Thinking of starting your own trucking company? You need a trucking authority, the government’s permission to haul cargo for profit. With your own trucking authority, you’ll have the independence to choose your own routes and cargo. If you run your business, obtaining a trucking authority can increase your profits.
So, what’s holding you back? We’ve done the research and taken the time to shed light on a process that many find confusing.
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What Is a Trucking Authority?
A trucking authority, also known as an operating authority or motor carrier authority, represents the government’s permission to carry goods for profit.
How Does Having Your Own Trucking Authority Work?
Although all trucks carrying cargo for profit must have a trucking authority, not all truck drivers have one.
In many instances, owner-operators share their profits with a trucking company because leased owner-operators don’t have trucking authority. Your own trucking authority gives you the independence to choose your own routes and loads. You also keep all the profit.
Pros & Cons of Having Trucking Authority
Running your own trucking business comes with its own pros and cons but with the right advice, you could make a lot of money.
Advantages
- You make your own decisions
- You set your own timetable for work and leisure
- You keep all the profits
- You control how much you earn – you can choose your routes and negotiate the best rates.
Disadvantages
- You take full responsibility for all aspects of the business – this can add a lot of work to the average day
- Building relationships with shippers can take time – so it may take a while to get full loads at good rates
- You are responsible for all expenses – many trucking companies battle with cash flow problems. Customers pay invoices in 30, 60, or 90 days. Yet you will have to cover operational expenses such as gas on an ongoing basis. Because of this many truckers factor their invoices.
7 Steps To Get Your Own Trucking Authority
Follow all the steps below to get your own trucking authority and avoid delays in going active.
Step 1: Register and Acquire the Correct Numbers
If you have decided to start a trucking company, you will have to register your business in the state from which you plan to operate. If you haven’t already decided on the type of entity you plan to run, now is the time.
If your business is a limited liability company, you will need an EIN number. This step is not required for a sole proprietorship. You can use your Social Security number for a sole proprietorship.
The US Department of Transportation requires all trucking companies to register. Upon registration, you will receive a DOT number containing all the information about your company including cargo, routes, and vehicle type. Shippers and freight brokers use this information when you carry cargo for them.
You will have to renew your USDOT number every two years or when your company data changes.
Step 2: Apply for an MC Number
You will need an MC number before you can cross state lines. Although the FMCSA gives you your MC number when you apply, it isn’t active until you have filed your BOC-3 and bought insurance.
Step 3: File a BOC-3
You have 20 days after filing to prove to the FMCSA that you have a designated agent in each state in which you plan to operate. The agent is needed to accept legal documents in the state. The BOC-3 is proof of the existence of these agents.
Step 4: Insurance
You must also have proof of insurance before you can drive your trucks.
Step 5: Pay HVUT
All heavy vehicles using public highways are subject to Heavy Vehicle Use Tax or HVUT. Before you set up your International Registration Plan or IRP you must have paid your HVUT.
Step 6: Acquire Apportioned Plates and Set Up Your IRP Account
The International Registration Plan is an agreement between 48 contiguous US states and Canada. It allows commercial vehicles to operate between states. The owner of the fleet is liable for taxes in each of the states and must report mileage for tax purposes in each of these states. This is done annually.
You will receive apportioned license plates once you have set up your IRP and IFTA accounts.
Step 7: IFTA and UCR
The International Fuel Tax Agreement (IFTA) has been set up between Canada and the 48 contiguous US states to simplify the collection of fuel taxes. The agreement ensures that each member state receives a fair portion of the fuel tax. You must complete a quarterly return.
Every carrier that crosses state lines also needs a Unified Carrier Registration (UCR). You must renew this by the end of each year. The amount you pay will depend on the number of vehicles in your fleet.
Kickstart your career as an independent trucker
If you’re ready to start your own business and have considered the pros and cons, you might be ready to take the next step and file for your trucking authority. You also don’t have to be a driver to start your own hauling business. You can hire drivers. Take our step-by-step approach and you could have permission to operate your trucking business within three weeks.
If you’re just entering the world of trucking, look for companies who hire truck drivers fresh from a driving school. You could start driving under their trucking authority, gain valuable experience and eventually get your own trucking authority.
FAQ
If you want the freedom to choose your own routes and cargo, then having your own trucking authority is better.
This depends on how well you run your business. Though you keep all the profit, you also choose the routes and the cargo. If you negotiate lucrative contracts, you could make considerably more.
Building relationships with brokers can take a while so you may find it difficult to fill loads on lucrative routes.
