Applying for your Motor Carrier Authority
Applying for your Motor Carrier Authority and going into business for yourself are major steps in your life. Here is a list of 5 of the first things you need to consider as you begin your journey. You’ll get another email from me in another couple of days with 5 more things to consider. These lists do not include everything you need to think about or be prepared for, but they will get you off on the right foot. Good luck!!
1. Major Startup
2. Expenses –
The biggest hurdle to starting your own business is coming up with the money to get started. It takes a lot to get going, but don’t let that discourage you. The long-term benefit is worth it, as long as you do things right. If you are reading this, chances are you are going about getting started the right way.
- The Truck and Trailer - This will be by far your biggest expense. Most companies start out with used equipment. The easiest way for a new trucking company to get into a truck and trailer is usually through a lease-to-own option. The bad thing about a lease-to-own option for a new company is that you are limited to how much they will lend you. The good thing about this type of “loan” is, you usually don’t have to come up with a huge down payment because they are 100% financed. Often this is a new company’s only option. Because leases are fully financed, you typically only have to come up with the first and last month’s payments. Since monthly payments tend to range between $2,000$ 2,500, your first payment will be around $5,000.
- Vehicle Registration Fees - This depends a lot on the state you are based out of and the states you are going to run in, but you can pretty safely plan on paying between $1,500$ 2,500 per year, and you will usually have to pay the entire amount upfront.
- Insurance - Your insurance cost will range between $8,000 and $15,000 per year. To start the policy, you will usually need to make a down payment of between $2,500 and $4,500. 2. How to structure your new business – Here are the three most common business structures. Your tax accountant or a lawyer can usually help you pick which is right for your situation:
Limited Liability Company or LLC Probably - the most common business structure for new small businesses because it is the simplest to maintain and protects your personal assets under most circumstances.
- Corporation- Also protects your personal assets under most circumstances. This option is usually the best if you plan on growing into a very large company.
- Sole Proprietor - A sole proprietor is just you personally operating a business and is usually not a good option because your personal assets are at risk. In a lawsuit, you could potentially lose personal assets like your home or personal savings.
3. Insurance –
I have outlined the cost of insurance above, but you also need to keep in mind that most insurance carriers will not cover a new trucking business that has drivers with less than 2 years of experience and companies that plan on having more than one truck in their first year.
4. Pick The Best Tax Structure –
One of the big benefits of owning a business is the tax benefit. Many things you already use, like your cell phone, can become business expenses and be paid for by your business before taxes are taken out of your income. Here are the most common tax structures? Your accountant should be able to help you choose which will be best for your particular situation. Each has its own pros and cons.
- Disregarded entity - Most sole proprietors and single-member LLCs are taxed this way. It just means the business taxes will be part of your personal 1040 tax return reported on Schedule C.
- Partnership - By default, LLC’s with more than one member/owner are taxed as a partnership
- S- Corporation - Many small businesses, whether an LLC or Corporation, elect to be taxed as an S Corporation because of its many benefits. The company itself does not pay any income tax. The tax liability flows through to the personal tax obligation of the owners. You have to formally request this tax structure through the IRS.
- C- Corporation - this is the default tax structure of a corporation. The company pays income tax on profits and then pays dividends to the owners, which can also be taxed.
5. Who is going to apply for your Motor Carrier Authority –
This doesn’t sound like an important step, but it probably is one of the most important. There are two types of companies out there that help new trucking companies apply for their motor carrier authority. The first type does nothing but get you your US DOT and MC Numbers, and they are usually the cheapest. The second type of company is more full service. They will do everything the inexpensive guys do, and they will also help you through many of the other steps you must take before you are able to start hauling loads for hire. They charge a little more but are worth the price because they will save you lots of headaches in the future. This is one of those cases where you definitely get what you pay for. As always, if you need extra help or have any questions, I can answer for you; give me a call on my direct line (801) 6796490 or reply to this email.
Our Plans, Services, and Fees
1. Truck Quote
Business Formation: Before getting your Motor Carrier Authority, we can help you protect your personal assets, such as your home, bank accounts, and personal investments. Setting up a business entity such as a corporation or a Limited Liability Company (LLC) can create separation between your business and personal assets. The cost varies, with the hard cost differing from State to State. (Call Chris for Pricing.)
New Motor Carrier Authority: We can apply for and receive your DOT and MC numbers the same day that you give us the go-ahead. We will also file the government-required BOC-3 free of charge. Keep in mind that the Authority will not be active for 21 days. If there are any hiccups along the way, we will stick with you until the Authority is granted. The cost of applying for your Authority is $495.
UCR (Unified Carrier Registration): This is a filing required for all for-hire private motor carriers who cross state lines. This fee must be renewed each December for the following year. If we file this for you, we will notify you with plenty of time to make sure that it stays current. Failure to file the UCR can get you stopped at a port and/or get you a ticket. The cost of the UCR filing is $130.
Annual Flat-Rate Drug and Alcohol Program: For $199, your single driver Starter kit will include the DOT required Pre-Employment test, Drug and Alcohol Policy in your company name, membership to the DOT compliant consortium for the year, and all random testing for the entire year. The Annual Membership renewal is $139 and will include all random testing fees. As you grow your transportation company, you can add additional drivers for $99 for the year—a simple approach to drug and alcohol compliance. Pay once; we do the rest!
Prepaid IFTA Made Easy: $150.00 per quarter and $75 for any additional truck per quarter. Any motor vehicle registered at 26,001 pounds or more and registered with apportioned plates is required to submit a quarterly IFTA report. When you have completed your final trip for the quarter, simply mail your trip packets along with your fuel receipts in the provided prepaid self-addressed envelope; we’ll take care of the rest.
Audit Assurance Filing System: Every new Motor Carrier will be required to have a New Entrant Audit within the first 12 months of operation. The auditors want to see that you have systems in place to ensure that you remain compliant with the DOT regulations. Our Step by Step Audit Assurance System is that system. Click here to see a video to learn more about them.
The cost is only $99! The grand total for you would be $1073. This does not include insurance and IRP/IFTA setup.
LLC price is not included in the $1073
2. Truck Quote
Business Formation: Before getting your Motor Carrier Authority, we can help you protect your personal assets, such as your home, bank accounts, and personal investments. Setting up a business entity such as a corporation or a Limited Liability Company (LLC) can create separation between your business and personal assets. The cost varies, with the hard cost differing from State to State. (Call Chris for Pricing.)
New Motor Carrier Authority: We can apply for and receive your DOT and MC numbers the same day that you give us the go-ahead. We will also file the government-required BOC-3 free of charge. Keep in mind that the Authority will not be active for 21 days. If there are any hiccups along the way, we will stick with you until the Authority is granted. The cost of applying for your Authority is $495.
UCR (Unified Carrier Registration): This is a filing required for all for-hire private motor carriers who cross state lines. This fee must be renewed each December for the following year. If we file this for you, we will notify you with plenty of time to make sure that it stays current. Failure to file the UCR can get you stopped at a port and/or get you a ticket. The cost of the UCR filing is $130.
Annual Flat-Rate Drug and Alcohol Program: For $439, your 2 driver Starter kit will include the DOT required Pre-Employment test, Drug and Alcohol Policy in your company name, membership to the DOT compliant consortium for the year, and all random testing for the entire year. This also includes the Supervisory Training that is mandatory once you have more than one heartbeat behind the scenes. The Annual Membership renewal is $239 and will include all random testing fees. As you grow your transportation company, you can add additional drivers for $99 for the year—a simple approach to drug and alcohol compliance. Pay once; we do the rest!
Prepaid IFTA Made Easy: $150.00 per quarter and $75 for any additional truck per quarter. Any motor vehicle registered at 26,001 pounds or more and registered with apportioned plates is required to submit a quarterly IFTA report. When you have completed your final trip for the quarter, simply mail your trip packets along with your fuel receipts in the provided prepaid self-addressed envelope; we’ll take care of the rest.
Audit Assurance Filing System: Every new Motor Carrier will be required to have a New Entrant Audit within the first 12 months of operation. The auditors want to see that you have systems in place to ensure that you remain compliant with the DOT regulations. Our Step by Step Audit Assurance System is that system. Click here to see a video to learn more about them. The cost was only $99!
The grand total for you would be $1388. This does not include insurance and IRP/IFTA setup.
LLC price is not included in the $1388
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