Hand-OffHow to Start a Local Delivery Business
To start a delivery business, decide what you will deliver and for whom, define a service area and delivery windows, price by zone or distance, get commercial auto and liability insurance, decide whether drivers are employees or contractors, and use software for routes, customer updates, and proof of delivery.
There are two kinds of local delivery business. Some deliver their own products, like a bakery, dispensary, or meal prep company. Others deliver for other local businesses as a courier. The steps are the same; the customer is different.
1. Choose What You Deliver
What you carry decides your vehicle, packaging, and rules. Food may need temperature control. Alcohol, cannabis, and prescriptions require licenses and ID checks. Large items need two people. Start with one category you can do well.
2. Define Your Zone and Windows
Start with a radius your drivers can cover reliably, then publish delivery windows and order cutoffs. A narrow zone delivered on time beats a wide zone delivered late.
3. Set Your Pricing
- Flat fee by zone: easy to explain at checkout.
- Distance-based: fairer for longer drives.
- Order minimum or free-delivery threshold: raises order value.
Know your cost per stop: driver time plus vehicle cost per mile. The IRS standard mileage rate is a useful benchmark for vehicle cost.
4. Get Insurance and Vehicles Right
Personal auto policies often exclude business deliveries. Ask an agent about commercial auto coverage or a delivery endorsement, general liability, and coverage for the goods you carry.
5. Decide on Employees or Contractors
The IRS looks at how much control you have over how, when, and where the work is done. Misclassifying drivers can lead to back taxes and penalties, so check the rules before you hire.
6. Plan and Optimize Routes
Group orders by zone and window, optimize the stop order, and send each driver the full route with customer details. The route planning guide walks through it step by step.
7. Track and Prove Every Delivery
Text customers when an order is out for delivery, delayed, and delivered. Take a photo or signature at each stop, and decide in advance what happens after a failed attempt.
Startup Checklist
- Business registered and any required licenses in hand
- Insurance that covers business deliveries
- Zone, windows, cutoffs, and prices published
- Drivers hired or contracted, with a clear policy
- Routing, tracking, and proof-of-delivery tools set up
Hand-Off connects delivery zones, windows, fees, route optimization, a driver app, and customer tracking in its on-demand delivery software.
This guide is general business education, not legal, tax, or insurance advice.
Sources
- U.S. Small Business Administration — Get business insurance Accessed October 20, 2026
- U.S. Small Business Administration — Apply for licenses and permits Accessed October 20, 2026
- Internal Revenue Service — Independent contractor or employee Accessed October 20, 2026
- Internal Revenue Service — Standard mileage rates Accessed October 20, 2026
