To make real money in owner-operator trucking, you need to have your own authority. Sure, you can offer your services to a leasing 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, 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
- 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.
- Then you’ll need an employer identification number (EIN) from the IRS. Visit www.irs.gov for more information.
- 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.
- Submit form OP1, OP1 (b), or OP1 (ff), whichever applies in your case. The site will instruct you on how to determine which applies to you.
- 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.
- About 10 days later you’ll receive your authority permit forms in the mail.
- 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:
- 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
- Single state registration
- DOT physical and alcohol/drug test
- Your heavy vehicle use tax
You’ll find contact information for each state’s DOT at this site.
What You Can Do After You Obtain Authority
Becoming an independent owner/operator is an exciting and life-changing event. You’re in charge of your own operation and living the American dream of building a successful business. Obtaining your MC number is only the first step on this exciting adventure. Now you can enjoy the benefits of being your own boss. Here are some of the things you can expect after obtaining your operating authority:
- Your hard work goes toward building your business, not toward making someone else rich.
- You can control your schedule to have time at home when you need it.
- Efficient driving results in fuel savings and this means more money in your pocket.
- You own your truck and can trust that it’s safe and in optimal operating condition.
- By keeping accurate records, you can control costs, plan loads, and increase revenue.
If you’re registered with the IFTA to have your IFTA sticker you’re on your way. But, don’t forget to obtain a TMS package that will help with IFTA reporting. You want to avoid any penalties, fines, or downtime, and trucking software helps you stay behind the wheel making money – which is the main reason why you wanted to be an independent owner/operator to begin with, right?
What is IFTA?
If you want to get your own authority, you will first have to set up an IFTA account. IFTA, or the International Fuel Tax Agreement, is an agreement among the 48 contiguous states and Canadian provinces that simplifies the process of fuel tax collection. The IFTA is for trucking companies that operate in multiple states. With an IFTA sticker, your fleet can travel freely between member jurisdictions and pay a single fuel tax fee to your base jurisdiction, rather than paying separate fees to each jurisdiction in which your fleet travels.
Staying on top of IFTA reporting and payments can be a real headache, especially if you are trying to track your miles and fuel use manually. Our trucking software at Trucking Office makes handling IFTA reporting and other fuel tax matters quick and easy. With our software, you can automatically record miles and fuel use, ensure that your IFTA reporting is accurate and prevent audits, saving you precious time and money. To renew your IFTA registration online or request additional IFTA stickers, you’ll need an IFTA login, which you can get on any state or jurisdiction’s tax website. Also, keep in mind that before you can get your IFTA account set up, you must set up an IRP (International Registration Plan) account.
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!