Getting your own authority and becoming a Motor Carrier can be a great way to make a living. It can mean more freedom and more money and it can be much more enjoyable when you call the shots.
It is also a lot more responsibility than being a company driver and to reap all those extra rewards you have to be able to handle all the extra responsibilities of being a Trucking Business Owner which is a different skill set than being an operator.
Not to worry though, anyone who is driven to achieve success and willing to work hard to make it happen can learn and do all the things that will be necessary if they really want to.
This article will be an Introduction and a Brief Overview of what it takes to get started as an IOO. It is NOT an in-depth step-by-step guide – so just keep that in mind as you continue on. There is much more you will need to know to start your trucking business successfully. If you decide you want to do so – then I have plenty of in-depth information, training, and support available for you too.
I started a Facebook Group called Trucking Business Success which you can join for free and connect with hundreds of other people interested in all aspects of trucking. You can also attend one of my FREE Webinars and you can find announcements about dates, times, and how to register by being a member of the group and or following my Trucking Business Success FB Page. These links should work – but even if they get broken you can simply go to FaceBook and search for the page or the group.
In my live and recorded free training events I go more in-depth and give you a ton of value in a very short time frame. If you are serious about actually starting your own Trucking Business I also offer additional premium courses, consulting, and coaching – so you can get access to all the information you need all along your Trucking Business Journey as you want it.
Overview of the Motor Carrier Authority Process
Before you can begin operations and start hauling freight you have to get a DOT number and an MC number (your authority). The DOT number is free and it is basically an identifier. The MC number is currently $300 and it represents your actual Authority (basically your license to operate).
If you are going to be hauling freight in interstate commerce in a tractor trailer for compensation you need both.
There are exceptions for various reasons and for people who will only operate within a single state hauling local products (not interstate commerce), and for private companies hauling only their own products (not for hire) and others. However, these are other topics for other days and other articles. Today we are talking about interstate operations using a tractor trailer for hire as an Independent Owner Operator.
I just wanted to mention that because you need to be clear on what you intend to do before you start building your own trucking business. So that’s a good place to start – with a plan.
Figure out where you plan to operate, what you plan to haul, and for who. That will help you formulate all the other questions you will need to find answers for – and come up with a written plan you can wrap your own head around.
Once you have a plan then you can begin gathering more information and start to take specific actions to make your ideas and your plans become reality. From plans come your goals and from your goals come specific action items/tasks that must be completed in sequence to get where you want to go. Think of it as a Trip Plan for your trucking business.
Choosing a Business Name and Entity
You are going to need to know what you want to call your business before you can fill out all the forms to get it started. Think carefully before you choose a name. It matters. Keep in mind any future business expansion you may want to make and be careful not to lock yourself into something that has limiting connotations like “Car Haulers” or “Livestock” unless you really want to do that.
Also, consider using something other than your name. You may want to sell your company someday – even though that is probably far from your mind now – now is the time to think about such things as you consider what name to give your new trucking business.
The entity type you choose is also important and all have benefits and drawbacks. Research them all and make an informed choice. I can tell you many small trucking companies choose LLC and others choose to be a corporation (Inc.) – but again – do your own homework and decide what makes sense to you.
Once you form your company, which will usually be online through your state, and have your actual entity created you have a company at that moment it is granted. So as soon as you’ve done that – Congratulations! You then own your own company! Keep in mind you are not yet ready to begin operations because you have to finish all the other stuff that needs to be done. Yet it is still a very exciting moment and a lifetime milestone to be proud of and celebrated.
Once you have your company name and your business entity in place next you need to contact the IRS and get your EIN (Employer Identification Number). You will need this for many things and you should always use it and NOT your personal SSN. Think of the EIN as a SSN for your business. That’s not exactly what it is but close enough for understanding at this point. It is an identifier and a tax tracking number.
You will need it for many things during the course of your trucking business operations so get it now before you start filling out all kinds of forms.
I also want to briefly mention something else that is often overlooked or just ignored. Your local county or city business license. Most counties and cities have laws and ordinances that require you to obtain a business license prior to operating there. Others have a minimum dollar amount of revenue you can make first (usually about $4000) after which you have to get a license there.
They also may have zoning issues and require you to be approved for your type of business by their zoning board before they will grant the license. There are many counties and cities that will not allow you to legally park your truck at home either. Just be aware of these things and any possible issues you need to address before you step into some trouble with your local government.
By the way, are you beginning to see there is a lot more to this than it may at first seem to be? Keep in mind again this is just an Introductory Overview and not an in-depth tutorial – however, I do have plenty of training programs to help you if you decide to move forward – so don’t worry. I have been doing this stuff for years and I can help you do it too.
Begin Your Application
You can go to the FMCSA website which you can find at www.fmcsa.dot.gov and begin your application process there. Keep in mind you have a time limit from the date your start your application to the date you must complete it and submit it. Otherwise, the system will make you start over. If you need more than one session to finish your application be sure to save your work before you exit/log out of the system.
To be able to complete your application you have to get several things done to move forward. One of the biggest is getting your liability insurance in place and active – and for your insurance company to notify the FMCSA that you have it. You can not get an active MC number without this. To be able to get your insurance you need a truck. Keep this in mind before you begin the actual application process.
The system is relatively simple and easy to use to complete everything the FMCSA wants – so long as you take your time and carefully read each question and requirement and make your responses accordingly.
Once you have finished your application including paying their fee – you can expect to receive your active authority within about 21 days or so.
While you wait there are many other things you have to do.
You will need to put together your own files and filing systems (part of your Management Control Systems). You need to be certain you are in a DOT-compliant Drug and Alcohol Program by joining a Consortium. This is a program managed by a Third Party Administrator (TPA) company such as DDTA Services out of East Palestine OH. They will enter into a contract with you and charge you a fee along with additional costs per collection/test.
They will also coordinate and manage your random pulls and all your reports and other requirements for the FMCSA and remind you of the things you need to do. Drug and Alcohol testing is a huge requirement and one of the areas where fines and penalties are most severe- so do not screw it up. Partner with a good TPA service provider to help you.
Next, you will need to set up your own DOT Driver Qualification File, or DQF for short. Even though you own your own company you have to have a separate driver’s qualification file on yourself. So think of it as wearing two completely separate hats. On the one hand, you are the founder and owner of your own trucking company. You may give yourself any one of several titles including Founder, Owner, President, etc. That’s one hat. The other hat is that of “Driver”. And DOT/FMCSA has very specific requirements for all drivers that must be met.
Before you can haul your first load you must be in a random pool as part of the consortium. You also have to go and get a pre-employment DOT drug test done and have the results back and on file before you can run a single load. WARNING! Make sure you have the RESULTS back BEFORE running the load (not just having the collection done).
As you set up all your files and systems do it with the mindset that you have or are going to have ten or more drivers. That helps you get it right.
It doesn’t matter if you have one (just you) or one hundred or more – the requirements are almost identical and are virtually the same. Set your systems up with that in mind and you will be just fine.
Let’s talk about some of your other filings and responsibilities you will have to do before you can operate. There are lots of additional filing requirements you have to complete too. You will need to get set up with IRP/IFTA. This is usually administered by your state’s DMV or MVA. IRP is short for International Registration Plan – and basically, it is your plate for your tractor. Your trailer plate will be handled by your state separately. There are costs to get your plate upfront and ongoing costs annually per truck – and it can be expensive so be ready for that.
Next is IFTA which is short for International Fuel Tax Agreement. You need to get registered and get your account set up so you can get your IFTA decals/stickers and so you can pay your quarterly fuel taxes.
You need to pay a Heavy Vehicle Use Tax (HVUT), and file a BOC 3 – and possibly meet additional state-specific requirements depending on where you intend to run.
Truck and Trailer Selection and Purchase
This is a critical step for your business and plays as a big part of your success or failure in trucking as an owner operator. If you buy too much truck (too new and too expensive) you will go broke or at least struggle just to keep it. Likewise, if you buy an old worn-out piece of junk you will go broke trying to pay all the repair and towing bills you are going to get.
Neither is a good choice.
What you want is an older rock solid mechanically sound and otherwise good work truck.
This is not the time or egos and chrome – that can come later if you do the work right now. But now you need a workhorse of a truck that you can actually afford to buy and to maintain.
Truck Selection Criteria is a whole other topic and one I cover in great detail in other places, yet is beyond the scope of our discussion here. Just be sure to get the right information and then make an intelligent informed decision when you select and buy your first truck as an owner operator.
Vehicle Markings and Considerations
While you wait for everything to be taken care of you can go ahead and begin marking your truck and trailer. DOT requires that you put specific information on your truck in specific ways and locations. Once you have your DOT number you can go ahead and get your lettering and number decals ready.
Generally speaking, you have a couple of ways to do this. You can either pay a professional to come out and apply the markings (or go to their shop) and tell them what to put where. Another way is to order your lettering and have it professionally cut from vinyl and shipped to you – and you put it on your truck yourself, which is what I chose to do. It isn’t that hard to do once you know a couple of key techniques and it is much cheaper than paying to have it done.
It is really just a matter of personal choice and preference.
Beyond the mandatory marking on your tractor, there are other marking that you will need. Every shipper and receiver and most other entities you will encounter will want your truck and trailer number. These numbers can be anything you like – but the more routine they are the easier it will be to deal with other people.
For example, you could make your truck number NCC1701 and your trailer number 007 – however, this looks unprofessional and you may want to think twice about that (even though many people do this). Some larger companies use the last four of the tractor vin of their truck numbers – and others use sequential numbering. Some people pick numbers that mean something to them personally and may not be apparent to others.
For example, my tractor number is 7851 – which is just a number and a typical format that shippers and receivers are used to dealing with. The meaning behind those numbers matters not to anyone but me – but the reason I chose them is because two of my favorite machines of all time are the 1978 Pontiac Trans Am and the WWII P 51 Mustang fighter plane – hence 7851.
Your trailer number could be the length and a number made up by you – such as 53204 or whatever you like. Just keep it relatively short and easy to remember and to write. Look around you at large ad small fleet trailers you see being pulled by others down the road and parked in truck stops and at shippers/receivers etc. Get a feel for what others do and decide what you want on your own trailer – and remember you are going to have to apply those markings too or pay someone else to do so for you.
I recommend trailer markings on the nose on both sides near the top and on the right rear door. I recommend putting your tractor number on the cab extenders about three-quarters of the way up and set vertically – and/OR put them on each side of your hood. In all cases, they should be contrasting colors and big enough to be clearly and easily read from at least 50 feet away.
In the picture above is my truck. This is probably about 100 feet away and is hard to read but within 50 feet or less the markings are very clear. Even here you can see the lettering on my side box (the same as on the other side) and you can see the numbers on the trailer nose near the top (and it is also the same on the other side). There is another number on the right rear trailer door about eye level or so (horizontal).
Here is a little closer look;
Your lettering can be bigger if you like – it just has to meet the minimum FMCSR requirements which is currently visible to the naked eye in daylight within fifty feet and in contrasting colors. In other words, do not put white letters on a white truck.
Verify You Have All Requirements Completed
Once you have your truck and trailer and have your authority active. You are almost ready to roll and that is a very exciting time!
But before you book that first load as an Independent Owner Operator take a moment and go back over all the requirements and be certain that you have done everything that you are required to do to be able to legally head down the highway and pick up that load. Be especially careful to confirm your authority is indeed ACTIVE. You should receive an official letter from DOT saying so – and after that – log into https://safer.fmcsa.dot.gov/CompanySnapshot.aspx and check it for yourself. As long as it’s good there then you are good to go.
Next, make sure your ELD is operating correctly and you log yourself on duty – and be sure to log off duty at the end of the day before you leave the truck (if applicable).
Check your permit book – make sure it’s onboard and has all the required docs in it. Be sure you have spare log book pages and a guide to your ELD either in the permit book or somewhere you can easily put your hands on them if you need them.
Be sure you have a charged and secured fire extinguisher, and three reflective triangles, and spare electrical fuses (of the correct sizes!) in your truck.
Be certain your drug test result is in and that your insurance is still active (MCS90) and check safer.
At some point within the first several months you operate you will complete a New Entrant Audit. You must do that successfully or you may wind up losing your authority. While it isnt much of an issue IF you understand what the requirements are and if you are ready, t can become a nightmare if you dont know what you are doing or if you just got busy and let stuff fall by the wayside. Be better prepared from day one and stay that way from then on.
Booking Your First Load
Most owner operators are going to use load boards and book loads on the spot market through brokers, especially in the beginning. Brokers are intermediaries (middlemen) who obtain loads directly from shippers and make them available to carriers (often through load boards and direct calls to carriers they know of) for a certain rate to the carrier to haul the load. The rate they pay the carrier is less than the rate the shipper pays them – and that is their revenue including their costs and their profits.
Often reputable brokers will earn 15 to 20 percent of the total revenue for the load and the rest they pay the carrier (trucking company/you). However, it is important to know that the amount they pay you is a matter of agreement between you and them and is NOT set by any law. It is a matter of negotiation. Once you and the broker (or shipper) agree on terms including the rate (price) you will receive a Ratecon (Rate Confirmation) which is typically emailed to you. Some you will need to acknowledge and send back and that is essentially your contract for that particular load.
Even before you get to that point – if this is the first time dealing with a specific broker/shipper they are likely going to require you t complete a Carrier Packet. That just means forms and information they can verify who you are, that your company is legit and is insured and so they can get you in their own computer system to track you and loads you haul through them. Many of them will also want you to download, install and use some type of phone tracking app too. Without that, they will not assign you loads in most cases. It is not a big deal – just be aware of it and anytime you haul a load for them make sure that the app is on and working and that you update it as needed so you can get paid without issues.
Once you have your rate con (ratecon or rate con are both just abbreviations for “Rate Confirmation”) and your pickup and delivery info the rest of the job is identical to that of a company driver in most respects. At that point, you are doing the job of an Operator (Driver).
Once the load is delivered then you submit your paperwork (BOL etc) in the manner prescribed by that broker/shipper. Many have a scan feature in their app and a quick pay option so you can easily and quickly submit your bills with your phone as soon as the load is completed and then they will pay you within a day or two – which is nice! But not all do it that way.
Others will require mailed, scanned or emailed paperwork then they will not pay you for 30 days or more from the date they receive the paperwork. This is why you are likely to need to use a good Factoring company. A factoring company takes your paperwork and takes charge of collecting payment from the broker/shipper – and they pay you within a few hours to a day or two even though it may take them a month or more to get the money from the broker/shipper. They obviously charge fees for such services – but factoring allows you to keep rolling and keep making more money instead of running out of fuel and money waiting to be paid. that is especially critical at the beginning of your business.
Even if you have tens of thousands of dollars in savings and reserves (Very nice and very unusual!) a factoring company can still be useful because they serve in many ways as part of your “back office” much like staff (which you can’t afford to hire and don’t need as a one truck shop). That means they handle the billing and if needed the collections – which can be a pain in the ass.
For example – I have one customer to this day (direct customer) who is a great customer to run for most of the time – but who sucks at paying their bills on time. I had to go collect my check in person (wasting my time and gas in my car) three times in four months before I finally gave that account to my factoring company too. The few bucks they charge is nothing compared to the time and trouble of trying to collect my money directly, and it just works better – for me. You have to decide for yourself whether to use factoring or not ad when.
Trucking Business Considerations
You have to do many things to be good at business. One thing is that you must think tactically – you have to be able to see and understand the bigger picture and take the right action at the right time. For example – some owner operators will sit for days waiting for a more desirable load – yet fail to understand that each day (and even each hour!) they sit when they could be running comes at an Opportunity Cost. That has to be factored into their overall considerations too. So it might make more sense to take a less profitable load and still make a few hundred dollars gross profit for the day vs letting the day slip away with zero dollars in revenue or profit.
Next being able to plan routes and to connect loads and schedules strategically makes a world of difference in your money. Do it right and you can make two to four times what others make per day – and that is a huge difference! What determines whether you do r not is your knowledge (I can help you with that part!) and your own determination and effort (that part is on you!).
Once you get to this part – congratulations are in order because you will already have accomplished quite a lot.
To stay in business and keep on doing better you have to be prepared for all that is coming too. There are fees and filings that come periodically and that you must always be ready for. Your records must be impeccable too. There are lots of taxes to pay both quarterly and annually and you must know how to calculate and pay them accurately or hire others that can and will for a fee. Even then never forget YOU are ultimately still responsible so make sure you get good advisers and keep them.
Likewise, much of your ability to negotiate the best rates and to eventually get some direct freight is all going to come down to your own ability to do sales. It isn’t that hard once you have some training and develop some skills and have a bit of determination (sales is always a numbers game – and an ability to deal with many rejections to get a few yes answers). Do NOT underestimate the importance of this as it is worth multiple thousands of dollars per month to you! Read that again and let it sink in – real money is at stake here. All you have to do is learn what to do and then get out there and do it consistently.
Get the information, the training, and the help you need to build a Better Trucking Business and keep doing better from now on. There will be challenges and obstacles – I guarantee you of that.
I can help you become better prepared and navigate challenges as they occur – and help you seize opportunities as they happen too.
By the way, here is a pic of an obstacle I encountered on my very first run as an independent owner operator;
I was on a three-stop load hauling plastic film and this is what I encounter falling across the road as I rounded a curve! The traffic behind me was soon miles long, but fortunately, a couple of homeowners and their neighbors had chainsaws and we had plenty of labor (me and a bunch of people from other behicles) so within just a few minutes that big tree was cut to pieces and removed from the road way.
Before the emergency crews and police even got there we were rolling again!
I made all my stops on time and successfully completed my first load as an owner operator – and went on to deliver hundreds of additional loads, and I still do from time to time between doing courses, creating publications, and other content.
Hopefully, you won’t find a tree down in front of you on your first run – but you will have your own challenges of other kinds too. When you encounter them it is nice to already be prepared and to have other people to be able to help you too.
Conclusion and Final Remarks
Well my friend this brings us to the end of this article. I hope you have gotten some value from the information I shared here with you, and please consider joining my Trucking Business Success FaceBook Group. It’s free and you can connect with hundreds of other owner operators, freight brokers, professional drivers, and other trucking business owners. There you will also find out when my live events such as Free and Premium Webinars and Courses, Videos, Podcasts, and other resources will be available – and get special offers, discounts, and other benefits just by being part of our community.
Until we meet again, take care and be safe!