Offer-- reinstate his authority or get a new one myself? Benifits or negatives?

From what I have understood, it doesn't necessarily matter how many loads you pulled, but how long the authority existed. I think insurance companies are worried more about the experience of the drivers and the equipment. Again not 100% sure, but from what I've experienced that seems to be more important. If it were me, I'd reinstate an authority rather than starting a new one, unless the old authority had an operating time of a year (or something miniscule like that). I personally don't deal much with brokers, maybe 2-5x a month. All my loads are contracted so it makes life easier. I think all the broker wants to see is that you have a good record (i.e. no late loads, abandoned loads, stolen loads, etc...). Again I may be wrong, but I'm just going by what I witness.

As far as the business partner, it'd be in your BEST interest to be the president and have your friend be the VP. If there's any doubt that the friendship would end, that is your safest bet. I doubt anyone would want to be bought out if a friendship ended. Again just going by what I've experienced so far. Though he shouldn't have an issue with getting a MC # or DOT #. I do hope I got at least something correct. Hopefully more chime in; best of luck!

 

You have to have insurance in order to have authority. There is little upside to using his inactive/revoked authority. BTW, revoked is the common term for canceled authority. The only positive I can think of to using his old numbers would be speed. Typically a couple days to be rolling vs 30 days or so. However, your business plan should allot for that time. If it were me, I'd start my own. Why would you bring him in? If he never ran under his authority, he doesn't have any real knowledge to share. Any questions you have can be answered here at TTR, and typically with more than one way of looking at it.

 

You cannot get authority without having active insurance. Liability is all that is required for authority, but you will need $1 million auto liability and $100,000 cargo to do business with most shippers and brokers. If your friend never purchased insurance, then he never had authority. Someone mentioned at one time that current authority applicants had 30 days to get insurance once authority is granted. When I got my authority (many years ago) you had to have insurance prior to applying.

You can reactivate authority for $80, unless fees have changed. Some brokers have minimum time requirements as to how long your authority has been active or reactivated. Others don't care as long as you have insurance and active authority. Before your reinstatement will be active, they must have your insurance on file. It usually takes 2-3 days from the time you file and pay the reinstatement fee.

Insurance companies will look at how long you have had authority. If the authority was never active, then it is a non issue. The most important factors with any insurance company are driver mvr's, driver experience, where you run and type of freight hauled.

I don't think it will make any difference whether you reactivate your friend's authority or get your own. Both will be considered new authorities. You apply for your DOT number at the same time you apply for motor carrier authority.
Either you or your friend can terminate your business relationship at any time and get new authority.

 

There are a couple of things you need to do before even applying for authority. First, you need to decide whether you plan on having a partnership with anyone and who that individual will be. Second, decide on the type of business structure. You can set this up as a partnership, sole proprietorship (if you don't have a partner), LLC, sub s corporation or c corporation. A s corporation might be your best option for a variety of reasons. The s corporation is primarily the same as a c corporation with the exception of how you are taxed. A s corporation is taxed like a partnership whereas the c corporation is not. The s corporation is more ideal for those with a small number of shareholders. But, I would check with a good corporate attorney before making any decision. One advantage to having a corporate structure instead of a partnership is if you decide to dissolve the relationship, the corporation will continue. A partnership will come to an end. Regardless of what you decide, you need to make a decision on a name before applying for authority. Again, talk to an attorney before making a decision. Everyone's circumstances are different.

Insurance is in the name of the business entity, as is authority. The feds only require $750,000 in auto liability, but you will need minimum coverage of $1 million liability and $100,000 cargo to haul for most brokers and shippers. Insurance companies do consider how long you have been in business, credit history, mvr's of any drivers, where you plan to travel and type of freight hauled. Once you decide on a business entity and get your insurance in place you can then file for authority. There is no reason to apply for authority until you make sure you can get insurance and that it is affordable. Insurance companies are hitting new startups hard with rates. Everything can now be done online with a credit or debit card. When you apply for authority, you will also apply for a USDOT number. After you submit your application you will be assigned a docket number. Unless things have changed recently, the docket number will be your MC number. You can go to the fmcsa website and do a search for what you will need and the approximate time frame from the time you apply until you have active authority.

Insurance options will be dependent on the experience of drivers, for the most part. Northland, Lancer, Travelers and a few others write those with some level of experience. If none are experienced or only have about 1 year of experience you may need to start with Progressive. Find a good insurance agent or broker who writes for several different insurance companies and can shop your insurance business. Rates can vary from one part of the country to another. As a footnote, most will want to tie the quote to a specific piece of equipment before finalizing the policy.

 

I prefer a sub chapter s corporation. Noone but the IRS will know your corporation has filed for the sub s election. Having corporate structure makes it much easier to sell shares or transfer partial ownership from one person to another. Most lenders require primary stockholders or executives to co-sign any loan agreement. Even if you lease to a company you could use your corporate entity instead of being paid as a proprietorship. Drivers don't need to be owners in order to be covered under your insurance. There are millions of drivers around the country. Only a small percentage own the company. I doubt any insurance company will even ask about ownership. If you don't have driving experience, it would be in your financial best interest to drive for someone else for a year or two and then buy a truck or get your authority. If you want to go forward and buy a truck then it would be easier to lease to a carrier until you get experience prior to getting your authority. The cost for insurance for a start up, especially one with driver (s) that have little or no experience, is very high.

 

I think there is a bit of confusion here. you can get authority without insurance, it Doesn't become active til the insurance is filed with the feds. and it becomes inactive if the insurance cancels and starting out I would do a sole proprietorship, much simpler starting out until ya get your legs under, worry about the corporation crap later, in fact much later. I am still doing sole proprietorship 25 years later after buying my first truck, just a heck of a lot simpler for me.

 

I pulled this off the fmcsa website under insurance. Apparently, you now have 90 days to file your insurance once you apply for authority. Without the insurance being on file, your authority won't become active. You only have a docket number until you meet all the requirements and your authority is active. I think they must have changed the time frame since I got my authority. I believe I had my insurance when I applied. It has been a long time ago. As I recall, it took about 6 weeks for me to get my authority back. Of course, that was with snail mail.


How to File

Applicants should be prepared to contact their agents to request filing of the required forms immediately after obtaining their designated docket number. These filings must be received within 90 days after the FMCSA has published public notice of intention to register the applicant. (Applicants will be notified by letter of their docket number and date of publication in the FMCSA Register.)