Getting your own trucking authority gives you the opportunity to schedule your own loads and to negotiate your own rates. As an owner-operator trucker, leasing on to a large carrier company has benefits, but holding your own authority will provide you with opportunities to make more money.
The basic steps to get your authority
Before you apply for your authority, you must register your business with your state and the Internal Revenue Service (IRS). You will get an EIN (Employer Identification Number) from the IRS. This process sets up your business, either as a sole proprietor or as an LLC (limited liability company.)
Which is better for you? We can’t decide for you, but we recommend SCORE, an agency that provides free business consulting from experienced people from the world of business. If you search for your state’s Secretary of State, you will find that setting up an LLC is not expensive and does not require an attorney.
When you’re getting ready to apply, you need to make some decisions about this company for the coming year. If you expect to expand quickly, organize your plans and prepare to answer questions about what you expect to need.
Three things at once
There are things that you can do concurrently to speed up this process.
Proof of Insurance: You’ll need to obtain three types of insurance.
- Liability Insurance: The requirement by law is $750,000 liability insurance to cover damages as the result of your truck causing damages. Most brokers want $1 million.
- Cargo Insurance: $100,000 is the industry standard for cargo insurance. However, you may be hauling a load that has a greater value and may require a larger dollar amount. You can contact your agent for a one-time binder for loads that exceed the current cargo insurance coverage. The more cargo insurance you have, the more freight you’ll be able to haul, so buy as much as you can afford.
- Physical Damage Insurance: Like comprehensive insurance for automobiles, physical damage covers your equipment in case of damage. This insurance protects your investment in your rig and trailer.
Work with an agent who represents trucker insurance policies. There are a few companies that offer coverage for truck owners and finding an agent will help you get many quotes for coverage. You will decide what insurance you want, what deductible and monthly payment you can afford, and what equipment you have that needs coverage. You will be asked to provide this information when you file for your own authority. Make sure your insurer notifies the Federal Motor Carrier Safety Administration (FMCSA) of your coverage.
Bonds
Bonds Bonds are not always required for getting your authority for the first time. Sometimes you will be required to show proof of a surety bond if you are working as a broker, but this is not usually the case when you apply for your authority for the first time.
Your BOC-3 You will be asked to name a process agent. This is the person who will receive any legal court papers. The BOC-3 – Designation of Agents for Service of Process is necessary. You can find it online at the link and you must file the original signed copy with the FMCSA by mail. This process is handled by a company for you and will have a small cost.
Now You Apply for Your Trucking Authority
Go to the FMCSA site to fill out the necessary forms through the Unified Registration System. Since the pandemic, all of these forms for your trucking authority are filled out and filed online. This process has been revised to protect your financial information, so you’ll have some extra steps that didn’t exist when it was possible to file through the mail. In 2021, this filing costs $300.
The IRS and FMCSA will both notify you on their websites about fraudulent agencies that will contact you after you file for your trucking authority. Please be very wary of them and research anyone who contacts you. Some agencies are legitimate and offer products or services you wish to use. Many are scams that are trying to steal your money.
The FMCSA Filing Online
This process is not complicated nor does it take long if you have details at hand when you begin.
With all of the information, you will be able to complete this process quickly. You do not need to use a third-party to file for your own trucking authority. You might want to use one to help you get through the process if you’re not comfortable. These companies will charge you for this service. Remember to check to be sure they are a legitimate company.
Some companies will continue to assist you with filings and maintaining records, such as the UCR and the drug testing requirements. Others charge for one-time assistance.
Setting Up Your Owner Operator Trucking Business or a Fleet
Getting your own authority is one step in building your trucking business. What was once handled by the company you worked for, you’re now responsible to
As a trucker, those may not have been your tasks. As an owner of a trucking company, you
- handle dispatches
- send out accurate invoices with attached BOLs and expenses
- track your loads
- track your accounting including late invoices
- handling expenses, including insurance and loan payments
- maintain your driver records
- use a DOT-compliant ELD
- pay drivers
- maintain your equipment and safety records
- pay your IFTA, IRP and HVUT taxes.
In order to make your trucking company a success, you need to know how much it costs for you to haul a load, and how you can manage your expenses.
Do you need a bookkeeper?
Many accountants will want you to use QuickBooks to track the accounting for your business, but your business is not just about accounting. You are required by law to maintain maintenance records, track your miles per state, and file quarterly taxes that QuickBooks cannot file for you.
If you want peace of mind that your trucking business is succeeding and growing, consider getting a complete trucking management software for your business. TruckingOffice offers you a complete software solution for your trucking business. You can get a free trial for TruckingOffice Trucking Management Software to start out to build your business and keep it compliant.
Recent Comments