Tech | Big Rig Pros

Tractor-trailer trucks in a line at a rest stop If you have experience as a company freight driver, or have as a leased owner operator, you might be ready to make the jump to getting your own trucking authority and running your own trucking company. Getting your trucking authority can be pretty straightforward, knowing what is required based on where you operate can be trickier. So, what is trucking authority and how do you get it? Trucking authority is the government license and registration that allows you to own and operate a freight shipping company. Issued by the Federal Motor Carrier Safety Administration (FMCSA), a trucking authority requires filing the appropriate paperwork and obtaining the proper insurance levels. While the requirements for getting a trucking authority can seem straightforward, knowing exactly what is needed for the type of business you hope to run can be less straightforward. Knowing the ins and outs will help the process of getting your trucking authority go as smoothly as possible. What’s the Benefit of Having Your Own Trucking Authority? The benefit of having your own trucking authority is The ability to cut out the middle manYou can make more moneyThe freedom of owning your own business It’s hard to overstate the benefits of owning your own business for those willing to take on the challenge. Owning your own trucking company is no different. The first benefit is the ability to make more money. By removing a broker or hiring company you’ll avoid having to pay a fee on any contracts you receive. This not only opens you up to make more money, but it also gives you control to grow your business as you see fit. You’ll have the ability to decide which contracts to take on and who your clients will be. This means you can choose your own hours, the type of freight you’ll be hauling, and your own routes. Additionally, you’ll be able to begin hiring your own drivers. It requires more work and, in many ways, different work than being your one and only driver, but it can open you up to making a lot more money. Once you start hiring your own drivers and building your business that way, you can start doing less and less driving, until eventually you’ve eventually fully transitioned to running your business from the office. How to Get Your Trucking Authority By making the leap to obtain your own trucking authority and to start your own trucking company, you have in many ways already done the hardest part. Starting your own business can be both terrifying and risky, but obtaining a trucking authority is as simple as filing the correct paperwork. Of course, knowing what paperwork is necessary for your operation is the trick. Once you’ve decided to make the leap to get your own trucking authority and start your own business, follow these steps to help streamline the process and make sure you get the authority you need for your business. Register your business. This step requires you to know how you want to structure your business, which will have implications come tax time. The business type will also affect whether you register your business at the state or local level. Seeking out professional advice on the best structure for your business could help out in the long run.Acquire an Employer Identification Number(EIN) from the IRS. If you structure your business as a corporation or LLC you will need an EIN. If you opt to run your business as a sole proprietor, an EIN will help to protect your privacy.File your business with the US Department of Transportation(USDOT). Think of this step as creating your business’s record. This file will house all the info about your business, including vehicle, cargo, insurance and compliance information. While this file on its own does not give you authority, it is necessary for any trucking company looking to participate in interstate commerce.Get insured. This might seem out of order – why get insurance for a business that you haven’t finished forming? – but getting preapproved for the proper insurance will help you avoid the situation of going through the whole process only to be denied insurance at the end. Send Proof of Coverage. The level and type needed will vary based on the specifics of your business, but the minimum required on primary liability will run anywhere from $750,000 to $1,000,000. Once you obtain coverage, you will need to have your insurance provider send proof of coverage directly to the FMCSA for them to keep on file.Obtain a Motor Carrier Number from the FMCSA. The MC number is what will give you the authority to participate in interstate commerce. You’re not finished, however. Once your MC number is issued, you have 20 days to complete the next two steps: file a BOC-3 and get the proper insurance. After that, it will take another 2 weeks or so for you to receive your trucking authority certificate in the mail.File for a BOC-3. A BOC-3 in plain-speak is a representative agent that can be served legal papers on your behalf. The FMCSA requires that you have one of these for every state in which you operate. That may seem daunting, but thankfully there are companies that will go through the trouble of setting up agents for every state you operate in for a flat rate. Set up an International Registration Plan(IRP) and get your apportioned tags. An IRP is essentially the same as your personal car’s registration, just beefed up for commercial vehicles. Trucks that operate in multiple jurisdictions are required to track and submit an array of information when applying for these tags. Get the specific information you need. You’ll need the specifics about your vehicle(VIN, title info, purchase price and date, etc), as well as the states you plan to operate in. You will also need information on mileage driven, either exacts or estimates based on averages. Once this information is collected the DMV will determine the price of the registration and issue your tags upon payment.Make an IFTA Account. Applying to commercial carriers in the lower 48 states and Canadian provinces, the International Fuel Tax Agreement(IFTA) regulates the reporting of fuel use by those carriers. Each vehicle in your fleet will need to be registered, and at the end of each fiscal year your mileages in each applicable jurisdiction will need to be reported. IFTA also requires estimates of mileage for the coming year.Register with the Unified Carrier Registration(UCR). The UCR requires all operators to register their business, and the annual fee will be determined by the size of your fleet. This registration will need to be renewed annually, with adjustments made for changes in fleet size. Stay organized through this process. Set up a file specifically for each set of paperwork, and get a calendar devoted to the deadlines. Mark out upcoming deadlines and what paperwork needs to be filed on those deadlines. Know which steps in the process are contingent on other steps, and make sure you’re filing them in the correct order. A missed deadline or filing the incorrect paperwork at one juncture of the process could force you to restart the whole thing. Knowing the Types of Trucking Authority and What One You’ll Need The kind of trucking company you are running will have an effect on the type of trucking authority you need to obtain. According to the FMCSA website, there are two main types of trucking authorities for domestic carriers, determined primarily based on the type of cargo you will be carrying. Motor Carrier of Property – A motor carrier of property that transports regulated commodities. This kind of carrier is required to carry primary liability insurance, but not cargo insurance.Motor Carrier of Household Goods – This is essentially your typical moving company. They carry household goods either from a home, factory, or store, to a home. They are required to carry both primary liability and cargo insurance. In addition to these trucking authorities, you might be interested in becoming the middle man, making a commission on coordinating drivers and clients without doing any of your own driving. A freight forwarder does this while assuming responsibility for the cargo, while a broker does this without assuming responsibility for the cargo. Both of these designations are required to register with the FMCSA. What Information Do I Need Before Filing With the USDOT? Before going to the USDOT to register your business, and potentially before you even form your business, there are some pertinent questions about the type of business you will be running that you should consider. Where will you be operating your business? – This question will pertain to where your business is registered, should you go the LLC or corporation route, but also to the states through which you will travel. This information is needed both for the USDOT file and your IFTA and UCR registrations.What type of vehicle will you be using? – The answers to this question will affect the type of cargo you can haul, which will in turn affect the type and level of insurance you need to carry.What is the weight of your vehicle and the cargo you are hauling? – The answer to this question will affect you in certain states, as outlined below.What kind of cargo will you be hauling? – This question will have an impact on the types of insurance you will need to carry. Also, if you are hauling potentially hazardous or highly regulated materials you will likely need additional permits and licenses.How big is your fleet? – Remember, you’ll need to register each vehicle and each truck in your fleet will need its own IFTA registration. It’s important to think about these questions, as the answers will not only affect the kind of registrations and permits you need, but also the kind and levels of insurance you will need to carry. What’s the Cost of Getting a Trucking Authority? The initial, one-time costs of registering a trucking authority range from $6,000-$15,000, based largely on the type of business you’ll be operating. That said, the initial capital needed to start your business is a bit higher. For starters, you’ll need your own truck, the price of which can run anywhere from $35K up to $120K. In addition to the cost of the truck, you’ll also need to factor in the startup period before your revenue stream really gets going. Also, the time waiting for all of your registrations to come back and your authority certificate to be active is a dead zone of time in which you won’t be able to accept contracts. Once you are active, there will be the usual period of time it takes to send out invoices and receive payment back. You will also have ongoing fixed and variable costs. Insurance premiums will need to be paid monthly, and could vary based on changes in your business. There is also the cost of maintenance and repairs that inevitably come up. Registrations will need to be renewed annually, a fixed cost unless your business operations change. How Long Does the Registration Process Take? As is the case with any process that involves bureaucratic red tape, the registration process can be a bit lengthy. In total, from filing your business to getting the necessary insurance and tags, the process to get your own trucking authority runs about 5-7 weeks. That said, it is critical to have all of your information correct the first time you submit it. Any paperwork that needs to be refiled will restart the process and can set you back 8-10 weeks. The length of this process also ties back to what your startup costs will look like. During this time period you won’t be making money from your trucking company. Having enough cash on hand to get you through this lean period is crucial for anyone looking to start their own trucking company. Are There Any State Specific Registrations? For the vast majority of states, the requirements listed above are sufficient for operating your business. That said, there are a few states that require additional licenses and registrations. Knowing their requirements and acquiring the necessary licenses will allow you to expand your business and operate in more states. Kentucky – The state of Kentucky requires you to get a KYU number if your truck/trailer weight exceeds 59,999 pounds. You will be required to send quarterly reports to the state of Kentucky if you require this permit.New York – The state of New York requires all vehicles with a gross vehicle weight(GVW) exceeding 18,001 to obtain and keep a Highway Use Tax permit. The quarterly taxes you pay to the state of New York will be determined by the mileage and weight that you report on a quarterly basis to the state.New Mexico – New Mexico requires all carriers exceeding 26,001 pounds and using the highway system in the state to obtain a New Mexico Weight Distance Tax Permit. The taxes paid under this designation are calculated quarterly, and are based on the weight of the vehicle and the mileage travelled within the state.Oregon – The state of Oregon maintains a strict mileage reporting system. Each carrier is initially required to submit a $2,000 deposit or bond. This bond is returned to the carrier only after the carrier has maintained compliance for the first 24 months. Once registered, the carrier must submit monthly mileage reports to the state.Oregon also provides the option to obtain a temporary permit without paying the $2,000 deposit. This option is ideal for carriers who may not be operating on a regular basis in the state of Oregon. All of these requirements are less time and paperwork intensive when it comes to applying for them. The diligence for all of them comes on the back end, as they require the carrier to carefully track their operations in those states. Mistakes in reporting can result in overpaying in taxes or facing potential fines for underpaying. Are There Services to Help with This Process? Yes, there are third party services that will handle the registration process for you. They will often require you to have already set up and registered your business, but once your pas that point they will handle the rest. These services simply require you to fill out information on your business(cargo types, states of operation, etc.), and a contract stating that you sign over permission to handle the necessary paperwork. These services can be a great option for those with the money to hire them but not the chops or interest in handling the paperwork. While they do charge a fee, you can rest easy knowing that the paperwork will be filed correctly and a quickly as possible, ensuring that you receive your authority as early as possible. Additionally, the time not spent worrying about filing the correct paperwork on time can instead be used on lining up clients or securing more financing from investors for your new business.