How to get your MC authority: a step-by-step guide
Getting started in the trucking industry
Branching off and starting a trucking business isn’t for everyone, but there are plenty of benefits. You’ll get to be your own boss and create your own schedule — not to mention the excellent profit potential. If you’ve decided that running your own business is the right fit for you, the first step you’ll need to take: getting your MC authority.
Getting your MC is an exciting prospect, but there are many moving parts involved. This blog post will provide you with all the necessary information you need and the steps involved to get your own authority so you can hit the ground running.
Branching off and starting a trucking business isn’t for everyone, but there are plenty of benefits. You’ll get to be your own boss and create your own schedule — not to mention the excellent profit potential.Share Tweet!
What is a MC authority?
A MC authority, also known as a trucking authority, shows that you have permission from the government to move freight. Trucking authorities are issued by the Federal Motor Carrier Safety Administration (FMCSA), the government agency responsible for regulating the trucking industry.
Who needs a MC authority?
Truck drivers who are interested in working for another company or leasing on exclusively to a company can operate under another company’s MC authority. However, if you plan on starting your own trucking company as an owner-operator or small fleet owner, you’ll need an authority.
Some carriers are not required to have MC numbers. They include:
- Private carriers: Private carriers who exclusively haul their own cargo.
- For-hire carriers of exempt commodities: Carriers who exclusively haul non-regulated cargo.
- Carriers operating in a federally designated “commercial zone”: Carriers who operate exclusively in regions where a large metropolitan area borders multiple states or commercial zones.
What are the different types of MC authorities?
The two most common forms of authorization are Motor Carrier of Property (Except Household Goods) and Motor Carrier of Household Goods (Moving Companies). The type of trucking authority that you need will depend on the kind of cargo you plan to haul.
- Motor Carrier of Property (Except Household Goods): Most carriers have this type of MC authority, which allows you to transport regulated commodities (except household goods) for the public in exchange for payment.
- Motor Carrier of Household Goods (Moving Companies): You need this authority if you only intend to transport household goods. Trucking companies with this type of authority must have proof of liability and cargo insurance.
You may need multiple authorities if you plan on hauling different kinds of freight. Make sure you apply to the MC authorities most relevant to your business.
Steps for getting your operating trucking authority
Step 1: Form your own company
The first thing you need to do to get your trucking authority is to start your own trucking business. First, decide on a name for your business, and if required, file your business with your state. Create a business plan and outline how your business will work and your business structure. Some common ways to structure a business include:
- Limited Liability Companies (LLCs): A business structure that protects your personal assets from claims against your business
- C Corporations: A business structure where the owners, or shareholders, are taxed separately from the business.
- S Corporations: A business structure where income, losses, deductions, and credits are passed through to shareholders
- Partnerships: A business owned by more than one individual that isn’t formally organized. Both partners are legally liable for the business.
- Sole Proprietorships: An informal, unincorporated business that isn’t legally separated from its owner.
Most small trucking companies operate as an LLC but consider your current business needs and long-term goals before deciding on the best structure for your business.
Next, you’ll need to get a Tax ID or EIN for your trucking business. You can complete the entire EIN application process online through the Internal Revenue Service website. You’ll need this number to file taxes for your business.
Step 2: Get your USDOT number
Carrier companies that haul freight interstate must be registered with the FMCSA and have a USDOT Number. You will not be able to complete your application for your MC authority without it. This number is unique to your business and is used to monitor safety, conduct inspections, and investigate crashes.
To get your UDOT number, use the Unified Registration System portal and follow the guided instructions.
Step 3: Apply for authority with FMCSA
Reference your business plan to determine the type(s) of authority you will need. Then, file for each one with the FMCSA. The fee is $300 for each type of authority. Ensure you have information on your truck(s), including the VIN, year, license plates, weight, and details about your business.
Step 4: Get trucking insurance
You cannot have active authority without proof of insurance. Types of insurance needed for trucking companies include primary liability, cargo, physical damage, and non-trucking (bobtail) insurance. Insurance for talking companies can be a big expense, so it’s important to do your research to find the right fit for your needs. You’ll want to find the best trucking insurance rates with the right coverage to protect your business.
Step 5: Register for your UCR permit
The Unified Carrier Registration (UCR) enforces carrier safety laws. The permit verifies you have active insurance coverage in the states where you operate. Your MC number and USDOT number are required before applying. Fees are based on fleet size and must be renewed annually.
Step 6: Register for your IRP license
The International Registration Plan or IRP is an agreement between the United States, Washington D.C., and Canadian Provinces that grants carriers a license to haul interstate freight. You find more information on how to register on the IRP website.
Step 7: Register for IFTA
IFTA is an agreement between the lower 48 U.S. states and Canada that simplifies fuel reporting for interstate carriers. With an IFTA license, you submit one quarterly fuel tax return to your base jurisdiction. Find out how to contact your base jurisdiction to set up your account on the IFTA website.
Step 8: Understand and plan for Heavy Vehicle Use Tax (HVUT)
HVUT is a tax the government charges to help fund highway programs. If you have a truck weighing 55,000 pounds or more, you must file an HVUT return (form 2290) with the IRS yearly. Moreover, states like Kentucky, New Mexico, New York, and Oregon may require additional taxes.
Run your trucking business with SmartHop
A lot goes into getting your MC authority and starting your own business. But, it doesn’t have to be challenging. SmartHop is here to support you.