Starting a trucking business in America, where three-fourths of the cargo is shipped via the industry and generates over $700 billion in revenue, requires obtaining the proper licenses and permits.
However, the process can be intimidating, especially with conflicting information on the internet. But don’t worry; whether you’re a seasoned driver or just starting, this guide will simplify the process of obtaining MC numbers and trucking authority in ten steps.
Get ready to sharpen your pencils, stock up on black pens, and flex your typing fingers, as you navigate through a mountain of paperwork to achieve your “get it done” commitment and become a trucking business owner.
What is a Trucking Authority?
Transporting goods across the United States can be lucrative, but it requires a trucking authority from the Federal Motor Carriers Safety Administration (FMCSA). This permission allows you to operate a freight company or employ drivers for interstate services.
There are different types of authorities for various purposes, including freight forwarders and motor carriers. Obtaining the appropriate trucking authority can take some time, but it is essential for legally and profitably running a trucking business.
Having your own operating authority, in the form of an MC number from the FMCSA, is critical for getting paid for hauling freight as a trucking company. The type of operating authority you need depends on the type of cargo you’re transporting, and you may need multiple authorities to cover various cargo types.
Some states also require Intrastate Authority for moving loads within their borders. To be successful, make sure you apply for the necessary operating authority as soon as possible. It can take up to two months to complete the process, so don’t delay
Embarking on the bureaucratic journey to secure various authorities entails a $300 fee per category. Ensure your paperwork is thoroughly assembled before commencing the laborious process.
What is an MC Number (Motor Carrier Number)?
Unleash the Power of Transport with a Motor Carrier Number (MC Number). This unique identifier, granted by the FMCSA, is the hallmark of trucking authority and a symbol of permission to transport goods in an efficient and regulated manner. MC Numbers identify carriers with the green light to transport regulated commodities, such as items that have undergone a transformation from their natural state, in interstate commerce. You can confidently drive your business forward and take on the open road with an MC Number. After a number has been obtained, operating authorization documentation is typically sent out within 3–4 business days.
What is a USDOT number (Department of Transportation)?
Running a trucking business involves navigating a complex web of regulations, and one of the key numbers you need to have on hand is your USDOT Number. Assigned by the United States Department of Transportation, this number acts as a fingerprint for your company, providing insight into your business operations to freight forwarders, regulators, and anyone else who needs to know.
It helps track your company’s safety record, vehicle classifications, and other vital information, providing a comprehensive picture of your business. Whether during an audit, compliance review, crash investigation, or inspection, your USDOT Number is the cornerstone of your company’s safety information, serving as a clear identifier that helps everyone stay on the same page. A USDOT number can be obtained online the same day the application is submitted.
The Cost of Compliance: MC and DOT Numbers
Acquiring an MC and DOT number is a wise investment with wallet-friendly fees, as shown by the FMCSA fee schedule:
- Gain Permanent Authority for $300
- Revamp your identity with a Notice of Name Change for $14
- Get back in the game with a Reinstate Authority fee of $80
Best of all, securing a USDOT number comes at no extra cost!
What is the main difference between the Trucking authority, MC number, and DOT number?
The main difference between a trucking authority, MC number, and DOT number is the type of regulatory compliance they represent for trucking companies operating in the United States.
- MC number (Motor Carrier Number) is a unique identifier the Federal Motor Carrier Safety Administration (FMCSA) assigned to trucking companies operating in interstate commerce, meaning they transport goods across state lines.
- DOT number (Department of Transportation number) is also a unique identifier assigned by the FMCSA to all commercial motor carriers operating in the U.S., including trucking companies.
- A trucking authority, also known as an operating authority, is a regulatory permit that allows trucking companies to operate legally as for-hire carriers and transport goods for compensation. Obtaining trucking authority usually involves getting both MC and DOT numbers.
Which type of trucker is exempt from obtaining trucking authority?
Trucking companies that are limited to operating within a single state are exempt from obtaining operating authority. Three other types of carriers also fall into this category: private carriers that only transport their own cargo, carriers that move commodities without federal restrictions, and carriers operating within commercial zones free from limitations.
These exemptions also determine the insurance and financial obligations required of the company. This includes private carriers transporting their own cargo, for-hire carriers exclusively handling exempt commodities, and carriers operating solely within a commercially exempt zone, such as a metropolitan area spanning multiple states.
Who needs an MC number, and who doesn’t?
A company must have an MC Number legally to operate as an interstate carrier. This number results from obtaining operating authority from the Federal Motor Administration (FMCSA). There are several classifications of MC operating authorities, each dictating the type of operation a company may run and the cargo it may carry.
These classifications include: Motor Carrier of Property, Motor Carrier of Household Goods (Moving Companies), Broker of Property, Broker of Household Goods, US-based Enterprise Carrier, and several less common types such as Freight Forwarders, Motor Passenger Carrier, Non-North American Domiciled Motor Carrier, Mexico based Carrier, among others.
The type of operating authority granted by the FMCSA is often identified as an “MC,” “FF,” or “MX” number. It’s important to note that a company may need to obtain multiple operating authorities to support its business operations, and the type of authority granted could impact the level and type of insurance required by the FMCSA.
Companies transporting passengers or regulated commodities in interstate commerce for a fee or arranging their transport must have a DOT number and an MC Number. The MC Number, or operating authority, dictates the type of operation a company may run and the cargo it may carry.
Not all carriers are obligated to possess MC numbers. Exceptions include:
- Intrastate Carriers – These are carriers that solely operate within the state they are based in.
- Private Carriers – These are carriers that transport their own goods.
- For-hire Carriers that only transport commodities that are exempt from federal regulation.
- Carriers that operate exclusively within a “commercial zone” designated by the federal government and exempt from interstate rules. These zones are often located around major metropolitan cities and span multiple states.
Enjoy the Benefits of Being in Control with Your Trucking License
Applying for trucking authority can be a significant step forward for individuals or businesses with prior experience in the trucking industry. With your authority, you gain many benefits, including the autonomy to choose your loads, drivers, and routes.
You also can operate across multiple states, expanding your revenue streams and keeping more of your income. However, it’s important to note that having your own trucking authority comes with added responsibility. As a trucking company owner, you’ll be responsible for finding work, hiring employees, and following federal and local regulations.
When you become an independent owner-operator and establish your trucking authority, you take on the role of being your own boss. You can make all your own decisions and control your time, money, and equipment. You only have to answer to yourself, the Federal Motor Carrier Safety Administration (FMCSA), and your insurance company.
With your authority, you can choose your loads and runs, deciding where to go, for how long, and how much money you make. However, finding great loads doesn’t happen automatically – you’ll need to build your own pipeline and establish relationships with shippers and brokers to keep your trailer full.
You also have the freedom to work on your schedule, balancing time off with long-term profitability. As the owner of your trucking authority, you control your income and can negotiate better rates with brokers.
You can keep all your profits, but paying attention to your expenses and maximizing your top-end revenue to boost earnings from each load is essential. Running a trucking company with your authority is a big responsibility, but it can be a rewarding experience with the right approach.
What drawbacks come with having a trucking authority?
As an independent trucking business owner, you wear many hats – CEO, dispatcher, maintenance manager, safety and compliance officer, sales and billing supervisor, and human resources director. The new responsibilities that come with your authority may require you to work longer hours, especially as you establish systems to streamline operations.
Getting consistent loads at top rates can be challenging for new independent operators who haven’t yet established relationships with shippers and brokers. With tough competition from big companies and other owner-operators, finding high-paying loads requires persistence and active efforts to secure new business.
As a self-sufficient motor carrier, you bear the cost of all expenses, including licensing, safety inspections, taxes, fuel, and insurance. While these expenses can quickly add up, tracking your expenditures and understanding your cost per mile to ensure profitability is crucial.
Get Your Trucking Authority and MC Number in 10 Easy Steps
Step 1: Register your transportation business
To start a trucking business, register it and obtain an MC number by following your state’s requirements and costs.
Choose a business structure based on your location and tax planning, such as a proprietorship with the DBA, LLC, or Corporation. Submit necessary forms at the State’s office, which may be done online. Keep copies of all paperwork for future use. Seek guidance from professionals for the best decision.
Step 2: Unleash the Power of Your Business Identity with an Employer Identification Number
It’s crucial to obtain an employer identification number (EIN) when starting a business. Issued by the Internal Revenue Service (IRS), the EIN acts as an identification number for business entities.
However, an EIN may not be necessary if you choose to run a sole proprietorship. Nevertheless, obtaining one can protect your privacy by preventing using your social security number (SSN) in business dealings.
On the other hand, if you run an LLC or Corporation, having an EIN is a must. Obtaining an EIN is also advisable for sole proprietors to avoid potential identity theft risks associated with using their SSNs in business transactions.
Step 3: Embark on the Journey of Official Recognition by Signing Up with the US Transportation (USDOT)
Registering with USDOT and obtaining a DOT Number is necessary to operate a trucking company. This identifier serves as a company ID and allows vehicle, safety, and other information access.
However, DOT Number must be renewed every two years and updated if any business details change. Before registration, company information such as operation location, number of trucks, vehicle type, cargo, and more must be prepared. A PIN will be issued along with DOT Number for future updates.
Step 4: Next step on the journey is to secure your Motor Carrier number and hit the road with confidence
To participate in commerce, you must apply for your MC number on the FMCSA website. Your MC number is required for providing cargo services and is essential for involvement in all forms of interstate trade. Gather the information necessary for USDOT registration and have it ready for your MC number application.
Your MC number will be issued immediately, but wait 2-3 weeks for your Authority to become active after completing the necessary steps. Remember, your Authority certificate will take another two weeks to arrive, your MC number must be active, and BOC-3 and Insurance must be on file.
Step 5: Ensure a smooth trucking experience by obtaining insurance for your authority, and don’t forget to file your BOC-3
To obtain your MC number with the FMCSA, file a BOC-3 as your designated process agent and get insurance within 20 days. Not doing so will result in denial of authority. Use a “blanket” company for a fee for an up-to-date list of process agents. Note: changes to the MC number require a new BOC-3 filing, or the MC number will become inactive after 30 days.
Step 6: Satisfy the HVUT obligation
Once your insurance and designated process agent (BOC-3) are sorted, it’s time to fulfill another requirement for your trucking company with motor carrier authority – the Heavy Vehicle Use Tax (HVUT). This tax is a necessary expense for heavy vehicles utilizing US highways and adds to the costs of operating a successful trucking business.
Step 7: Acquire apportioned license plates and establish your International Plan
To run a trucking company across multiple states, you must register with IRP. This requires details about your vehicles, including VIN, title, purchase cost, date, make and model, and the states you’ll operate in. IRP requires annual reporting of mileage driven and payment of taxes based on that mileage. Your IRP fee will depend on the miles driven and your operating conditions. After submitting your registration, you’ll receive your apportioned tags once you pay the fee.
Step 8: Establish an IFTA account (International Fuel Tax Agreement)
As a motor carrier operating across multiple jurisdictions in the mainland USA and Canada, setting up an IFTA account is imperative. The IFTA simplifies the reporting process for fuel use taxes by providing a single point of reporting for the 48 states of the US and various Canadian provinces.
Upon obtaining an IFTA license, carriers must report their fuel use taxes at the end of every quarter. This report will encompass details of miles driven in each jurisdiction and all fuel purchases made. The IFTA fuel tax report resembles the IRP form, requiring carriers to list the states they plan to operate in, estimated mileage, and all fuel purchases.
Step 9: Finish registering with the Unified Carrier Registration
To ensure compliance with regulations and verify the validity of your insurance policies in the states you operate in, obtaining a Unified Carrier Registration (UCR) permit is essential. The process involves registering your business in each state you trade in and paying an annual fee, which varies based on your fleet.
It’s essential to remember that this registration requirement must be fulfilled annually and renewed every year. Make sure to mark it on your calendar, so you don’t miss the deadline.
Step 10: Sign up for a substance screening program.
To meet federal regulations and ensure the safety of the roads, your truck drivers must undergo drug and alcohol testing. The final step in this process is to officially register your drivers with a reliable testing facility where they can demonstrate their clean and drug-free status.
Conclusion
Unlock the door to your trucking empire by obtaining the necessary trucking authority, MC numbers, and licenses. But before you rev up your engines, pause and consider if this is indeed the road you wish to embark on.
Obtaining operating authority may open up new horizons for your business, yet it also brings added expenses. Ensure a smooth ride ahead with secure commercial truck financing – start your journey today. We hope this guide will help you understand more about the process and its hidden pros and cons.
