Knowing the documents you need and when to apply for them will save you time and headaches when you’re ready to obtain your operating authority.
For drivers shifting to become an owner-operator with your own authority, the first dilemma is chicken or egg – do you buy your truck and then get set up as an owner-operator or do you complete the paperwork first before acquiring a rig?
You will save money and aggravation by completing your applications and securing your permits before buying a truck, says Rick McNeill, president of Motor Carrier Consultants of Mobile, Ala. At the very least, put off truck shopping until you’ve started the paperwork process. If you’re going to lease on to a carrier, you can run under that firm’s authority and don’t need one of your own.
“People will purchase a truck and trailer and put their company name on the truck, not realizing it’s going to take at least three weeks for it to happen,” McNeill says. “In the meantime, they’re sitting on a truck note and insurance before they can get any business to pay their bills.”
Your first step is to file with the Federal Motor Carrier Safety Administration for your U.S. Department of Transportation number and motor carrier number (operating authority). You must have a DOT number to apply for your authority. About 10 to 12 days after filing, the FMCSA will send out a “first letter” acknowledging the application has been reviewed and accepted.
Once you receive the first letter, you can buy liability and/or cargo insurance. Save time by shopping for insurance quotes after filing for your MC number, but hold off on buying coverage, McNeill says. It takes only 24 to 48 hours for an insurance company to post your insurance filing with FMCSA.
At the same time you file your insurance, you should complete your BOC-3 process service agent form filing. This is a listing of registered process agents by state who, if a legal action was filed against your company from outside your base state, would accept legal documents on your behalf.
It takes 24 to 48 hours for the filings to appear on the FMCSA federal register. Once the filings appear in the register, a mandatory five-day waiting period begins before the final authority is issued.
During the period waiting for your MC number, don’t forget to file for your Unified Carrier Registration, McNeill says. Launched in 2007, this program applies to all carriers transporting goods in interstate commerce. About 40 states participate in the program, which is administered at >www.ucr.in.gov. This is an electronic filing that will show up when your truck goes through commercial scales. If you operate in a state that’s not active in the program, you will be directed to register using another state as your base.
You’ll also want to check the states where you plan to operate for supplemental fuel taxes – Kentucky, New Mexico, New York and Oregon – and for state intrastate authority, McNeill says. Thirty states have intrastate authority, but enforcement hasn’t been a high priority in some of them.
You can’t run your business without posting a copy of your operating authority in your vehicle. If you’re in a hurry, Don Norman Associates www.donnormanassociates.com will fax your authority to you for a fee.
Larissa Jacquez of Burson, Calif., says she started setting up the hot shot transport company she plans to run with her partner and driver Brett Makowiedki in February and hopes they would be ready to go by May 1. She knew how to organize the corporate structure but was unfamiliar with trucking company regulations and requirements, so she turned to MCC for help. “I wanted to make sure we had all of our paperwork right before we went out on the road,” she says.
Here are the important documents you’ll need to become an independent owner-operator. The sequence beginning with the U.S. Department of Transportation number will take about three weeks.
- U.S. Department of Transportation number: Need this to apply for operating authority. Apply for this first.
- Motor Carrier number (operating authority): Issued by Federal Motor Carrier Safety Administration. Apply for this next. It will take longest to receive.
- Insurance: Buy liability and/or cargo coverage after notice your MC application has been accepted. Will be filed with FMCSA within 24-48 hours.
- BOC-3 process service agent form filing: File at same time you buy insurance.
- Unified Carrier Registration: Online filing required of all carriers transporting interstate goods.
- International Fuel Tax Agreement: Fuel tax form covering all states except Alaska and Hawaii.
- State supplemental fuel taxes: If you plan to run in any of four states that impose a supplemental fuel tax, you should register in those state programs.
- Intrastate commerce authority: Check if any of the states where you intend to operate require intrastate authority.
How to Become an Owner-Operator: A Resource for Getting Started (Download PDF)
(NOTE: Article first published in the June, 2009 issue of Truckers News.)