Introducing the New Authority Checklist series
Are you dreaming of a career that offers freedom, adventure, and endless opportunities? Whether you're tired of sitting behind a desk or simply seeking a new challenge, starting your own trucking company might be your path to an adventurous future.
Our comprehensive New Authority Checklist series will take you on an informative ride through everything you need to know to get your trucking dream off the ground. This industry is heavily regulated and knowing the ins and outs can save you a lot of time and headaches.
TrueNorth started as an owner-operator carrier. We learned many lessons over time, the hard way -- and now, our mission is to help other trucking owners capture as much of the profits in the industry as possible. From navigating licensing requirements to discovering exactly how to get paid, we have all the details covered.
First, structure your business entity
The first decision you'll need to make is to choose a business structure. The most common options for trucking companies are sole proprietorship, LLC, c-corporation, and partnership.
As a sole proprietor, you retain full control but have unlimited liability. Partnerships allow you to share ownership with others, but also come with joint and several liability.
If limiting liability is your priority, incorporating as an LLC or corporation better shields your personal assets.
Corporations require more formalities like board meetings and annual filings, while LLCs provide flexibility along with liability protection. The business structure also impacts taxes, ability to raise investment capital, and your personal level of control.
You will want to consult with an accountant and/or attorney to determine if LLC, corporation, partnership or sole proprietorship is the right fit based on your business goals, personal protection, and tax considerations.
After you have your structure set up you can apply for an EIN (Employee Identification Number) with the IRS. This will give your company a number (not associated with you personally).
Next, register with industry agencies
Once you’ve set up your business entity, you’ll need to register your company with multiple agencies in the trucking industry.
This one is a doozy! There are 5 key agencies to register with. We break everything down below.
- Register with the Federal Motor Carrier Safety Administration (FMCSA)
- International Fuel Tax Agreement (IFTA)
- International Registration Plan (IRP)
- Unified Carrier Registration (UCR)
FMCSA - Federal Motor Carrier Safety Administration
The Federal Motor Carrier Safety Administration (FMCSA) is a branch of the Department of Transportation (DOT). In the trucking industry, people will say “DOT” to refer to any regulations set forth by the FMCSA.
The FMCSA issues MC (Motor Carrier) numbers to interstate carriers, which allows the public to see your insurance coverage and motor carrier authority history.
The DOT issues DOT numbers to trucking carriers, bus operators, and individual commercial vehicles that engage in interstate commerce. DOT numbers allow the public to monitor your carrier’s safety and compliance.
How to apply for an MC number and DOT number
- Visit the FMCSA's online Unified Registration System (URS) at https://portal.fmcsa.dot.gov/UrsRegistrationWizard/.
- Sign in or create an account on the URS system.
- Fill out the online application, providing detailed information about your business, including its structure, ownership, and contact details.
- Be prepared to pay the required fees for MC number registration. The fee is $300 for permanent authority. If your authority lapses you will need to pay $80 to reinstate it.
- Once all information is provided, submit your application through the URS.
- The FMCSA will review your application, conduct necessary checks, and assign you a DOT number if everything is in order.
- Compliance: Ensure that you comply with all DOT regulations, including safety requirements, vehicle inspections, driver qualifications, and hours of service regulations.
IFTA - International Fuel Tax Agreement
IFTA coordinates fuel taxes across all 50 states. Prior to IFTA, carriers needed to track mileage and fuel spend in each state separately. Now, IFTA allows you to report all of your fuel taxes on a single tax return. Here's how it works:
Keep fuel records: Keep detailed records of fuel purchases and usage for each trip. This includes information such as the date, location, gallons purchased, and the vehicle's mileage at the beginning and end of the trip.
File quarterly: IFTA requires you to file quarterly fuel tax returns. These reports summarize your total mileage and fuel consumption in each state or province you traveled through.
Calculate taxes: Using the data you've collected, calculate the amount of fuel taxes owed to each jurisdiction. This is typically based on miles traveled in each jurisdiction and the fuel consumed there.
Submit payments: Pay the total amount of fuel taxes owed for all jurisdictions on your IFTA tax return. You'll send this payment to your base jurisdiction, which is typically the state or province where your business is based.
Renew your license: Ensure that you renew your IFTA license annually to stay compliant.
Maintain records: Maintain detailed records for at least four years, as you may be subject to audits to verify the accuracy of your IFTA tax returns.
How to apply for an IFTA account
To apply for an IFTA fuel tax account you will need to register through your state’s website or at your local clerk.
IRP - International Registration Plan
The IRP is an agreement between US states and Canadian provinces. It simplifies the process of apportioning and distributing registration fees and taxes for motor carriers operating in multiple jurisdictions.
Under the IRP, commercial motor carriers are required to register their vehicles in their base jurisdiction (the jurisdiction where they have an established place of business). This base jurisdiction then apportions the registration fees among the jurisdictions in which the carrier operates.
To apply, you need to fill out your state’s Schedule A/E and B. The specifics vary by state but each application will include:
- Federal Employer Identification Number (FEIN/EIN): Input the unique identification number assigned to your business by the Internal Revenue Service (IRS) or your social security number.
- Vehicle Identification Number (VIN): Located on the Manufacturer's Certificate of Origin or title for your truck.
- Unladen Weight: Refers to the weight of your truck when it is not carrying any cargo.
- Gross Combined Weight Rating (GCWR): Indicates the maximum allowable weight of your semi-tractor and trailer when fully loaded, as specified by the tractor manufacturer. You can typically find this information on your truck's VIN plate.
- Axle Count: Denotes the number of axles on your tractor unit alone. A standard truck tractor typically features three axles.
- Purchase Price: The amount you paid to acquire the vehicle.
- Manufacturer's Base Price: Represents the original, manufacturer-listed price of the fully equipped vehicle when it was brand new.
To find a list of contact information for each IRP jurisdiction you can visit: https://www.irponline.org/search/custom.asp?id=5283
UCR - Unified Carrier Registration
The Unified Carrier Registration (UCR) is a federal program that mandates all motor carriers to register and pay annual fees based on the size of their fleet. The UCR program supports the safety and administrative costs associated with motor carrier oversight and enforcement activities.
The fee starts at $37 for carriers with 1-2 trucks. If you have a question about if you are required to register, you can visit UCR’s compliance helper.
HVUT - Heavy Vehicle Use Tax
The Heavy Vehicle Use Tax is a federal excise tax that all vehicles with a gross weight of 55,000 pounds must pay. You file this tax via Form 2290. You will need to show proof of filing this form in order to obtain your plates in the next step.
See if you are required to pay the HVUT by following the IRS’s compliance helper.
Finally, obtain plates
Once you’ve obtained your DOT and MC numbers, filed your IFTA, and signed up for UCR, and paid your HVUT, you’ll next register with your state to receive your license plate and cab card.
Each year, you’ll record your miles in each state. When you renew your plates, IRP apportions a % to each jurisdiction (state) that you traveled in. Each year your plates will need to be renewed and costs will vary based on the percentage of miles driven in IRP jurisdiction.
An example of how your filing would look if you operated in 4 states during the year:
Continue the New Authority Checklist series below:
New Authority Checklist 2: Choose Your Player (Equipment)
New Authority Checklist 3: Cover Your Assets (Insurance)
New Authority Checklist 4: Show Me The Money (Invoicing & Factoring)
About TrueNorth
TrueNorth pioneers a new era for truckers, new carriers, and owner-operators. Born from a legacy of trucking roots, it transforms the industry's landscape with a cutting-edge operating system. By replacing outdated processes with a unified mobile app, TrueNorth empowers truckers with superpowers – a dispatcher, CRM, financial dashboard, and real-time market insights. Bridging the gap between traditional fleets and tech companies, TrueNorth champions truckers' profitability, offering tools, and support for streamlined operations. In a world where autonomy looms, TrueNorth remains the ally ensuring profits and efficiency for the heroes steering the wheels of commerce. Get started with TrueNorth today, and see how a trucker-first tech platform can revolutionize your operations.