So you want to "own " your own company

You guys are good at what you do & i thank you for such great info i wanted for a long time. A+++

 

lifetime membership is worth the price alone

 

There really isn't that much paperwork to do on a daily basis when you run your authority. The main thing you will do is track your miles and fuel purchases by state. The other thing you need to track are any maintenance costs, such as oil changes, tires, brake adjustments, etc., You could be asked for a quarterly maintenance report if you are audited. Hopefully, this is not something that you will need to deal on a daily basis. Other than driving, the rest of you time will be checking loadboards, making phone calls and booking loads. Starting out you will spend some time signing contracts. Every broker or shipper with whom you do business will require a signed contract before they will book a load with you. I suggest that you get a laptop computer and an all in one fax/printer/scanner for your truck. You will also need an air card to get on the internet and an internet fax service. It will only take a few loads to get your money back from these expenses. Contracts can be 20-30 pages. Truck stops can charge from $1-3/page for faxes. It has become a necessity in this business for those who run their authority. An internet fax service usually runs about $10-15/month.


Starting out you will need the following:

Before doing anything you need to decide on a name and business structure. I prefer a corporation. Some like an LLC or LLP. Others may prefer a sole proprietorship. You may check with a lawyer or CPA to see which is best for you. Once you make a decision on your business structure, you need to decide on a name. Check with your state to see if the name is in use. After making those decisions, you will want to apply for a FEIN or Federal Employer Identification Number. You should do this regardless of which structure you decide to use. I would not use my social security number. Having a different number will help keep your business separate from your personal business and also protect your identity. You will need a FEIN for all documents that are listed below.


Insurance - The first thing you need is insurance. You will need a minimum of $1,000,000 liability and $100,000 cargo to load for most shippers and brokers. You only need $750,000 cargo for interstate authority, but most won't load you unless you have the minimums that I noted above.

Registered agent - You must have registered agents for every state in which you run and it must be on file with the feds before authority will be granted. There are services who will do this for you for an annual fee. If you are a member of OOIDA, they will act as your registered agent at no charge.

MCS 150 - This is the form you fill out for your MC and DOT. The feds require that it be updated bi-annually. My state requires that it be updated each year before they will allow me to purchase my base plates.

Authority - Once you have your insurance and registered agent in process, you can apply for authority. It usually takes about 3-6 weeks from the time you apply. You can apply for a DOT number at the same time you apply for authority. Fees for authority are $300. There is no charge for a DOT number.

2290 - This is also called the heavy highway use tax or HUT. It costs $550/yr and runs from August 1 through July 31. It is prorated from the time the truck is put in service. You will be required to show proof that this has been paid before you will be allowed to purchase your base plates. You can go by your local IRS office and pay it or do it online. I suggest doing it in person so that they can give you a stamped copy while you wait. You will need to pay this fee each year as long as you own a truck.

UCR - This is short for Unified Carrier Registration. It must be paid each year. The cost is based upon how many trucks you have that run under your authority. Brokers and freight forwarders must also pay this fee.

Base plate - You usually do this through your home state since you will need to provide proof of residency in most states. A few states offer this at a local office, but most will require you to go to your state capital. Make sure you have everything you need before going. It usually takes me all day if I walk it through. Costs vary, but I would count on $1,400-2,200/yr. You will need a copy of your title when you apply.

Proof of residency - Most states will require a property tax receipt, business telephone bill, utility bill, etc., to prove residency. You may also need to show your drivers license.

IFTA - There should not be a fee for this. You will be assigned an account number and required to submit a quarterly tax return listing all fuel purchased and miles driven by state. Your state should give you 2 stickers for each truck that needs to be placed on each side of your truck.

Other permits - Some states require that you have a permit for their state. Some must be renewed annually unless you want to purchase a trip permit every time you enter their state. It is usually less expensive to have their permit. Kentucky require carriers to have a KYU number. There is no fee attached, but you must file a quarterly tax return with them whether you have miles in the state or not. Failure to file could result in having to put up a $1,000 bond. New Mexico and New York also require permits. Quarterly returns must be filed with them as well. Both charge for their permits. I believe that New Mexico charges $9/per truck. I don't remember what the New York permit costs. I think it is $68. I don't have the information handy. Oregon requires a trip permit or $2,000 cash bond and quarterly returns. I would pay for a trip permit in Oregon unless you travel through there a lot. With their newest tax increase, I believe they have the most expensive tax rates for big trucks. In Oregon, you don't pay fuel tax at the pump if you have their PUC, which is their weight distance account. You can get an account with them without putting up the cash bond. As I stated, I would just get a trip permit with them unless I traveled through there on a very regular basis.

Intrastate authority - There are a few states that require intrastate authority if you pick up and deliver the same load within their state. It is different than interstate authority. Interstate authority is where you pick up in one state and deliver in a different state. The authority that I noted above is for interstate authority and must be granted by the feds. There are only about 11 states which require intrastate authority for those who pick up and deliver the same load within their borders. The two you may need are Texas and California. They are also two of the most expensive. I believe Texas is still $200 and if I remember correctly, California charges $150. Intrastate authority fees are usually only paid one time as is interstate authority. I would not worry about intrastate authority unless you plan on picking up and delivering freight in one of the states that require it. I rarely pick up and deliver in the same state.

Signage and identification - You will need to have your company name, truck number and DOT number printed for the side of your truck. Some print their MC number and state intrastate authority numbers. If you plan on running in Colorado, you will also want the last 8 digits of your truck's vin number. Otherwise, you will need to stop at every scale in Colorado.

Annual inspection - It would be a good idea to have an annual DOT inspection performed on the truck before you get started. It would be a good idea to have one done at least each year. Keep a copy of the inspection in your truck.

SCAC code - This is something that you may or may not need. I would probably wait until someone asked for it before spending the money. They keep going up on the fee. The SCAC code is a set of 4 letters that you will be assigned which identifies your business. You can apply for it online once you get your authority. I believe the cost has gone up to $65/yr. It may be required to register with some of the ports and will be needed if you do business with the government direct. If you use brokers, it could be a non issue unless you deal with one of the brokers that require the number. I can only think of two major brokers who require the SCAC code. It may be more critical at a later date.

As far as getting authority and getting started, this will pretty much take care of you.

 

Great post Gman. That should be a sticky!

 

I'm gonna copy and paste that into my thread, since it fits very well with that!

Edit - I did give you credit too G/MAN!

 

Gman is a straight up guy.... I been reading his posts for years... very knowledgeable.

 

I appreciate it you all.

 

This is the thread I copied your post to.

Becoming an Owner Operator - The steps, forms and info

If there's something key that I missed, let me know and I'll fix it!

 

Thanks for the link, Lilbit. I will mention a few other things that might be helpful to anyone who decides to get their own authority.

It is very important to be organized. Anyone who gets their authority today is supposed to go through an audit within 18 monts. The initial audit is more about letting you know what you need to keep track of and where you are in the process. There are no fines for the initial audit. Subsequent audits can be expensive.

I use envelopes to keep records for each load. Everything that has to do with that particular load is placed in the envelope. All information that is contained in the envelope is written on the outside of the envelope. Some truck stops have pre printed trip envelopes. You can use regular envelopes or print your own and keep then in your truck. Regardless of how you do it, it is critical that you keep your records together and organized. I also designed a form that I keep in the truck for miles, gallons and maintenance. I usually have one for each trip in the envelope.

A laptop and all in one printer is important to anyone who runs their authority. You need to have the capability to receive and send faxes and email while on the road, especially if you drive the truck yourself. All in one printers can be purchased for under $100 at most office supply stores or at Walmart. Laptops can be purchased for less than $500. You will also want to subscribe to one of the internet fax services such as myfax or eFax. They only cost about $10-15/month. When you get set up with a new broker they will want you to sign a new contract. Those can be 10-30 pages long. Truck stops charge from $1-3/page to send and receive faxes. Rate confirmations will usually also need to be faxed or sent by email. When the load is completed you may want to scan the bills for your records. Some brokers will allow you to upload your bills and paperwork directly into their website. The sooner you get the bills to them the faster you will get paid. Having a laptop and all in one printer/fax/scanner will quickly pay for itself. You will need access to the internet. You can use WiFi, use your cell phone or get an air card. Wifi is available at most major truck stops, but is usually limited to their parking lot. I don't care for the cell phone connection because you may need to call while still connected to the internet. I prefer an air card. It will enable you to get online anywhere you have a cell phone signal.

Some brokers have their own loadboards which can be accessed by those who are set up with them. There are also independent loadboards that you can subscribe. Most run about $35/month. You will need a computer to access any loadboard. Most will not allow you to subscribe without authority.

It will save a lot of frustration if you can keep your records up to date. Some people use an expandable portable file folder to keep load information and then take it in and file it when you get home. It is important to keep your records up to date and know where you are at any given time. If your records are current it won't take very long to complete your IFTA and other state fuel tax reports. You can keep that information on a spreadsheet or purchase one of the industry specific software packages. I have looked at several of them over the years. I have owned Easy Trucking www.easytrucking.com , Trucknpro www.foglinesoftware.com and tried Truckers Helper www.truckershelper.com . Easy Trucking will do invoicing, fuel tax computations, aging and most anything that you need, but I don't personally care for the way some of the features operate. Unless you purchase their fleet version it could create some problems if you have multiple trucks and have any driver turnover. Their smaller version will accommodate up to 5 trucks, but if you have driver turnover it doesn't work as well. Once you have more than 5 drivers it has a problem with the data on the smaller version. Truckers helper has several versions from driver to fleets. The main complaint that I hear about this one is that it is a bit more complex than some driver prefer. It does have the capability to do fuel taxes, compliance, payroll, etc., depending on the version. I prefer Trucknpro due to it's simplicity. Trucknpro will do everything that I need other than payroll and fuel tax computations, although it will do the state mileage and fuel calculations. All you need do is print the report, transfer the data and do the computations on the IFTA form. There are other software packages that are trucking specific. Most have online downloads or demo's that you can check out. I have a friend who has Trucknpro and he puts in his loads every weekend when he gets home. He leases to a carrier, but tracks all of his load information. It takes him about an hour. At the end of the year, he just prints out the reports he wants and gives it to his accountant.

You need to have a drug testing program. There are several around, but this is a biggie with the feds, even if you are a single truck operation. Most of them run about $100-135/year.

You need a maintenance file on your equipment. All of the software packages that I listed have the capability to track maintenance and print out a report. The file should include anything that you spend on maintenance from oil changes to tires to major repairs.

One other thing that comes to mind is having a driver file for all drivers, even if you are the only driver. The feds require that carriers have a driver application on all drivers. You can pick up a standard driver qualifications file at some truck stops or go online and order them from JJ Keller. www.jjkeller.com. You need to also have an annual mvr report or transcript. Most insurance companies pull one each year before they renew your insurance, but it is still a good idea to have one in the driver file.

You should have workers comp or a good occupational accident policy. I prefer the occupational accident policy. It is less expensive and easier to work with should you have a work related accident. You can get those for about $140/month.

I keep a 3 ring binder with plastic sleeves in all my trucks. Inside I have my cab card, insurance certificate, authority, IFTA information, KYU and other state permit information. I also keep a copy of the truck and trailer title, but NOT the original. The originals stay in a file in my office. The binder and sleeves keep everything clean and organized. When the new year comes around, all that is needed is to slide the old documents out and the new ones into the sleeve. You can pick up a 3 ring binder at Dollar General Store or any office supply. Each truck has their own binder. The DOT likes to see you well organized and not have to search for documents.

Join OOIDA. They are a good resource for drivers, owner operators and those who run their own authority. The regular cost is $45/year, but you can join during some of the trucking shows or before January 31 for $25/year. They can help you stay informed about trucking issues and should you have any questions about compliance or other issues they are only a phone call away. They are the closest thing to a trade association that we have in this industry.