Make the Switch to Being Your Own Boss
Getting your authority can be downright intimidating. With so much competing information available on the internet, it’s hard to keep track of all the steps you need to follow. Getting your own authority also requires start-up cash, an attention to detail, and a “get it done” commitment.
If you’re having trouble knowing where to start, we’ve assembled the most frequently asked questions for obtaining your own trucking authority to help. Expect the entire process to take upwards of two months.
What does it mean to have your own trucking authority?
Having your own carrier authority means you have the government’s permission to get paid for hauling freight as your own trucking company. Operating Authority is issued through the Federal Motor Carrier Safety Administration (FMCSA) in the form of a Motor Carrier (MC) number.
There are different types of authority depending on what kind of cargo is being carried, and some carriers will need multiple authorities to cover multiple types of cargo. Some states require Intrastate Authority if you’re moving loads within a given state. Make sure you apply for the authority or authorities relevant to your business.
What are the benefits of having my trucking authority?
Once you’ve been working as a trucker or owner-operator for a while, it’s natural to want to move on to having your own authority. It’s a huge career growth opportunity, gives you complete independence, and can come with a pretty significant bump in pay if you’re running your business correctly.
There is a lot more work and responsibility involved, but it means you can hire your own drivers. Over time, you could have multiple trucks and drivers. It also means you’ll be responsible for finding and negotiating loads. If you’re planning to use a load board to find freight, Truckstop.com’s Load Board is a low-cost way to get started (Basic is just $39/month).
Where do I start?
- Figure out what kind of authority you need. Authority is based on the cargo being carried, and some carriers need multiple authorities to cover multiple types of cargo. Learn more on the FMCSA website. Some states require Intrastate Authority if you’re moving loads within a given state. Apply for the authority or authorities relevant to your business.
- Decide on a name for your business. If required, file your business with your state. Typically this is done through the Secretary of State, but check your state’s official website to be sure. FYI: Some states require you to file your business under an assumed name or DBA (doing business as). Check your state’s official website to be sure.
- Decide on a business structure. Talk to an accountant to determine how you’re going to organize your business to maximize your financial and operational success. Research Limited Liability Companies (LLCs), C Corporations, S Corporations, Partnerships, and Sole Proprietorships to make the right decision for your business.
- Get an EIN. Visit the IRS website for an Employer Identification Number (EIN) which you’ll need for tax purposes related to your business.
- Get preapproved for primary liability and cargo insurance. If you wait until the end of the process to learn that you aren’t approved for insurance to protect you in the event of an accident, you’ll have spent a lot of time and resources unnecessarily—don’t skip this step!
- Get an MC number. Visit the FMCSA website to get your MC number.
- You need to know where your freight is coming from so you have something to move. Get familiar with load boards if you don’t have customers lined up, and start building relationships with quality brokers that you can work with in the future. Learn about services offered through Truckstop.com’s Load Board.
Have at least 60 days of extra cash set aside to cover operating costs (fuel, repairs, etc.). If you’ve been an owner-operator for a while, you know it can take 30-45 days for an invoice to get paid. Be prepared by having operating cash on hand while you build up your business.
What are the steps to getting my trucking authority?
If you’ve completed everything under the “Where do I start?” question above, then you can get started completing the list of items below. (Fees can vary depending on the state you live in, so they are not listed here. Visit your state’s Department of Transportation/motor carrier website for more information.)
- Apply for your authority.
Complete the OP-1 or OP-1(P) form, the BOC-3 form, and pay the application fee. You’ll need the truck information (VIN, year, weight, etc.), a tax ID number, incorporation details, and license plate information (if you have it).
Once you complete the Motor Carrier Identification Report (MCS-150) and Safety Certification Application, you’ll receive your USDOT Number which you need to have a vehicle used in interstate commerce to move freight.
There is a mandatory 10-business day dispute period that occurs after your application is posted to the Federal Register in which anyone can protest your authority. Once it ends, you’ll need to post proof of insurance and your BOC-3 form which assigns an agent or business in all 50 states to receive and forward legal documents on your behalf.
Your authority will be reviewed by the FMCSA. You’ll receive a letter from them when it’s approved, at which point you’ll start working on the remainder of this list.
Secure your UCR permit.
Use your USDOT and MC Number to apply for the Unified Carrier Registration (UCR) system. UCR verifies active insurance coverage in the states you operate in. Apply for your permit and learn more about the UCR system.
- Pay your HVUT.
The Heavy Vehicle Use Tax is an annual tax assessed on all heavy vehicles operating on public highways. Research Form 2290, and when you’re ready, download the OOIDA worksheet. This must be completed before you can agree to the IRP.
- Register for an IRP.
The International Registration Plan (IRP) is an agreement between the 48 contiguous states (and Canada) which provides the payment of licensing fees dependent upon the distance operated across all jurisdictions. (It means you’re licensed to participate in interstate transportation.) The IRP website can help you complete this process. You must have an IRP account before you can set up an IFTA account.
- Set up an IFTA account.
The International Fuel Tax Agreement (IFTA) is an agreement between the 48 contiguous states (and Canada) that simplifies fuel tax collection. It means you can travel between jurisdictions and ensures each state has a share of revenue to support roads and transportation. With an IFTA license, you just have to submit one fuel tax return every quarter to your base jurisdiction. Learn about IFTA, including how to contact your base jurisdiction to set up your account.
There are some circumstances that will require extra permits. Kentucky, New Mexico, and New York require weight distance permits to operate, and Oregon requires a permit and a bond. You’ll need the Standard Carrier Alpha Code (SCAC) if you’re moving military, government, international, or intermodal loads.
- Enroll in a Drug and Alcohol Testing Program.
All motor carriers are required by the FMCSA and the DOT to have a negative drug test prior to hiring drivers or driving themselves. Learn more about the rules and regulations related to drug and alcohol testing on the FMCSA website. All supervisors of commercial drivers are required to complete two hours of controlled-substance training, and a Designated Employee Representative (DER) must be named who is authorized to immediately remove employees from duty in the event they cannot pass a drug or alcohol test. Get full details!
After the above is complete, you’ll be enrolled in the New Entrant Safety Assurance Program.
Within your first 18 months of doing business, you will have a mandatory “New Entrant” audit to ensure you’re compliant with federal regulations. To make sure you are, start keeping good records now.
Make sure you maintain:
- Driver qualification files/employee records
- Driver logs
- Safety records
- Hours of Service (HOS) records
- Accident reporting
- 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 a lot of steps involved, just take them one at a time. Truckers and drivers make the switch to owner-operator every day. And as always, Truckstop.com is here to help.