When you first look into the trucking industry, all the regulations and terminology can quickly leave your head spinning. So many questions spring up, and you may have a hard time figuring out which one to answer first.
Here’s some good news — you’re already reading the right post. Learning about trucking authority is essential for anyone who wants to start their own trucking company. Obtaining operating authority is required for you to legally pick up, transport, and deliver freights both in your state and across state lines.
In other words, without trucking authority, you can’t legally do business.
Let’s take a closer look at what trucking authority is, how to apply for trucking authority, and what you need to know about obtaining operating authority through the Federal Motor Carrier Safety Administration (FMCSA).
Trucking authority is also known as operating authority. You may see the terms USDOT authority, MC number, MC authority, and DOT number used interchangeably, and in these cases, they all refer to a business’s authority granted through the FMCSA to haul freight.
Your authority is a special, unique number that represents your company. It makes it easier for the FMCSA to conduct routine inspections, monitor and record your company’s safety scores, and keep a detailed profile of your company.
Trucking authority also ensures that the industry remains highly regulated and safe for drivers. To keep their authority, a trucking company must always adhere to the FMCSA regulations.
Obtaining operating authority starts by establishing your business as a legal entity. This means you need to have a business name registered with your state as opposed to doing business under your personal name.
You can register as a limited liability company (LLC) through your department of state website. You will have to submit a form along with a registration fee of $250-$300.
You will also need to pay annual LLC fees, which are around $100. Each state sets their own fee prices, however, so be sure to find the rates in your area.
You will also need to acquire an EIN number, which you use to file taxes as a company rather than using your Social Security number. The basics for registering as a legal business varies from state to state, so it’s important to research carefully on official government sites.
The Unified Registration System makes it easy to apply for operating authority online. Rather than having to file and submit multiple forms, you can work through the system to complete all the necessary paperwork in one place.
The process is long, so expect to invest several days or even a week or more into getting all the appropriate information. Keep in mind that this is the baseline trucking authority requirement for interstate transportation.
It doesn’t license you to transport cargo across state lines.
Companies that want to perform interstate trucking must also apply for a motor carrier number (MC number) in addition to their USDOT authority. While these may often be used synonymously, they are actually two distinct permits.
You won’t be granted active authority until you can provide proof of valid insurance. Your trucking insurance must meet the FMCSA insurance filing requirements.
Using form BMC-91 or BMC-91X, you will have to demonstrate you hold at least $750,000 - $5 million in personal liability coverage for each vehicle under your authority.
If you are a home goods carrier, then you will also have to provide additional cargo insurance. The total amount of insurance you’ll need varies based on your vehicle weight and commodities. Hauling home goods in a semi-truck, for example, will require less insurance than a tanker transporting hazardous materials.
Your trucking company must register with the Unified Carrier Registration system before it can operate legally. UCR requires annual renewal, and the fees vary by state depending on the size of your fleet.
The International Registration Plan (IRP) modulates carrier registration between the United States, Washington D.C., and Canada for carriers who move between two or more of these regions. This allows payments to be made on behalf of the collective number of miles traveled between each jurisdiction.
You’ll need to apply for IRP plates if:
Trucks that are part of a declared fleet in Florida must always apply for an IRP.
The International Fuel Trade Agreement (IFTA) is a requirement for all interstate motor carriers. You will need to register with the IFTA so you can pay quarterly taxes on your company’s fuel. These taxes are paid in accordance with your headquartered state, regardless of how many additional states you operate in.
You will have to file a heavy vehicle use tax via Form 2290 with the IRS annually if your commercial vehicle’s GVW is 55,000 pounds or more. For companies who regularly haul through Kentucky, New Mexico, New York and/or Oregon, additional heavy vehicle use taxes apply.
There are different types of operating authority depending on your role in the trucking industry.
A motor carrier is what most people think of when they imagine working in trucking. As a motor carrier, you will arrange shipments to be delivered from two destinations, assign trucks, dispatch drivers, and see that every load makes it to its destination without a problem.
A freight broker as an intermediary between shippers and carriers. Put another way, they help people who need trucks with the companies that have them.
The broker needs authority to receive payment for arranging the transportation between a shipper and carrier. They do not actually possess the freight or take control of it; their role is focused on management.
Freight forwarders offer transportation options for shippers whose goods may need multiple vehicles or transfers during their delivery route. They are largely popular in land/sea/air travel, so they may pick up goods that have been brought over by plane or ship to carry to its destination.
Freight forwarders actually assign trucks and haul the goods being moved, unlike a broker who only arranges for deliveries and matches shippers with carriers.
If you haven’t already, complete your business registration for your trucking company. Then, you can start looking for a good insurance provider and gather all the necessary info to complete your USDOT authority registration.
You should also explore how to get operating authority in your own state, as some have special requirements and additional permits for trucking companies. Searching trucking requirements in your state will ensure that you don’t accidentally miss a single detail.
Educate yourself as much as you can prior to applying for your trucking authority. This will help you avoid any hold-ups or delays that could ultimately put your business on hold. Getting up and running takes some time, but the entire process also helps you build a solid company that is easy to maintain after you’re fully licensed to operate.
Whether you’re looking to be an owner-operator or a veteran in the industry, Truckbase can help you handle your office load with our light weight TMS which includes document storage, manage your loads and avoid costly disputes if you have time-stamped photos. So that you can focus on what counts. Schedule a demo today and find out why so many truckers are moving to Truckbase!