Being an owner operator is one thing, but when you decide to get your own authority, it puts you in a totally different ballpark. When my significant other Pete Briggs decided to get his own authority last July, I had no idea how much paperwork was to come along with that decision. Getting your own authority is exciting, but it is not easy. However, in the end, we think it is all going to be worth it. Let’s look at this detailed process, step by step, so you know what you are up against if you decide that this is something you want to do to take your trucking operation to the next level.
If you think that the regulations placed on you as a driver are hard to keep up with, triple that when you hang out the shingle with your name on it. Now, you not only have to comply with the rules as a driver, but as a company, too. More and more regulations are being put on both the companies and the drivers, and learning (and keeping up with) all of them can be a real challenge – if not just plain mindboggling at times.
Pete is a Lifelong Member of the Owner Operator & Independent Drivers Association (OOIDA) and that is where we started on this journey. Talking with the people in their Authority and Permit Department, they got all the necessary paperwork filed to get us started. They warned me that once our Motor Carrier (MC) number was issued, we would be inundated with all kinds of people calling and faxing us offers to “help” us operate our new business for a fee. They were certainly right about that. Some of these companies offered to help us with our new entrant safety audit, some of them wanted to offer us freight, and, frankly, if I was unlucky enough to pick up the phone when they called, some of them were downright rude and pushy. The way they hook you makes you think that they are someone you have to talk to and that isn’t always the case. Listen very carefully to what these people are asking and telling you before you give them any information over the phone.
The packet OOIDA sends you has everything you need to get started and they are always just a phone call away for any questions you might have. If the person you are talking to doesn’t have the answer, they will find out and get back to you. Be sure to ask lots of questions to ensure that you get set up the right way. Once you get started down the wrong paperwork road, it might not be easy to get turned back around.
The first thing I suggest you do is get a five-drawer file cabinet, because you are eventually going to need it. I have one made for legal size files and have found that it is really nice to have the extra room in and on the folders. I write a lot of information on the outside of the folders so I don’t have to dig through a bunch of papers to find phone numbers, addresses, etc. The file cabinet is just the first step, but you must get organized! Be sure to make a file for everything and then put the files in some kind of order that makes sense to you so you can easily put your hands on everything you need when it comes audit time.
The process officially begins when you complete the Motor Carrier Identification Report (MCS-150) and Safety Certification Application for a USDOT Number (MCS-150A). Once these forms have been filed, you will be issued your MC and US DOT numbers. But this does not mean you are ready to operate. After filing the MCS-150 and it is reviewed and accepted, you then have to provide proof of insurance, and then you have to wait 10 days for anyone who might protest you obtaining your authority. Getting your authority active is only the first hoop you get to jump through, but it is a big one. Always make sure any paperwork you submit to any agency has the exact same name on it – even a one-word difference can cause you major problems down the road!
Once you have an MC number, you need to go to the DMV and register your truck and trailer. It can save you money if you are licensing a truck that you ran the previous year because you are able to provide actual miles instead of having to estimate the miles you will run. Register for all the states that you think you will be running in. If you find out later that you will be going to other states, those states can be added at that time.
Next, you must register and get your IFTA stickers through the state you are licensing in. You will be required to keep track of all your gallons of fuel purchased and miles ran in each state to properly report your road and fuel taxes. You can figure it yourself or hire any one of the many companies that specialize in this. Some states like NY and KY still have separate forms you are required to fill out if you run in those states, and some still require paperwork to be sent in even if you don’t run any miles in their state that quarter. Make sure you remember to file. I have a bulletin board that shows me when everything has to be filed. And, on another bulletin board, I have a note reminding me when all licenses, medical cards and annual vehicle inspections are due. Out of sight is out of mind, so you don’t want to keep these important dates out of sight (or out of mind).
Now you are ready to get your truck and trailer lettered and numbered. Your name, truck number, USDOT number and MC number must all be on both sides of the truck. When getting started, it will be really helpful if you have contacts for freight. If you have worked with a load board in the past, they offer a lot more information than just the loads – they also tell you about the broker offering the freight. Getting the good paying loads is going to be the second biggest key to your success – the first is having all your ducks in a row – because without that, all your good paying loads could be wiped out with fines for improper paperwork.
As an Independent Contractor with your own authority, you will need to be part of a random drug testing program. OOIDA (and other companies) offer this service for a fee. CMCI is a division of OOIDA, and for $100 per driver per year, you are compliant for this very important requirement. CMCI provides instructional CD’s to qualify the person you chose to be your drug compliance officer. All drug records are required to be kept in a locked file. You will also need to create “company policies” for everything, including a Company Drug Policy, Company Log Policy, Company Rider Policy, etc. For the drug policy, CMCI has a form in their packet to help you with that one. You can also talk to someone in the Compliance Department at OOIDA and they will help you with all of these policies. Even if you are the owner of the company and you only have one truck and trailer, these little things will be helpful – and some are required.
Within the first few weeks or months that you are in business, the state that you live in will schedule a New Entrant Safety Audit. I must say that I am very proud of the fact that when I went through our first audit, the officer did not find one thing that I didn’t have that we were required to have. I was able to pull out everything she asked for, and we were finished in 15 minutes (she told me most audits usually take about an hour). One thing that she was surprised that I had was an Accident Registry (even though we have had no accidents, it’s still a requirement to have). A friend told me that we would need this registry, and it’s also on the list provided by OOIDA.
To get freight, you are going to have to get set up with some brokers. This process will require you to send a lot of e-mails and faxes. Some companies won’t even work with you until you’ve had your authority for at least six months. After filling out and signing a broker contract, you must send it back to them along with a copy of your authority and a Certificate of Insurance. Having a good insurance agent is a must, especially when it comes to getting a Certificate of Insurance fast when setting up a new broker. After all that is done, you need to sign the rate confirmations – once you do that, you are committing to that load. It is important to ask how and when each company pays, and what they require from you to get paid. Some companies have quick-pay options (they pay you a little less but you get it faster). Some companies require you to provide the original paperwork before they will pay you, while others will accept a fax as proof of delivery – they are all different.
If you need immediate cash flow (and who doesn’t), there are plenty of factoring companies you can use, but you need to find a good one. Factoring is a process where a third party (the factoring company) basically pays you in advance for your receivables (invoices). They do this for a fee (or percentage) of course, but this can help you to get paid faster. We work with TBS in Oklahoma City, OK and we love the girls we work with there (Nadia and Judy). You can even call ahead and find out if a company is factorable, and if they are not, you might not want to haul that load, unless you can wait for your money.
I would highly recommend that you use OOIDA to help you through this entire process. Their staff is not only knowledgeable, but great to work with. Their Business Assistance team offers “one-stop shopping” designed to provide all needed services related to getting your own authority. The Business Services Authority Unit takes the initial call and works closely with the other departments involved in getting you set up with truck insurance, your base plates, drug testing requirements and other necessities. To borrow a phrase from my friend Sandi Soendker, OOIDA is the “Mother Ship” for your new trucking operation (many thanks to Nikohle Ellis and OOIDA for providing these photos of some of their team members). After that, you need to have a good banker, a good accountant, a good insurance agent and a maintenance facility that you can trust.
It takes a lot of hard work to be successful in this business. All we have to offer is service, so you must deliver outstanding service if you want to be remembered. Well-kept equipment and a professional driver that gets the job done are what shippers and receivers will remember. It is not easy to get your own authority, but in the few short months we have been operating under this business arrangement, it sure has been well worth all the work! I wish you good luck if you choose to do it, and hope that 2012 is your best year yet!!