You must have an active operating authority if you want to start your own trucking business and engage in interstate commerce. To work in the trucking industry, you must have an active authority in every state, according to the Federal Motor Carrier Safety Administration (FMCSA). According to the kind of cargo that each state requires, there are various authorities.
Obtaining your own trucking authority is a significant step in your professional development and enables you to be paid for transporting freight as an owner-operator. The process of obtaining a trucking authority must be completed in its entirety; otherwise, it will take longer to become active, delaying your ability to haul loads and earn money.
What Is Trucking Authority?
Also known as Operating Authority or Motor Carrier Authority, it is the permission granted by the government to transport goods in exchange for profit. Federal Motor Carriers Safety Administration (FMCSA) is the principal agency in charge of overseeing the trucking sector. You are not permitted to cross borders or even transport goods for delivery if you do not have trucking authority.
Despite being required by law, not every person in the industry has trucking authority. Some businesses are leased owner-operators, which means that revenues are split between the owner and operator. Instead, obtaining your own trucking authority gives you the operational flexibility to select your own loads, schedule, and even route, resulting in a more effective and profit-generating enterprise.
What Different Trucking Authorities Are There?
Generally speaking, there are two types of trucking authorities you can apply for – contract and common. Regarding who they can transport cargo for, these two differ from one another.
- Only businesses with whom they have signed contracts permit contract carriers to transport freight.
- Regardless of whether formal contracts are in place, common carriers can be hired by anyone who needs goods transported for a fee.
Only common carriers are required to buy cargo insurance; both carriers must have liability insurance with a minimum limit of $750,000. See more about What is Hot Shot Trucking?
Having One’s Own Trucking Authority What Does That Mean?
If you have your own operating authority, you can receive payment from the government for transporting goods on behalf of your own trucking business. The Federal Motor Carrier Safety Administration (FMCSA) issues you an MC number, which serves as your operating authority.
Different types of motor carrier authority exist depending on the type of cargo being transported, and some carriers may require multiple authorities to cover a variety of cargo. When moving loads within a state, some states demand Intrastate Authority. To the extent necessary for your business, make sure you apply for the appropriate operating authority.
How Much Does Trucking Authority Cost?
To submit the paperwork necessary for the FMCSA to grant commercial truck authority, there is a flat filing fee. This cost includes submitting the necessary paperwork to obtain your Department of Transportation (DOT) and Motor Carrier (MC) numbers. If you want to reclaim your authority or change the name on your paperwork, you’ll have to pay a reduced fee.
When Can I Get My Trucking Authority?
The state and federal approval processes typically take at least five to seven weeks to be finished before a business can obtain trucking authority. Your wait period could increase to eight weeks or more if the FMCSA needs to conduct further review. A 45 to 60-day review period will be given to current carriers renewing their authority.
How Does Having My Trucking Authority Help Me?
It’s only natural to want to advance to having your own authority after working as a truck driver, company driver, or owner-operator for a while. You have complete independence, a great chance to advance your career, and, if you manage your business well, a pretty sizable pay raise as well.
Even though there is a great deal more work and responsibility involved, this allows you to hire your own drivers for your trucking company. You might eventually have a number of trucks and drivers. Additionally, it implies that you will be in charge of locating and negotiating loads.
As a new owner-operator, the Truckstop.com Load Board is a low-cost way to get going in order to assist with finding freight.
Where Should The Trucking Authority Process Begin?
- Find out what kind of authority you require. The type of authority required depends on the cargo being transported; some carriers require multiple authorities to cover various types of cargo. The FMCSA website has more information. When transporting loads inside a state, some jurisdictions demand Intrastate Authority. Request the authority or authorities that apply to your company.
- Pick a name for your company. Declare your company to the state, if necessary. If in doubt, check your state’s official website. Typically, this is accomplished through the Secretary of State. Remember that some states demand that you register your company using a fictitious name or DBA. Make sure by visiting the official website of your state.
- Establish a corporate structure. Consult an accountant to decide how to set up your own trucking company so that you can achieve the greatest possible level of operational and financial success. Research Limited Liability Companies (LLCs), C Corporations, S Corporations, Partnerships, and Sole Proprietorships to determine which structure is best for your company.
- Get an EIN. You can get an Employer Identification Number (EIN) from the IRS website, which you’ll need for business-related tax purposes.
- Get preapproved for primary liability and cargo insurance. Avoid skipping this step if you want to avoid wasting time and money if you wait until the very last minute to find out that you can’t get insurance to protect you in the event of an accident.
- Get an MC number. You can obtain your MC number by going to the FMCSA website.
In order to have cargo to move, you must be aware of the origin of your freight. If you don’t already have clients lined up, become familiar with load boards and begin cultivating relationships with reputable freight brokers you can collaborate with in the future. Find out about the services provided by the Truckstop.com Load Board.
Owner-operators must have enough cash on hand to cover operating expenses (fuel, repairs, etc.) for at least 60 days.). If you’ve been an owner-operator for a while, you’re aware that it can take up to 45 days for an invoice to be paid. While you expand your business, be ready by keeping operating cash on hand.
A Trucking Authority Can Be Obtained By: Step By Step Guide
Your business receives authorization from the US by requesting trucking authority. government to receive payment for hauling freight as an independent company. The FMCSA will issue you an MC number so that you can start using your authority. To make sure the registration process goes as smoothly as possible, use this trucking authority checklist.
Register Your Trucking Company
You must register your business in the state where you intend to conduct business if you are starting a trucking company. Choosing the type of business entity you want to establish is another important decision. Sole proprietorships and limited liability companies are the most prevalent types of entities.
Get An EIN
To run your business if you choose to form a limited liability company (LLC), you must obtain an EIN from the IRS. A sole proprietorship does not need to have an EIN. However, it is strongly advised.
Without an EIN, you must use your personal social security number to run your business, which could expose you to fraud issues.
Get Your Usdot Number
The US Department of Transportation requires all trucking companies to register. The company’s identification number, or DOT number, contains all of the company’s data, such as the type of vehicle, the cargo, safety standards, and compliance.
If you are transporting loads for shippers or freight brokers, they can access this data. Every two years, or whenever there is a change or update to your company’s information, your USDOT number is renewed.
Apply For Your Mc Number
To engage in interstate commerce, you need an MC number. The FMCSA must receive your request for authority. After filing, you immediately receive your MC number, but it is not yet active.
After filing, you will have 20 days to finish your BOC-3 and purchase insurance. Your MC authority will become active in two to three weeks after those are submitted to the FMCSA. Your authority certificate will arrive in the mail about two weeks later.
You must file your BOC-3 and insurance policy before you are legally allowed to operate your truck, it is important to note. Additionally, you will have to wait until your MC number activates.
File A Boc-3 & Get An Insurance Policy
You have 20 days to finish this step after that. A BOC-3 demonstrates that you have a designated process agent in each state who can serve legal documents on your behalf as required by the FMCSA.
In order for you to drive your truck and for your trucking authority to become active, your insurance policy must also be in effect. Update your BOC-3 and insurance policy as soon as your name, address, or phone number changes to avoid being placed on an inactive list.
Pay Your HVUT
Before creating your IRP, you must pay your HVUT. All large vehicles that travel on public roads are subject to an annual tax known as the Heavy Vehicle Use Tax.
Set Up Your International Registration Plan (IRP)
You must report all miles driven and pay taxes on them if your trucking business operates in several different jurisdictions. You must register all fleets of vehicles that operate in multiple jurisdictions for your IRP.
To register for your IRP, you’ll also need your truck’s VIN, title information, the make and model of your vehicle, as well as the price and date of purchase. Before registering, you should also have a general idea of the states you intend to travel through. You will obtain your allotted tags after registering and making the required payment.
Create An International Fuel Tax Agreement (IFTA) Account
To make it easier for truck drivers who operate in several different countries to report their fuel use taxes, an IFTA agreement has been reached with the lower 48 US states and the provinces of Canada.
At the conclusion of each fiscal quarter, you are required to submit a fuel tax report detailing all miles traveled in participating jurisdictions and all fuel purchases made. You will receive an IFTA license and two decals for each qualifying vehicle after setting up your IFTA account.
Complete A Unified Carrier Registration (UCR)
Your ability to conduct business in the states where you operate is confirmed by a UCR permit. This necessitates that trucking companies register their cars in the state where they operate and pay an annual fee based on the number of cars in their fleet. You’ll apply for this registration using your MC number and USDOT, which need to be renewed annually.
Enroll In A Drug And Alcohol Consortium
Before they are allowed to drive, all truck drivers must register with a facility that conducts drug and alcohol testing. Before hiring others or operating their own trucks, all truck drivers must pass a drug test, according to the FMCSA and USDOT.
Before beginning a trucking business, make sure that all of your compliance requirements are met. You won’t be able to drive a truck, your MC authority won’t activate, and there will be significant delays in starting your trucking company if you omit a step. Once all this has been completed, make plans to get your trucking business paid with trucking factoring
Conclusion
You’ll be enrolled in the New Entrant Safety Assurance Program once the aforementioned is finished.
You will be subject to a required “New Entrant” audit within the first 18 months of operation to make sure you are in compliance with federal laws. Start keeping accurate records right away to make sure you are.
Having a trucking authority will help your company grow financially and allow for professional development and independence. Please leave a comment below if you still have any questions.