After coming up with the idea, the next step in starting your business should be to write a business plan.  Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a junk removal business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

It’s possible to start a junk removal business from home, especially if it’s just a single-vehicle business. As that business grows and expands into a multi-vehicle fleet, it may be time to rent a commercial property or garage. Rental costs will depend on the type and size of the property, as well as its location. 

Related: Choosing a business location

A junk removal business owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.

When starting a junk removal business, do some research into the disposal regulations in your area. Disposing of certain materials, like hazardous waste, may require additional permits and fees. The same is true of disposing of large items, like appliances. Familiarize yourself with the different facilities that you will need to travel to, and get an updated list of disposal prices. Having this information can help you to appropriately price jobs so you don’t lose out on profits because of these fees. 

According to Haul Away Cash, a junk removal business will need to obtain additional licensing if it transports hazardous materials like paint, chemicals, and oil. This can be dangerous, so plan to budget not only for licensing but also for training. Many junk removal businesses avoid this challenge by working only with non-hazardous materials.

Some other common local, state and, federal registrations a junk removal business may need include, a business license, Employer Identification Number, and Occupancy Permit among others. 

Related: Common business licenses, permits, and registrations by state

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a junk removal company is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. 

Related: Finding the money to start a business  

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Because there are low barriers to entry in this industry, your business will be up against plenty of competition. This means it’s even more important for you to create a recognizable brand and offer services that are better than what competitors provide. This doesn’t mean that you have to charge less than competitors, but rather that you have to provide a quality service and experience that customers won’t find elsewhere. Consider what you can do to make your business stand out, whether that’s offering last-minute bookings, complimentary cleanup services, or above-and-beyond customer service.

A junk removal business can market in many different ways, but some of the most common include social media marketing, online advertising, print advertising, and even direct mail advertising. Some businesses may explore radio and TV advertising, too.

Don’t forget the importance of networking and developing relationships with other professionals in the area. Realtors, construction contractors, property managers, and real estate flippers are all likely to frequently encounter situations needing junk removal. Building these relationships can lead to repeat business and referrals. 

Related: Low-cost ideas to market a new business

There are several types of insurance to consider when starting a junk removal business. A few of these include:
– General liability insurance helps to protect the business against expenses that could result if a customer or their property are hurt or damaged as a result of the business’ work. 
– Commercial auto insurance helps to protect the business from expenses like medical bills and legal fees that it might face if one of its vehicles were in an accident. 
– Workmans’ comp insurance helps to cover expenses like medical bills and legal fees that might occur if an employee were hurt on the job. 

The cost to insure a junk hauling business can be affected by factors like the business’ location, the number of employees on staff, and the value of its vehicle. To get the most accurate idea of insurance costs, request quotes from multiple companies. When comparing the quotes, evaluate not only how the premiums, but also the plan exclusions, coverage limitations, and deductibles compare.

Related: What types of insurance does a junk removal business need?

A junk removal business will need at least one employee from the start for practical reasons since many junk removal jobs will require multiple people to lift and remove at least some of the items. ZipRecruiter reports that junk removal salaries average $30,641 per year, though salaries can range from $21,500 to $38,000 per year.

In addition to budgeting for salary costs, a budget also needs to include other related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are all common expenses that come with hiring staff. 

Related: Hiring your first employee

Setting up an accounting system for your junk hauling business is critical to your long-term success.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business