If you want to start your own trucking company and participate in interstate commerce, you must have an active operating authority. The Federal Motor Carrier Safety Administration (FMCSA) requires you to have an active authority in all states to operate in the trucking industry. There are different types of authorities, depending on the cargo type that states require.
Getting your own authority is a big step in your career growth and allows you to get paid for hauling freight as an owner-operator. It is critical to complete all of the steps to obtain a trucking authority; otherwise, it will take longer to become active, delaying your ability to haul loads and earn money. To help with this next step in your career, you can enroll in a free online class, Steps to Becoming a New Motor Carrier. This class is a simple step-by-step approach to get your company legally on the road as quickly as possible and is taught by a 32-year industry veteran.
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How Long Does It Take to Get Trucking Authority?
Typically, it takes at least five to seven weeks to complete the state and federal approval process for a company to receive trucking authority. If the FMCSA needs to conduct further review, your wait time may extend to eight weeks or longer. Existing carriers renewing their authority will have a 45 to 60 day review period.
How Much Does Trucking Authority Cost?
The FMCSA charges a flat fee to file the paperwork to issue commercial truck authority. This price includes filing paperwork for your Motor Carrier (MC) and Department of Transportation (DOT) numbers. You’ll need to pay a reduced fee if you wish to reinstate your authority or change the name on your paperwork.
Where to Start the Trucking Authority Process
Before you begin the process of applying for a trucking authority, you will need to consider the following factors:
- What kind of authority you need: The type of trucking authority your company applies for will vary depending on the cargo your company carries. Some companies will need to apply for multiple authorities to cover the various types of materials they transport. Many states also require you to apply for intrastate authority if you move cargo within just one state.
- Business name: Some states require companies to file their business under an assumed name. Before starting the filing process, check your state’s official website to ensure you’re following all rules and regulations.
- Business structure: Speak with an accountant to determine how you’ll organize your trucking business to maximize your success. Whether your company is a Limited Liability Company, C or S corporation, a partnership or a sole proprietorship, choose an organizational strategy that works best for your business.
- Get an EIN: Visit the IRS website for an employer identification number (EIN). This number is essential for your business’s tax purposes.
- Get primary liability and cargo insurance: Getting approval for primary liability and cargo insurance as soon as possible will protect your company in the event of an accident. Early approval will also ensure you don’t waste time and resources.
How to Get a Trucking Authority
Applying for trucking authority gives your company permission from the U.S. government to receive payment for hauling freight as an independent company. You’ll obtain your authority from the FMCSA in the form of an MC number. Follow this trucking authority checklist to ensure the registration process is as smooth as possible.
1. Register your trucking company
If you’re starting a trucking company, you must register your business in the state you plan to operate from. You also need to decide what business entity you want to create if you haven’t already. The most common types of entities are sole proprietorships and limited liability companies.
2. Get an EIN
If you decide to start a limited liability company (LLC) you will need to obtain an EIN issued by the IRS to operate your business. It is not mandatory to have an EIN with a sole proprietorship. However, it is highly recommended.
If you do not get an EIN, you need to operate your business under your personal social security number, which could open you up to potential fraud problems.
3. Get your USDOT number
All trucking companies must register with the US Department of Transportation. A DOT number is the company’s ID number that provides all company information, including vehicle type, cargo, safety and compliance.
This information is available for freight brokers and shippers to access if you are hauling loads for them. Your USDOT number is renewed every two years or whenever company information is updated or changed.
Related Article: 6 Levels of DOT Inspections Explained
4. Apply for your MC number
You must have an MC number to participate in interstate commerce. You must file for your authority with the FMCSA. Once you’ve filed, you get your MC number immediately, but it is not active yet.
You’ll have 20 days to complete your BOC-3 and get an insurance policy after you file. Once those are filed with the FMCSA, your MC authority will become active within two to three weeks. About two weeks after that, you will receive your authority certificate in the mail.
It is important to note that you cannot legally drive your truck until you’ve filed your BOC-3 and insurance policy. You will also need to wait until your MC number goes active.
5. File a BOC-3 & get an insurance policy
From there, you have 20 days to complete this step. The FMCSA requires you have a designated process agent in each state that can serve legal paperwork on your behalf – a BOC-3 shows that you do.
You must also have an active insurance policy in place for you to drive your truck and your trucking authority to become active. If you make any changes to your name, address, or phone number, you need to update your BOC-3 and insurance policy to avoid going on an inactive list.
6. Pay your HVUT
You must pay your HVUT before setting up your IRP. The Heavy Vehicle Use Tax is an annual tax assessed on all heavy vehicles operating on public highways.
7. Set up your International Registration Plan (IRP) and get your apportioned plates
If you are operating your trucking company within multiple jurisdictions, you must report all miles driven and pay taxes on them annually. For your IRP, you must register all fleets of vehicles that operate in more than one jurisdiction.
You’ll also need your truck’s VIN, title information, purchase cost and date and the make and model of your vehicle to register for your IRP. What’s more, you will need to have some kind of idea of the states you plan to haul in before you register. Once you have registered and paid the fee, you will receive your apportioned tags.
8. Create an International Fuel Tax Agreement (IFTA) account
An IFTA agreement is with the lower 48 US states and Canadian provinces to simplify the reporting of fuel use taxes by truck drivers that operate in multiple jurisdictions.
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. Once you have set up your IFTA account, you’ll get an IFTA license and two decals for each qualifying vehicle.
9. Complete a Unified Carrier Registration (UCR)
A UCR permit verifies that you have active insurance in the states where you operate. This requires that trucking companies register their vehicles within their operating state and pay an annual fee based on their fleet size. This registration must be renewed every year and you’ll use your MC number and USDOT to apply.
10. Enroll in a drug and alcohol consortium
All truck drivers must register with a drug and alcohol testing center before they can get on the road. The FMCSA and USDOT require that all truck drivers have negative drug screens before hiring others or driving themselves.
Before you can start a trucking company you must have all your compliance in order. If you skip a step your MC authority will not go active, you will not be allowed to drive a truck and there will be large delays in starting your trucking business. Once all this has been completed, make plans to get your trucking business paid with trucking factoring
Contact Porter Freight Funding Today
Having a trucking authority allows for career growth and independence and will help your business increase revenue. If you’re looking to get your trucking authority and need help, give Porter Freight Funding a call at (205) 397-0934 or fill out our online form to speak with a trucking specialist.