How to Get Your Own Authority in Trucking

How to Get Your Own Authority in Trucking

Alma Bailey 0 Comments

Once you have experience as a truck driver or owner-operator it’s a natural progression to want to run under your own authorities. Having your own trucking business provides complete independence and the opportunity to earn more money.  While there is more work and responsibility required, the rewards can be significant. Owner operators running under their own authority have reported making $2 to $3 per mile on average. Over time, you can grow to have multiple trucks and drivers to service an expanded customer base and generate more revenue.

First Time Applicants

Any for-hire carrier over 10,000 GVW performing interstate commerce must have authority from the U.S. Department of Transportation (USDOT). Note that some states require Interstate Authority even if you restrict cargo movement to within the state. To transport federally regulated commodities owned by others for a fee requires an MC (Motor Carrier) number, issued by the Federal Motor Carrier Safety Administration (FMCSA). There are different types of authorities required depending on the type of cargo being transported. Carriers that transport various types of cargo will require multiple authorities. Separate fees must be submitted for each kind of authority sought. Make sure you apply for the authorities relevant to your trucking business. To get started, visit the FMCSA website.

First-time applicants need to register via the Unified Registration System. Applicants already registered with a USDOT number, or are applying for additional authority can apply online using the FMCSA website and a credit card. Getting your own authorities requires attention to detail and commitment. There are numerous regulations and registrations to complete. The entire process can take up to two months. The following is a guideline to assist you through the process.
 

Initial Decisions Before You File For Your Authorities

Business Name: This is generally done through the Secretary of State (check your state’s official website to be certain). Ensure you choose a name that is not already in use.

Business Type: Sole Proprietary, Partnership, LLC, or corporation
Consult with your accountant; based on the state you’re in, each has different liabilities and tax implications.

Freight: Determine the type of freight your business will be transporting.

Available Funds: ensure you have start-up money for

  • Insurance
  • Permits
  • Base Plate
  • Equipment
  • Enrollment in a Drug and Alcohol testing program
  • Cash Reserve: have funds available to cover at least 60 days of operating expenses. It takes an average of 30 to 45 days for invoices to be paid. You need available working capital while you build your business.

Note: It is common practice for start-up freight carriers to partner with a freight factoring company to provide operating capital and ensure steady cash flow.

Preliminary Trucking Authorities Requirements

MC Number: Get your MC number by visiting the FMCSA website.

EIN: For tax purposes, you’ll need to obtain an Employer Identification Number (EIN). Visit the IRS Website.

Proof of Insurance: All carriers are required to have $750,000 to $1 million in liability insurance (more if you’re transporting hazmat material). Additionally, you’ll need to have $100,000 in cargo insurance. Without these insurances the FMCSA will not approve your authority. Be sure to obtain preapproval from your insurance broker or you risk spending a lot of time and resources unnecessarily.

6 Next Steps

Now that you have completed the above listed requirements, its time to proceed with applications. Visit your state’s Department of Transportation/motor carrier website for more information and associated fees for each of the following steps. For greater ease, contact an authorized e-file service provider to assist with the following 6 steps.
 

1)  Apply for your Authority:

First time applicants must complete a BOC-3 form, a federal filing that designates legal agents upon which process may be served. Only a process agent, on behalf of the applicant (carrier), can file Form BOC-3 (Designation of Process Agents) with the FMCSA. Many trucking companies choose process agents that provide nationwide coverage (a blanket company) to eliminate the need to find individual agents for multiple states. Refer to the FMCSA website for a list of registered process agents.

  • You will need to report your truck information (VIN, year, weight, etc.)
  • Also provide your tax ID number, incorporation details and license plate information

You will receive your USDOT Number upon completion.
 
Your application is posted to the Federal Register at which time a dispute period of 10 business days begins. During this time, anyone can dispute your authority. At end of period, your process agent will post proof of insurance along with your BOC-3 form. This action will assign a business or agent in all 50 states to transfer legal documents on your behalf.

Once the FMCSA has reviewed and approved your authority, you will receive a confirmation letter. At this point you are ready to continue the process.

2)  Pay HVUT (Heavy Vehicle Use Tax):

HVUT is an annual tax imposed on all heavy vehicles operating on public highways. Complete Form 2290 and submit. This must be completed prior to obtaining an IRP account.

Fee: (Based on vehicle weight) up to 55,000 lbs = $100.00 plus $22.00 per each additional 1,000 Ibs
 

3)  Register for IRP

IRP (International Registration Plan) is a registration reciprocity agreement between the contiguous states and Canada. It provides for payment of apportioned fees on the basis of total distance operated in all jurisdictions. This must be completed before obtaining an IFTA account.

Fee: Ranges from $1,400.00 to $2,400 for the first year of registration
 

4)  Set up IFTA Account:

IFTA (International Fuel Tax Agreement) is an agreement between the contiguous states and Canada to simplify the reporting and fuel tax collection of motor carriers that operate in more than one jurisdiction.

Fee: (varies per state) Ranges from $0.00 to $10.00

If you operate in Kentucky, New Mexico or New York you will require weight distance permits to transport goods. The state of Oregon requires a permit plus a bond.

5) UCR Permit:

UCR (Unified Carrier Registration) is a mandatory registration program that applies to all carriers conducting interstate transportation. It is used to verify active insurance coverage in the jurisdictions you operate. You must use your USDOT and MC Number to apply.

Not all states are included in the program. If your base state does not participate, you are required to pay your UCR fee through a neighboring, participating state. Currently, the following states are not participating: Arizona, Florida, Hawaii, Maryland, Nevada, New Jersey, Oregon, Vermont, Wyoming and the District of Columbia.

Fee: (based on fleet size) i.e.:   1-2 trucks = $155.53      3-5 trucks = $311.06 

6) Drug and Alcohol Testing Program

You must enroll in a drug and alcohol testing program, and anyone in your company holding a CDL must pass a screening.

Fee: (based on fleet size) i.e.:   1-2 trucks = $72.00      3-5 trucks = $209.00


Upon completion of the above 6 steps, you’ll be enrolled in the New Entrant Safety Program. You will have a mandatory “New Entrant” audit within your first 18 months of doing business to ensure that you are compliant with federal regulations. Ensure you keep good records from your first day of business.

Records to maintain include:

  • Driver qualification files/employee records
  • ELD records (Driver Logs and Hours of Service)
  • Safety records
  • Accident reports
  • Maintenance records
  • All Drug and Alcohol Testing Program records and reports

 
Learn about the New Entrant Safety Assurance Program on the FMCSA website.

Although there are numerous steps, applications, forms and fees to comply with, obtaining your own trucking authorities is the first step to independence as an operator. Be methodical and complete each step one at a time. The entire process can take up to 2 months. For ease and convenience, engage the services of an authorized e-file service provider to guide your process.

When you are in possession of your own authorities, you will feel the freedom of the open road and the great possibilities that lay before you.

Congratulations on your new undertaking!

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