Having your operating authority is a big step in your career growth. It means that the government allows you to get paid for hauling freight as an owner-operator.
Your operating authority is issued through the Federal Motor Carrier Safety Administration (FMCSA) in the form of a Motor Carrier (MC) number.
To obtain your Authority, you will have to submit applications for each step of the procedure:
STEP 1: Register your trucking company
This registration should be done based on where you plan to operate. There are two (2) things you need to consider in registering your company.
1. Business Structure
Sole Proprietorship – If you are going to operate as a sole-proprietorship with a DBA you will need to determine if your state requires you to file your DBA at the county or state level.
Limited Liability Company – If you are choosing to limit your liability by forming an LLC or Corporation you will need to fill out and submit the correct forms at the Secretary of State’s office.
2. Company Name
The name you register with must be unique because you cannot use a name that is already taken. Follow the naming guidelines we outlined in the last article.
STEP 2: FMCSA Authority Procedures
1.Get your Employer Identification Number (EIN) – It is a nine-digit number, essentially a Social Security number for a business, assigned by the Internal Revenue Service (IRS) for tax purposes. You can obtain it by applying on the IRS website.
It is recommended that an individual operating as a sole proprietor also obtain an EIN to protect their privacy. In the absence of an EIN, the sole proprietor must use their social security number which can open them up to potential fraud.
2. Get your US Department of Transportation (USDOT) Number – A DOT number is the company’s ID number that provides all company information, including vehicle type, cargo, safety, and compliance. You will be issued a PIN along with your USDOT number which will be needed for any changes you make with the USDOT or FMCSA in the future.
When you begin the registration process, you must know the following details:
• Where will you be operating?
• How many trucks will you operate?
• What type of vehicle will be used?
• Will you haul hazardous materials? If so, what types?
• What is the weight of your vehicles?
• Will you be hauling exempt cargo?
• Will you be a freight forwarder or a broker?
All of this information will be filed under your USDOT number and will be available to any shippers you haul for. Your USDOT number needs to be renewed bi-annually or anytime changes are made to your fleet size, name, phone number, address, or cargo type.
Take note, Once you have received the USDOT number you will be placed in the FMCSA New Entrant program.
3. File a BOC-3 – The FMCSA requires that you have a designated process agent in each state that can be served legal paperwork on behalf of your company if the need arises – a BOC-3 shows that you do.
Keep in mind that if you ever make any changes to your MC # such as your address, name, or phone number, you will need to file a new BOC-3 or your MC # will be put inactive 30 days later.
4. Obtain a Motor Carrier (MC) Number – This will give you authority to participate in Interstate Commerce. Once you’ve filed with FMCSA, you get your MC number immediately, but it is not active yet – This is called a Docket Number or a reference number for all your information.
You’ll have 20 days to complete your BOC-3 and get an insurance policy after you file and once those are filed with the FMCSA, your MC authority will become active within two to three weeks. Finally, about two weeks after that, you will receive your authority certificate in the mail.
Remember that you cannot legally drive your truck until you’ve filed your BOC-3 and insurance policy and until your MC number goes active.
STEP 3: Shop for your insurance
You must have an active insurance policy for you to drive your truck and your trucking authority to become active. This is proof of your financial responsibility.
There’s a lot of commercial truck insurance to choose from, you just have to choose based on your company’s needs and what’s within your budget.
STEP 4: Set up your International Registration Plan (IRP) and get your apportioned plates
IRP is a process of registering fleets of vehicles traveling in two or more member jurisdictions. If you are operating your trucking company within multiple jurisdictions, you must report all miles driven and pay taxes on them annually.
You’ll also need all the nitty-gritty details about your trucks like VIN, title information, purchase cost and date, and the make and model of your vehicle to register for your IRP. Additionally, you will need to have an idea of the states you plan to haul in before you register. After you registered and paid the fee, you will receive your apportioned tags.
STEP 5: Set up an International Fuel Tax Agreement IFTA Account
This is an agreement among the lower 48 states of the United States and the Canadian provinces, simplifying the reporting of fuel use by motor carriers that operate in more than one jurisdiction.
You must complete a fuel tax report at the end of each fiscal quarter, including all miles traveled in participating jurisdictions and all fuel purchases made. After setting up your IFTA account, you’ll get an IFTA license and two decals for each qualifying vehicle.
STEP 6: Unified Carrier Registration (UCR)
The program requires individuals and companies operating commercial motor vehicles in interstate or international commerce to register their business within their base state and pay an annual fee based on the size of their fleet. A UCR permit verifies that you have active insurance in the states where you operate.
STEP 7: Enroll in a drug and alcohol consortium
All truck drivers must register with a drug and alcohol testing center before getting on the road. The FMCSA and USDOT require that all truck drivers have negative drug screens before hiring others or driving themselves.
Before starting your own trucking company, you must have all your compliance in order. Follow the steps outlined above religiously. Otherwise, your MC authority will not go active, you will not be allowed to drive a truck, and there will be a huge delay in starting your trucking business.
Once all this has been completed, Consider using a factoring company to speed up your cash flow. Freight factoring has been beneficial to so many trucking companies across the country.
You can learn a lot more about starting your own trucking company by checking our courses!