Becoming an Owner-Operator
JUNE 2009 34 TRUCKERS NEWS F or drivers moving toward hauling as an owner-op-erator with their own authority, the first dilemma is chicken or egg do you buy your truck and then get set up or do you complete the DOT paperwork first before acquiring a rig? You'll save money and aggravation by completing your applications and securing your permits before buy-ing a truck, says Rick McNeill, president of Motor Carrier Consultants of Mobile, Ala. At the very least put off truck shopping until you've started the paperwork process. If you're going to lease to a carrier, you can run under that firm's authority and don't need your own. People will purchase a truck and trailer and put their company name on the truck, not realizing it's going to take at least three weeks for it to happen, McNeill says. In the meantime, they're sitting on a truck note and insurance before they can get any business to pay their bills. Your first step is to file with the Federal Motor Car-rier Safety Administration for your U.S. Department of Transportation number and motor carrier number (operating authority). You must have a DOT number to apply for your authori-ty. About 10 to 12 days after filing, the FMCSA will send out a first letter acknowledg-ing the application has been reviewed and accepted. Once you receive the first letter, you can buy liability and/or cargo insurance. Save time by shopping for insur-ance quotes after filing for your MC number, but hold off on buying coverage, McNeill says. It takes only 24 to 48 hours for an insurance company to post your insurance filing with FMCSA. At the same time you file your insurance, you should complete your BOC-3 process service agent form fil-ing. This is a listing of registered process agents by state who, if a legal action is filed against your company from outside your base state, will accept legal docu-ments on your behalf. It takes 24 to 48 hours for the filings to appear on the FMCSA federal register. Once the filings appear in the register, a mandatory five-day wait-ing period begins before the final authority is issued. While you're waiting for your MC number, don't for-get to file for your Unified Carrier Registration, McNeill says. Launched in 2007, this program applies to all car-riers transporting goods in interstate commerce. About 40 states participate in the program, which is adminis-tered at . This is an electronic filing that will show up when your truck goes through commercial scales. If you operate in a state that's not active in the program, you will be direct-ed to register using another state as your base. You'll also want to check the states where you plan to operate for supplemental fuel taxes Kentucky, New Mexico, New York and Or-egon and for state intra-state authority, McNeill says. Thirty states have intrastate authority, but enforcement hasn't been a high priority in some of them. You can't run your busi-ness without posting a copy of your operating authority in your vehicle. If you're in a hurry, Don Norman Asso-ciates ( ) will fax your au-thority to you for a fee. Larissa Jacquez of Burson, Calif., says she started setting up the hotshot transport company she plans to run with her partner and driver Brett Makowiedki in February and hoped they would be ready to go by May 1. She knew how to organize the cor-porate structure but was unfamiliar with trucking compa-ny regulations and requirements, so she turned to MCC for help. I wanted to make sure we had all of our paper-work right before we went out on the road, she says. HOW TO BECOME AN O/O Here are the important docu-ments you'll need to become an independent owner-operator. The sequence will take about three weeks. U.S. Department of Transporta-tion number: You need this to apply for operating authority. Apply for this first. Motor Carrier number (oper-ating authority) issued by Federal Motor Carrier Safety Administration. Apply for this next. It will take longest to receive. Insurance: Buy liability and/ or cargo coverage after notice that your MC application has been accepted. Will be filed with FMCSA within 24-48 hours. BOC-3 process service agent form filing: File at same time you buy insurance. Unified Carrier Registration: Online filing required of all carriers transporting interstate goods. International Fuel Tax Agree-ment: Fuel tax form covering all states except Alaska and Hawaii. State supplemental fuel taxes: If you plan to run in any of four states that impose a supple-mental fuel tax (see main story), you should register in those state programs. Intrastate commerce author-ity: Check if any of the states where you intend to operate require intrastate authority. WHEN TO GET REQUIRED DOCUMENTS MAX KVIDERA The Paper Trail Knowing the documents you need and when to apply for them will save you time and headaches when you're ready to obtain your operating authority