Becoming an Owner Operator - The steps, forms and info

Lilbit · Sep 2, 2010

This thread is to provide information on the process of becoming an Owner Operator and links to the necessary information.

This thread will be kept locked to keep it as a source of information.

If anyone has information they would like to see added or that would be helpful, please PM the information to me to have it added. I welcome helpful information from members, especially on the individual states!

The order of the steps and the expenses to consider were based on my hubby and I getting him into his own truck.

Lilbit · Sep 1, 2010

The practical steps for the planning stage

1. Decide on the legal entity for you company sole proprietorship, LLC, etc, then set up according to your states requirements.
2. Start writing your business plan - even if you are not going for financing, a business plan helps you firm up your thoughts and plans and gives you a guide to follow.
3. Obtain federal and state tax ID #s
4. Set up any phone or fax lines needed if needed
5. Open a business bank account
6. Purchase/obtain business cards, forms, etc that you will need
7. Purchase truck and trailer
8. Purchase insurance, set up Process Agent
9. Pay Heavy Highway Use Tax
10. Obtain Operating Authority and Fed DOT number
11. State IRP, IFTA, Operating Authority, UCR, etc

Lilbit · Sep 2, 2010

Costs to calculate into your plans. Some of these may not apply in your case.

Truck
Trailer
Federal Operating Authority
State Operating Authority
Insurance - liability, load, bobtail, business
Vehicle Registration
Trailer Registration
UCRA
Heavy Highway Use Tax
Incorporation costs
IFTA
Fuel
Maintenance & Repairs
Annual Vehicle inspections
Permits
Tolls
Fed Med exam & drug testing
Accountant
Tools
Computer, printer, scanner, software
WI-FI
Personal, Business, and Self-employment taxes
Load Board Subscriptions

Lilbit · Sep 1, 2010

Links to forms and info at FMCSA's website

ETA Book - covers safety info and includes forms. A 'short' version of the regulations. Forms include all forms needed for a driver file, vehicle maintenence, accident records, etc. There is a downloadable pdf link on this page so you can download the entire book.

FMCSA Steps to complete - FMCSA's steps to obtaining your operating authority. This refers to over the long term, not the basic process of getting the authority so that you can operate.

Safety & Security page - Links to information on safety including drug & alcohol testing, load securement, and other useful links.

Registration & Licensing page - Links to information on licensing and registration.

Required Registration forms - a breakdown of the forms needed and when the are needed.

Online Registration page - starting point for obtaining your Operating Authority and DOT # online.

Downloadable Registration forms - links to pdf files of the downloadable registration forms. You must have Acrobat Reader to access these files.

Lilbit · Sep 1, 2010

The Compliance Review

The link above is a FAQ page that provides information on the New Entrant Compliance Review.

This is a topic that comes up a lot lately. The compliance review will include but is not limited to: Driver qualifications, driver duty status, vehicle maintenence, and drug and alcohol testing requirements.

They are looking at your record keeping and office practices to put it is easy terms. The state of Wisconsin has a helpful booklet that they send out (can also be obtained online) to give O/O's an understanding of what they will be looking at. With the forms in the ETA book above, and checking out the drug and alcohol testing information at FMCSA, you will be able to make it through this review.

Lilbit · Sep 1, 2010

Heavy Highway Use Tax

Her are the links to the Form and Instructions for the Heavy Highway Use tax.

Also, the page to get your Federal Employer ID number. Needed for any form of business other than self-employed with no employees.

Lilbit · Feb 10, 2011

G/MAN posted this in another thread, and I decided to copy it into here! More helpful info!

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.
Click to expand...

Lilbit · Feb 11, 2011

Link to another really useful post by G/MAN!

Lilbit · Mar 22, 2011

Here's another useful thread from this post on! Some very useful and helpful info from this guy!

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