To make real money in owner-operator trucking, you need to have your own authority.  Sure, you can offer your services to a lease firm, and doing so is a great way for those with challenged credit to get their own rig.  But obtaining an authority can help you to consistently earn $2-$3 per mile—and it’s necessary if you ever want to hire other drivers and build a multi-truck enterprise.

 

What Is An Authority?

In the trucking world, an authority is basically permission granted by the Federal Motor Carriers Safety Administration (FMCSA) to transport goods for profit. There are two types of authority you can apply for: contract and common.  A contract carrier hauls freight only for firms that it has a contractual agreement with.  A common carrier, on the other hand, can hire itself out to any entity wishing to pay to have (legal) good transported, whether or not a formal contractual relationship exists.  In either case the carrier must hold a minimum of $750,000 liability insurance, but only common carriers need to have cargo insurance.

 

What Does Having Your Own Authority Mean?

It enables you to remove the middleman and go directly to receivers, shippers, and load matching services to obtain freight.  It’s more work and responsibility, but with bigger payoffs in return. Obtaining an authority is an essential step if you wish to maximize your profits as an owner operator.  Without it you’re limited to working for a leasing service.

 

How To Obtain Your Own Authority

  1. If you haven’t already done so, then you need to set yourself up as a formal business, either as a sole proprietor or a limited liability corporation (LLC).  Each has its own advantages and drawbacks.  See other posts on this blog for details.
  2. Then you’ll need an employer identification number (EIN) from the IRS.  Visit www.irs.gov for more information.
  3. Next, visit this site to download the application forms for obtaining an authority.  Or you can apply directly online, which will get the process completed more quickly.
  4. Submit form OP1, OP1 (b), or OP1 (ff), whichever applies in your case.  The site will instruct you how to determine which applies to you.
  5. If you haven’t already done so, then you’ll need to obtain both liability and (if you’ll be a common carrier) cargo insurance.  Make sure your insurer notifies the Federal Motor Carrier Safety Administration (FMCSA) of your coverage.  The more cargo insurance you have, the more freight you’ll be able to haul, so buy as much as you can afford.  The minimum required by law is $100,000, which on average will set you back between $600-$700 each month.
  6. About 10 days later you’ll receive your authority permit forms in the mail.
  7. At this point you’ve covered yourself with the federal powers-that-be.  Next you’ll contact your state DOT to take care of the following:
  • Your uniform carrier registration fees (visit www.ucr.in.gov to handle this)
  • Your IFTA forms (TruckingOffice’s IFTA software makes dealing with IFTA matters quick and easy)
  • Your International Registration Plan (IRP) forms
  • Your single state registration
  • Your DOT physical and alcohol/drug test
  • Your heavy vehicle use tax

You’ll find contact information for each state’s DOT at this site.

 

You’ll Also Need Great Trucking Software

There’s a lot more to being an owner-operator than simply having good driving skills.  There are dozens of forms, permits, invoices, and other kinds of paperwork to deal with as well.  That’s why you owe it to yourself to give TruckingOffice a try.  You can use it free for a month—no credit card or checking account required.  We’re confident you’ll find that your business is running smoother than you ever anticipated!

Allen Campbell

The Trucker at TruckingOffice
Allen Campbell has more than 18 years of experience in the trucking industry as a driver, owner/operator, broker, and small fleet manager. He is the "real trucker" at TruckingOffice, an online software that makes it as easy to run the business as it is to run the trucks. It handles dispatching, invoicing, IFTA reporting, and all the other things that get in the way of trucking.

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