Truck Driver How To Get Trucking Authority

When you own a business in any industry, there are a number of permits and licenses you’ll need to get. The trucking industry is no different, and if you want to start your own trucking company, you’ll need to obtain your operating authority.

How a Trucking Operating Authority Works

When you want to start your own trucking company, you can’t just buy a truck and start charging clients to drive their freight across state lines: You need to get the proper operating authority from the Federal Motor Carrier Safety Administration (FMCSA). Having an operating authority means that the government has permitted you to charge to haul freight. You don’t always need this if you’re working as an owner-operator contracting with carriers, but you will need it if you want to find and negotiate your own loads or hire other drivers for your trucking business. When you do get your operating authority, you’ll be issued a Motor Carrier (MC) number, which marks your truck(s) as licensed to operate in the U.S. There are a variety of factors involved as far as who needs to have a trucking operating authority, but in general, if you’re a business owner transporting property or hazardous materials, you’ll likely need one. (Carrying passengers comes with different requirements and doesn’t usually require an operating authority.) You also might need additional authorities or permits depending on the type of cargo you’re carrying and which states you’re driving in.

Getting a Trucking Operating Authority

Obtaining your operating authority isn’t a quick task, which is why it’s important to allow yourself plenty of time to complete the process. There may be different or additional permits and authorities you need based on what you’re carrying and where you’re operating, so be sure to research those thoroughly. It’s also always a good idea to have an expert look at your individual situation and make sure you have everything you need to operate legally. That being said, there are a few steps that you’ll almost always need to complete so you can obtain your operating authority.

1. Register your business. This means you’ll need to come up with a name for your business and register it as a sole proprietorship, limited liability company (LLC), or partnership. Usually, most truck drivers prefer becoming an LLC since there is less personal liability involved.

   However you register, you’ll also need to obtain an employer identification number (EIN) from the IRS to put on your operating authority application.

2. Apply for your operating authority. The actual steps and fees required to complete this will vary by state, so be sure to look those up for where you’re operating. However, you generally need to complete an OP-1 form, a BOC-3 form, an MCS-150 report, and a Safety Certification Application.

   Once you have submitted your forms and reports, you’ll receive a USDOT (U.S. Department of Transportation) number while the government posts your application publicly for ten days to see if anyone protests it.

3. Buy insurance and share it with the FMCSA. In order to grant you operating authority, the FMCSA needs to have your insurance on file. If you’ve been driving as an owner-operator or working as a freight broker, you may already have a policy, so check to see if you need to make any changes to it for this new situation.

4. Assign process agents. In addition to proof of insurance, the FMCSA needs to know who you’ve hired to handle any legal documents in every state where you intend to operate before they can grant your application for authority.

   You can hire your own process agents, but many times there are businesses with approved agents who will take you on as a client.

After you’ve completed all of these steps, you’ll just have to wait for the FMCSA to approve your authority, which they’ll do via a letter.

Additional Steps to Complete Before Your Authority is Activated

Once the FMCSA approves your operating authority, you still have a few more steps to complete before it is fully activated, and you can begin carrying freight. Again, these may vary by state or cargo type, so be sure to do your homework and talk to an attorney so that you don’t miss anything.

1. Pay your Heavy Use Vehicle Tax (HUVT). When you operate a vehicle on a public highway, you have to pay an annual HUVT to the IRS. You have to pay this tax before you can get a license to drive cargo between states, so it’s best to do it as soon as possible. Don’t forget to set reminders to pay it every year, either.

2. Register for your International Registration Plan (IRP). When you drive freight across different states and jurisdictions, you have to pay taxes and licensing fees for each of those areas based on the number of miles you travel through each one.

   The 48 contiguous states and Canada created the IRP to help with this process and to create licensing for driving across multiple jurisdictions.

3. Make an International Fuel Tax Agreement (IFTA) account. To simplify fuel use taxes and make sure each state you drive across gets what they’re owed, the 48 contiguous states and Canada set up the IFTA.

   You’ll still have to record how much fuel you purchase in each state (or country), but with an IFTA account, you’ll only have to submit one tax report at the end of each quarter instead of filing in each individual location.

4. Get a Unified Carrier Registration (UCR) permit. This permit verifies that you have insurance in each of the states that you operate in. You’ll need to pay an annual fee and renew this permit every year, so add it to your calendar of annual tasks.

5. Sign up for a drug and alcohol testing program. This isn’t just for your employees but for you as well, since all truck drivers have to have a negative drug test result before driving or hiring others.

   These programs will also usually require you to complete a supervisor training on controlled substances and to designate an employee who is allowed to immediately terminate or otherwise relieve an employee of their duties in the case of a positive drug or alcohol test.

After you’ve completed all of these steps, your operating authority can be activated, and you can start driving freight. Make sure you keep excellent records as you go because within the first 18 months you’re in business, you’ll have to go through a federal audit to make sure your company is fully compliant.

Trucking Authority FAQ

1. What is an authority in trucking?

   An authority in trucking is federal permission to operate a trucking company. To make sure that not just anyone can start their own trucking company, the federal government – via the Federal Motor Carrier Safety Administration (FMCSA) – issues operating authorities to approved truck drivers and their companies. This operating authority comes in the form of a Motor Carrier (MC) number, and it’s recognized in all U.S. states as well as Canada. To obtain operating authority, truck drivers have to file proof of insurance, pay their Heavy Use Vehicle Tax (HUVT), sign up for a drug and alcohol testing program, and file for a number of other permits. All of this is intended to make sure that the trucking companies approved to carry freight around the country will do so safely and will pay all of their taxes. For drivers and trucking companies, having an operating authority allows them to hire employees and find their own freight.

2. Is it better to have your own authority in trucking?

   Yes, it is better to have your own authority in trucking. If you want to work independently and/or hire employees at any point, you’ll need to have your own operating authority. If you work as a driver for a carrier, you don’t need to get your own operating authority, as it won’t do you any good and will just eat your money and energy. If you’re an owner-operator or freight broker with the goal of owning your own company, however, it is a good idea to get your operating authority. With an operating authority, you’ll be allowed to operate as an independent business by finding your own freight and hiring employees. This is often a logical next step for truck drivers who want to be their own bosses and run their own companies.

3. What are the benefits of having your own authority?

   The benefits of having your own authority include independence, increased pay, and career growth opportunities. Having an operating authority allows you to run your own business by finding, negotiating, and driving your own freight loads, as well as hiring employees. This gives you total independence as your own boss and, if you run your business well, a higher salary than you’d likely earn if you were driving for a carrier. Of course, it also puts more responsibility on your shoulders, as you’re responsible for your company’s success, compliance, and safety, but many people find this a worthwhile payoff. Even just getting your own operating authority as an owner-operator can open huge career opportunities for you, as you definitely can’t grow your business without it.