How to Start a Junk Removal Business

A junk removal business is simple to explain and hard to run sloppily. You show up with a truck and a crew, carry out what the customer wants gone, and make sure every item ends up somewhere it is allowed to go. The startup list is short: a truck or a dump trailer, strong backs, a disposal plan and the paperwork that makes you a real company. What separates the businesses that last from the ones that stall is usually the parts nobody sees on the job: where the loads are dumped, what each item costs to get rid of, and who is liable when a doorframe gets gouged or a helper hurts his back.

This guide walks through starting one in the order the decisions come up, from picking your services and disposal sites to forming the company, getting the permits that apply to haulers and trucks, hiring a crew and booking the first jobs.

How to start a junk removal business, step by step

1. Decide what you will haul and where. Junk removal covers very different jobs. A one-item couch pickup, a full house cleanout after a move or an estate sale, a contractor's pile of drywall and lumber, and a commercial office clear-out each need different trucks, crews and disposal sites. Start with the work you can do well with one truck, and write down what you will not take: most new companies refuse paint, chemicals, propane tanks, asbestos and anything else that needs special handling, and refer those calls elsewhere. Set a service area you can cover in a day with time left to unload.
2. Line up where every load goes. Disposal is your largest running cost after labor, and it is the part most new owners underestimate. Call the transfer stations, landfills, scrap yards, construction and demolition recyclers and donation centers within reach. Ask what each accepts, whether it charges by weight or by volume, its hours for commercial haulers and whether it offers accounts. Many sites ask a hauling company for its business name and tax number to open one. A load that can be split between a scrap yard, a donation center and a recycler often costs far less to dump than one that goes entirely to the landfill.
3. Form an LLC for the business. Junk removal is physical work on other people's property with a heavy vehicle, which is exactly the kind of risk owners want held by a company. The LLC owns the truck, signs the job agreements and is the party a customer's claim is brought against, backed by its insurance. The filing itself is short; the general steps are in how to start an LLC, and a one-owner company is explained in single-member LLC.
4. Get the company's EIN and a bank account. Once the state approves the LLC, the company gets its own federal tax number and its own bank account. The section below explains why a hauling company needs the number early.
5. Get the local licenses and hauling permits. Almost every city or county wants a general business license or registration. On top of that, some states and many cities license or register anyone who hauls waste for others. New Jersey is the strictest example: its Department of Environmental Protection requires junk removal and cleanout companies that haul solid waste generated by others to hold an A-901 license and a Certificate of Public Convenience and Necessity, and to display licensed hauler decals on their trucks. Other places issue hauler permits through the city, require a decal from the local transfer station or have no hauler rule at all, so ask your city, your county and your state environmental department before the first paid load.
6. Equip and insure the truck. Most companies start with a box truck, a dump truck or a pickup and a dump trailer. Title it in the company's name and insure it with a commercial auto policy, because personal auto policies commonly exclude business use. Add general liability insurance for damage on the job site, such as a scraped floor or a broken railing. The size of the vehicle also decides which federal trucking rules apply, covered in the table below.
7. Hire a crew the right way. Helpers who show up when you schedule them, ride in your truck, use your equipment and follow your instructions are generally employees, not contractors. The IRS weighs behavioral control, financial control and the relationship of the parties, and what you call the worker does not decide it (see IRS Topic 762). Employees mean payroll, withholding and, in most states, workers' compensation insurance, plus state withholding and unemployment accounts, listed state by state on llc-ein.com.
8. Set your pricing and start booking jobs. The common pricing model is by volume: a minimum charge for a single item, then fractions of a truckload, with surcharges for heavy material such as concrete or for items that cost extra to dump. Build your prices from your real disposal costs, labor hours and fuel, not from a competitor's website. Your best early customers are often repeat referrers: real estate agents, property managers, estate sale companies, landlords between tenants and contractors.

The truck rules that depend on size

Two federal thresholds matter to a junk hauler, and both are set by the vehicle's weight rating, not by how full it is. The FMCSA requires a USDOT number for a vehicle used in interstate commerce with a gross vehicle or combination weight rating of 10,001 pounds or more, and interstate includes a trip that starts, ends or passes through another state. A pickup towing a loaded dump trailer can cross that line once the two ratings are combined. Some states require a USDOT number even for haulers that never leave the state. The CDL rules start higher, at 26,001 pounds.

Items that need special handling

Most of what you haul, furniture, boxes, yard waste and household clutter, can go to a transfer station or a recycler. A few categories come with their own rules, and handling them right is part of the job. Refrigerators, freezers and window air conditioners hold refrigerant. Under the EPA's safe disposal rules, the last party in the disposal chain, such as the scrap recycler, must make sure the refrigerant was recovered, and a hauler or technician who removed it earlier has to give that party a signed statement. Expect scrap yards to ask for it. Paint, solvents, pesticides and batteries are household hazardous waste, which the EPA directs to local collection programs, and the rules vary by state and city.

Why junk haulers form an LLC

You can start hauling as a sole proprietor under your own name, and some owners do for the first few weekends. The case for a company gets strong quickly in this business, for three reasons.

• Job-site damage and injuries. Carrying a sleeper sofa down a narrow staircase is how walls get gouged and backs get hurt. With an LLC, a customer's claim is a claim against the company and its insurance, not against your house and savings, as long as the company is run as a separate business.
• The truck. A vehicle owned and insured by the company keeps a road accident tied to the business that was operating it.
• Commercial accounts. Transfer stations, property managers and contractors deal more easily with a registered company that has its own tax number, insurance certificate and bank account.

The comparison with staying a sole proprietor is laid out in LLC vs sole proprietorship, and how owners take money out of the company once jobs are paying is covered in how to pay yourself from an LLC. An operating agreement matters most when two partners split the truck and the work: it says who owns what share and what happens to the truck if one leaves.

The EIN step for a junk removal company

A junk removal company usually needs its federal tax number sooner than other small businesses. The IRS requires an EIN to pay wages, and most haulers hire a helper early, because two people move a couch and one does not. Transfer stations and landfills that open commercial accounts ask for the company's tax number, so do equipment dealers and lenders on a truck or trailer, and property managers and contractors send a W-9 form before they pay the first invoice. A single-member LLC with no employees can technically report under its owner's Social Security number for federal income tax, but banks commonly ask for the company's EIN to open the account in its name.

The application asks for the company's exact legal name as approved by the state, the responsible party's Social Security number or ITIN, and the date the business started. The IRS does not charge for the number.

After the first jobs

A few habits keep a young hauling company out of trouble. Keep the dump receipts for every load, because they are your proof that the material went somewhere legal and they are a business expense. Run every payment through the company account, so the books show what the business earned and spent. Calendar the state's annual or periodic report for the LLC, and renew the city license, the hauler permit and the insurance on their own dates. The full list of first-year tasks is in what to do after forming an LLC.

What the state charges to form the company

The state's formation fee and its recurring fee are the only state costs of the LLC itself; hauler licenses, permits and insurance come on top. Here is what the ten most populous states charge.