involves your business must be recorded. All of your expenses will then help reduce your tax bill. Your tax year is between 06 of April to 05th of April, and you have until 31st of January to submit your tax returns. Failure to do so on time will cause unnecessary penalties! If you are considering registering as a ltd company, you must submit your accounts to Companies House once a year and submit your tax returns. If, as a director, you have taken any money from the business, you will be considered as a self-employed person and, therefore, will have to submit your self-assessment tax returns as well. Please read our articles ‘Top 5 perks of running a limited liability company’ and ‘How much tax should self-employed businesses pay’ to be able to make an informed decision on which business structure is best for you.

How can Evotax Help?

EvoTax specialises in small owner-managed businesses like self-employed, small ltd companies, and partnerships. We deal with many courier businesses, and therefore our experts hold an in-depth understanding of this industry. Our bespoke accounting services cover everything from final accounts, corporation tax, bookkeeping, payroll, VAT returns, self-assessment tax returns, and much more. Get in touch with us today for a free consultation!

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About the Author

Bilal Khalid

CEO, Accountant

Bilal Khalid EvoTax accountant

Successfully running my own small business for years has taught me a great deal about the complexities of taxation and I understand all the pain points that every entrepreneur has to go through. I often found myself paralysed with fear of making a mistake and getting fined and eventually decided to take up accounting and finances myself. Today, I help other small businesses suffering through similar mistakes and I am happy to share my knowledge, jargon free!

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