General Cash Outlay for Operating Authority

300.00    MC# FMCSA Application
1250.00  Insurance Primary Liability and Cargo
1000.00  Down Payment on a new to fairly new Trailer
500.00    Tax Tag Title
100.00    Compliance Services providing Consortium for random drug and alcohol screening
100.00    If you chose to use a Compliance Service to set up all the other compliance paperwork
12.00      New Mexico Weight and Distance Application 2.00 and 10.00 per Certificate
10.00     New York Application and Sticker 
20.00     IFTA Application and Sticker

3,500.00 Roughly is the cash layout in general on average to make the switch

Heavy Highway Use Tax may or may not be due, as already owning your truck you should know by now it's about 550.00 annually Form2290

-              California State Application is no charge if you have not run miles under you authority
-              Kentucky's Application is free for the KYU

Any one of these may have change, but these prices are fairly current at the time I'm posting the material 1st QRT 2009

One of the first things you'll want to concern yourself with is what is my responsibility at the Authority level, what should I expect to earn and HOW" am I going to do it. Here's a few things to keep in mind and a little bit of what happen to me at the Authority Level

III Business responsibility:  This includes but is not limited to the previous responsibilities of the load and the unit, the total responsibility for the creation of the business, the structure of its services, the range and scope of the business, the choosing of all services to the business, all legal requirements, employment requirements, compliance requirements, record keeping e.g. maintenance, driver logs, qualification and medical/drug and alcohol screening and random test, filings, taxes, penalties, legal injunctions, negotiating of all contracts involved in the general day to day business, setting rates, finding loads, gauging the market, research and development “which is by the way is what you’re doing now, permits, buying and selling of equipment, trailers and other load securing devices, recovery in breakdown situations, training, office and location, rents, utilities, and all other overhead financial responsibilities, and the list goes on and on and on.

One of the main things to continue to bear in mind is, If you have all this double the responsibility it should go without saying that you should be paid double of what you are paid at the company level. I did nothing but math and Spreadsheets the whole time I owned equipment, and over and over again I found that those that did not have a working knowledge of the market were paid as such that after their expenses they were making in most cases half of what the company drivers make. I'll be showing you some of those numbers. Point is it should never be and the shame is that in an average market with a high demand for truck it never should happen.

Authority stage: The decision to get my own Authority came as somewhat a surprise and carried its fair share of a mystery to me; I had left Panther thinking the grass was greener on the other side over at Tri-State. It wasn’t, I think maybe I could have stayed but I was already use to freely finding my own loads, at least outside the service area and sometimes inside all depending on the situation but there was, let’s just say, a different kind of environment there for that. So it got me to thinking, maybe God is putting out a challenge for me, and as you can tell I’m always up to it if the Lord “opens the door” so I check the bank and they said “No!”, I was some what relieved . I’d just stick it out and who know what the future would hold. But I remembered I’d been with the Credit Union for a long time, so I thought Why not try, turns out, they help me get the loan for the trailer. So the door was open and three weeks later I was on my own Authority and the Lord bless me to learn so much I can’t list it all here, so I decided to write a book, so here it is.

The process for obtaining your own Authority

Federal Common and Contract Operating Authority

If you were a local distributor of some type of goods that never leave the state you don’t need Federal Authority. You may need state authority, so check with your state. If the same local freight goes out of the state or comes into the state from out of state, you’ll need Federal Authority.

What is Interstate Operating Authority: Authority is permission from the Federal Motor Carrier Safety Administration to haul freight passengers or equipment that originates from one state to another state, which means you have complied with the requirements set forth by the FMCSA for Operating Authority.
Follow this link for any questions on Federal Operating Authority FMCSA FAQ Operating

Authority

Federal Common Authority:

If you are open to the public i.e. running loads through brokers, shipper etc. that go from one state to another state, you don’t own the freight, your broker doesn’t own the freight, you are expected to insure the freight, this type of  authority is commonly referred to as Common Authority. With Common Authority you are open to the public and are liable for insuring the load, the general public, the value of your equipment and the equipment or property of others in the event you are at fault in an accident. When you contract with a broker to haul a load, you agree to insure the loss of any part of the load, the broker is required to have proof that you do in fact have Cargo Insurance for the amount of coverage needed for the load, this make them a certificate holder. In the event of a loss the insurance company will pay the carrier and the carrier will pay for the losses to whomsoever the owner of the freight is. If the broker requires you to add them as an additional insured the request has to be approved through underwriting of the insurance company. If approved as an additionally insured, in the event of a loss the broker is then paid by the insurance company and is responsible to pay whomsoever the owner is of the freight. 

Federal Contract Authority:

Let’s say you only haul loads for one company that owns the freight that goes from one state to another state and you are only responsible for hauling it, the company is liable for any loses. In this case you are not required by DOT to carry Cargo Insurance; but you must insure the general public and the value of your equipment and the equipment or property of others in the event you are at fault in an accident. This type of authority is commonly referred to as Contract Authority. However, if the company requires you to pay in the event of a loss due to negligence or carelessness on your part you will then be required “by that company”, not DOT to carry Cargo Insurance. In which case whether you have Common or Contract Authority you are on the hook for the losses if it’s your fault.

Now some smart Truckers out there suggest you get both, I’m not that smart, I always say get what you need. There logic is that some states exempt you from taxes on certain purchases which could save you thousands of dollars if you have Common Authority. Please, check that kinda thing out with your State; it just may only apply to the good folks of Kansas I guess. Don’t get all rapped around the axial about it though.

US DOT Number

DOT Number just like you have to have a social security number for your person, in transportation you have to have a Department of Transportation Number, and like a social security number doesn’t give you permission to drive neither does the DOT number give you permission to participate in interstate commerce, it’s just a number that all federal information about your company is accessed by. Go online FMCSA DOT Registration
 fill out the questionnaire, obtain your PIN number, your DOT number will be issued immediately, it’s all free and you’re ready to get your MC Number.

Motor Carrier Number MC

The MC Number is to your trucking business what your CDL is to Driving a Big Truck. It gives you Carrier status and Interstate Operating Authority. To get an MC number go online to FMCSA DOT/MC Authority Registration Assisted or Unassisted fill in the blanks for the online form, take out your credit/debit card and shell out $300.00. About the same time, work out the details with your prospective insurance company for you insurance. You’ll need two months payments to get started, so figure about $1200.00 to $1400.00 depending on your driving record and insurance conditions. In about two weeks your number will issue, it will be in the inactive status until your insurance company sends them the proof of insurance. By calling FMCSA you can know when it becomes active. You have to have a copy in your possession to do business, if you can’t wait for it to come in the mail you can have a copy emailed or faxed to you; its $40.00 to get a copy; there’s only one man and his name is Don. The support folks at the FMCSA will give you his number. Pay the man, he’ll email or fax it to you, and you can go pick up a load that day!!! Hopefully you will have completed the rest of the stuff on my list

BOC-3  "Process Agent"

FMCSA Reg. CFR 49 pt 366 BOC-3 A process agent is someone who may be served on your behalf with court papers in any proceeding brought against you as a motor carrier. In order to obtain your authority this requirement must be met. Boy once you file that registration application those BOC-3 companies gona be on you like ugly on a ape, they’ll call email, fax, and if you're in their city they might knock on your door. Here look, there’s a whole page of them listed on the FMCSA site so you can beat them to it if you want.
FMCSA BOC-3 Process Agents

They all want to charge about 25-50.00 bucks just to be the one that can be served on you’re behalf. They already know the law requires you to have one so just get em paid and be done wit it.

Insurance Requirements to have your Authority

To run your own Authority you have to have $750,000 primary liability and $100,000 in Cargo. If you only have the bare minimum coverage you’ll expect to pay around $650.00 a month and about $50.00 per $22,000 more in cargo coverage. I suggest you have more cargo. I had 250,000 in cargo. I was allowed to carry high dollar loads when it became necessary. I’m not saying you need that much, and besides if the circumstances are just right you can call your insurance provider and request an additional amount of insurance before you agree to a load over your coverage amount.

This would be in the form of an endorsement to your current insurance contract and would have to go to underwriting for approval. The insurance companies will only allow this maybe a few times a year. If you keep asking, their going to start requiring that you have a higher coverage amount in cargo insurance on a permanent basis. My problem was most of my loads booked toward the end of the normal business hours or after, so when the shipper needed it, they needed you to have it now! And they need you to go get the load now! So there’s no time to wait until you’re insurance company opens the next morning to add it. If the broker is scrambling to find a truck with the insurance requirement and if you can’t get coverage now, they’ll usually get off the phone.  If they know I have the proper coverage, but don’t like my rate, chances are they’ll have to come back to me anyway.

Did I pay dearly for that potential? Yes I did, but I knew I could make it up on about two high earning loads. Should you do that? That’s a personal decision you’ll have to make. Later we'll talk about Supply strategies, which is when there are more trucks than freight in an unusually long downturn in the market. When that happens you began to realize, sometimes it’s better to cut your expenses to a minimum than to be forced to close the business.

But I would caution you!!! If you take a load say, that’s $200,000 in value and you only have $100,000 cargo insurance, and you lose that load, the insurance company will penalize you by only paying 50% of the coverage you had. That is, they’ll only pay $50,000 minus your deductable, i.e. deductible = $1,000 they'll pay $50,000-$1,000=$49,000. Now in this case you’re on the hook for the rest $151,000 total for the load you just lost. The insurance companies can and will do this as it is already written in your contract under the “Co Insurance Clause” and I bet you didn't even know that. How many Truckers do you know actually read those kinda things?

Get insurance quotes, get insurance, when they report insurance to FMCSA your Authority MC Number becomes active. You are required to decal your company name on the sides of  your trucks, also DOT, MC, VIN (certain states) and any other state required decals, IFTA  on sides and NY HUT sticker on front fender seen as truck approaches.
UCR the Unified Carrier Registration replaced the old SSR Single State Registration Call your state DOT; it’s about 40 bucks one truck.

Kentucky KYU

form online at Kentucky DOT KYU Application Kentucky Trucking Application: Form TC 95-1 “accepted only by mail” it’s about 10 bucks.

New Mexico weight distance

If you Google New Mexico weight and Distance Tax Permit you’ll find the Form MVD 10995 PDF New Mexico Weight And Distance Application , fill it out send about 2.00 bucks per permit.

New York HUT Highway Use Tax

application online NY HUT Application , about 20 bucks.

California Motor Carrier Permit

is online at California MC Permit Online Application

As with any of these applications don't let the look of application intimidate you, most of it doesn't even apply to you , just go down through it carefully and you'll find it's really not difficult at all. There is a phone number to call right on the application itself if you have any question, I called and they were very helpful and I don't remember going through any prompts. If I remember they picked right up. If you haven’t run any miles in California yet, I don’t think there is a charge for the application, call them to make sure.

Oregon Weight and Distance Permits

These are obtained trip into the state of Oregon, if you run that area all the time you can pay a one time fee which allows you to travel the state year round, but it up around $2,000 bucks. If you’re not traveling there on a regular basis you’ll want to opt for the occasional permit.

Oregon will set up your account on your first entry, get your weight distance permit “before” entering the state Oregon DOT Oregon DOT or call 503-378-6699 they’ll assign you a file number after you register by phone. Online http://www.oregon.gov

Compliance Services

Help with New Carrier New entrant Audit driver files, Medical files, Qualification files and Drug and alcohol. They also provide Hazmat Emergency Plans and a host of other compliance services. Find a compliance service pay about $100.00 bucks to get in the consortium for drug and alcohol testing. It’s the law. The other services are a choice, I used Foley Services I was very pleased and would refer them to any carrier.
Call or go online to your state IFTA usually found on DOT DPS or DMV site for your state. 

IFTA Briefly Explained

In addition to IRP which registers you to run in each state you are also charged by each state based on the amount of fuel you burn in their state. You’ll be charged by almost every state you burn fuel in. If you buy your fuel in a state which already includes the tax in the fuel purchase, they don’t charge you based on the miles you run in their state, if you buy just the right amount of fuel for just the right amount of miles in every state you won’t owe anything, but you still have to report it, besides, that probably won’t happen in a lifetime, and they know it. International Fuel Tax Association “IFTA”: every state has one; they collect from you based on your fuel receipts and the miles you submit for all states.

They then send just the right amount you owe to each state based on the miles you ran in that state and the fuel you bought or didn’t buy there. You have to renew the IFTA sticker every year and put it on the side of your truck. It and the application is 10 bucks, don’t get cancelled for a non payment it’ll be 100 bucks to redo another application in some states. You submit an IFTA report and pay every quarter, if the paper work is a little bit more than your busy schedule can handle you’ll need to get a service to help you. . IFTA Preparation

Your Fictitious Business Name

Most likely your state will want you to register your business name and entity in their state. I think it was like 10 bucks in Washington but I think its like 100 bucks in Oklahoma, after that they make you pay taxes on the miles you run out of their state or into their state while doing business i.e. under a load. That’s a state tax not IRP,  but if you don’t run any miles in their state when you renew your IRP “that’s registration” at end of year; instead of declaring that you ran let’s say a 1000 miles they’ll say, “oh well, since you didn’t run any miles in your own state you have to use estimated miles chart”, which charges you like well over 20,000 miles the IRP taxes alone for that state will come out over 200 bucks, so its better to do a little running in every state you list on your IRP, especially the state where you base plate IRP or you’ll pay estimated taxes on miles you didn’t even run.

HAZMAT

The first step in the process is to get to the Hazprint site online for the Transportation Security Administration, a governmental agency that checks your background to make sure you're not a terrorist or something. There you'll find a city and state where you can walk into there office, do the application and have your finger prints taken. Don't worry most places don't even use the black stuff anymore it's all computer imaging cool. You just lay you grimmy little DB's on the glass and whaola! it's done. 

Getting the Hazmat Permit will open so many doors of opportunity for you you would not believe it, I went the whole first two years running my own authority thinking my insurance would skyrocket if I got my Hazmat Permit, as it turned out I ended up going with a new provider and my overall cost including my cargo and primary and the Hazmat was all about 70.00 bucks less than what I was already paying. Now ain't that a blip. 

 

By far the hardest part of any process for anything I ever did in all of trucking was finding an underwriter that would write for an independent that really could not tell them exactly what he might be carrying. I started the process in about September of 2007 I think and finally ended up getting insured in about May of 2008. I might need to check those dates. It probably won't take you that long. I went through about 5 different Insurance agencies trying to get an agent that would finally chase it down for me. My search landed me at Clinewood Agency Which is the insurance company I refer you to on the Business Product Page, Others had pursued Great Western Casulty on the matter and didn't follow up, but they did, and we got it. the primary problem was figuring out how to assess the risk on a one man operation that could not really know exactly what he might carry. So we all agreed I'd do about 12 loads a year on some general Hazmat and review it at the end of the year to see if the products would be the general kind of hazmat I expected, like paint, corrosives and this kind of stuff you would throw on a van.

 

Once I got my Hazmat insurance I was ready to get a Hazmat Emergency Plan which is what you have to have to apply for the Hazmat Permit. This is most involved and too complicated for me, but I found out my Compliance Company Foley Services offered the service I jumped on it , It was 450.00 bucks but for the time and energy I would save I think it was worth it, and again that's conservation of time. Once you're out there busting it on loads on a day to day a Hazmat Plan is the last thing you need to be worried about. Here's one thing I know, most guys won't take the extra step to do Hazmat, which set those of you that will miles ahead of them. 

 

Unfortunately I got out the business before I could make good on my Hazmat investment, but I'll give you the final steps. Next go to the FMCSA site and pull down form MC 150-B which allows you to report your Hazmat status on the federal level this form may or may not be current so double check at the FMCSA help line ahead of time, at 1-800-832-5660. You'll also need to update your original MC 150 and your DOT status on the SAFER site

 

Now that you have all the bases covered on the FMCSA side there is the PHMSA side to tackle.

 

The Pipeline and Hazardous Material Safety Administration creates and enforces all the handlings of all hazardous material shipments.

 

There are two levels of requirements 

 

Training Requirements

Placarding requirements

 

First the training requirements for an Independent. Like the compliance for FMCSA you'll have to document that you trained yourself according to all the training requirements of the PHMSA  49 CFRand create a certificate that you must carry on the vehicle to show that you received training for your certification within the required intervals. As you add on drivers you must insure they have the equivilent training to the standards of the 49 CFR and are awarded a certificate of acheivement within the time intervals of the reg..

 

There are several level of training. the good thing is, all the regulations of the training is offered in the 49 CFR which is the Regulation bible for all Hazardous material training. However to ease your burden a bit there are bite size levels of training offered through the PHMSA site some for free others on a cost basis.

 

These are the categories of training required

 

FMSCA security awareness

General Hazardous Material Awareness

Safety Training

Function Specific Training "depending on what you haul"

Driver Training as per 49 CFR 177.816

 

There are lots of training materials offered by PHMSA that will assist you if you have a classroom of students as it would be for orientation. These materials are offered through the PHMSA site 

 

Training Materials

Electronic Services for hazardous material training brochures which are mailed to an address

Library Services Online are training materials which may be downloaded or printed online

There is also a 25.00 CD for the training which is offered through the PHMSA site

 

Once you have made yourself available to the training you are required to have through PHMSA you must document all the levels of training as you did for your compliance and qualification file for FMCSA. You'll need to have this documented audit ready according to the intervals laid out by the PHMSA.

 

The next level of qualifying to haul hazardous materials is the registration for permit level. Whenever you have to placard a load for hazardous material you'll have to be registered with the PHMSA to do so. There is an application and a fee which is set by a fee table depending on what you are carrying and the size of your company. Once you obtain this registration for your company you can copy the registration certificate and put it on each truck that will haul Hazmat.

 

The application is online at the PHMSA site and the fee table. There is an online application and pay option available which allows you to complete the process online and have the Permit faxed to you immediately.

 

 

Trucking Business Start Up Plans To Become A  Company Driver    Lease Operator    Operating Authority