how to get your own trucking authority in the USA
how to get your own trucking authority in the USA

Getting Your Own Authority or Leasing on to a Company: What You Need to Know

4 minutes, 28 seconds Read

If you’re looking into being a trucking company you are probably looking up phrases such as “leasing onto company” and “getting your own trucking authority”. These are two different paths that an entrepreneur in the trucking business can consider to start or in expanding their operations But the question is which one to opt for? In this guide, we’ll look into the intricacies of both options to help you start correctly.

Understanding Your Options: Getting Your Own Trucking Authority

What is the Trucking Authority?

Trucking authority, often referred to as Motor Carrier Authority or MC Number. It is a requirement by the federal government for anyone looking to operate commercial vehicles for the transportation of goods. A license given by the Federal Motor Carrier Safety Administration that permits you the lawful right to transport goods for profit between different states in the USA without violating any regulations or laws.

Steps to Obtain Your Own Trucking Authority

Getting your own trucking authority has its own benefits, such as controlling the entire operations and potentially increasing the profit margins. To obtain it here’s what you must do.

  1. Business Structure: To begin with, register a business entity, be it a Corporation or LLC legally, and get an EIN (Employer Identification Number)
  2. Insurance Requirements: You need to have insurance, hence the next step is to secure liability insurance coverage that gives a minimum coverage of $750,000.
  3. Registration: Next is to register your business under FMCSA and get an USDOT number.
  4. Safety Regulations: Your vehicles and the operations must comply with the safety regulations of FMCSA, such as driver qualification files and regulations inspection of vehicles.
  5. Financial Responsibility: If you want to broker freight to other carriers, set up a surety bond or a trust bond.
  6. Recordkeeping: Keeping the records up to date is a must, which includes vehicle maintenance, driver logs, and many others pertaining to operations.
  7. Operating Authority: This is your MC number. Also, In the case where your company deals with transporting hazardous materials there is a requirement for you to apply for additional operating authority or different types of operating authority depending on your operations.
  8. International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA):

If your business plans on operating in various states then registering under IRP and IFTA for simplifying the registration and tax process is necessary.

 

Leasing onto a Trucking Company

The Basics of Leasing onto a Company

If you want to avoid the administrative complexities of obtaining your own authority as a trucking company then you can opt for the “Leasing onto a Company” option. In that, you become the driver working on a contractual basis for a trucking company. It offers several advantages as well:

  • Less Administrative Burden: The transportation company will handle the paperwork, permits, and insurance and will minimize the administrative work.
  • Access to Established Customers: You can leverage the existing client base of the trucking company to get consistent trucking opportunities.
  • Lower Startup Costs: In this method, you save both time and money by not investing in obtaining your own authority.

Key Considerations for Leasing

Though leasing to a company seems convenient, there are certain factors you need to consider.

  1. Revenue Sharing: From company to company the revenue sharing model varies, you need to understand their revenue sharing model first.
  2. Contract Terms: Carefully read the terms of the leasing agreement. From lease duration to termination, clauses to penalties if any for early termination.
  3. Equipment: Figure out if you want to rely on the company’s truck or prefer your own truck. Also, keep in mind the implications of the maintenance and cost in both situations.
  4. Freight Types: Check upon the trucking company’s types of truck options that it specializes in and understand whether they match your expertise and preferences.

Making Your Decision

The choice of picking one among the two options depends on your goals, level of commitment, and financial resources. Here are some things to consider before making a decision:

  • Independence: If you wish to have the entire control of your business and need the independence then you can opt for obtaining your own authority.
  • Risk Tolerance: If you are operating independently, then consider how open you are to managing regulatory compliance administrative tasks, insurance, and many other responsibilities.
  • Cost Analysis: Draw a comparison between the ongoing and upfront for both options and then determine which one of them aligns with your budget.
  • Long-Term Goals: If the goal is to have your own brand and want to expand your operations then having your own authority is the right option to choose. It’s necessary to think from a long-term perspective.
  • Market Research: In both case scenarios, research the demand for your services in your region to comprehend the success of your goals.

Regardless of the option you pick amongst the “Having an own trucking authority” or “leasing onto a company” both the options have their drawbacks and benefits. The goal is to align with your choices and preferences. Note that the success of your trucking company not only relies on regulatory compliance but also on the service that you offer and building a stronger relationship with your clients.

If you need assistance with how to get your own trucking authority in the USA, check out the trucking authority packages in the USA or look for reliable trucking permit services in the USA to simplify the process of regulatory compliance.

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