Hopefully you’re reading this article BEFORE applying for Operating Authority. Everyday I speak with customers who have applied for the wrong type of operating authority OR too many types of operating authority. Each type of operating authority costs $300.00. The FMCSA makes it very clear at the very end of the application that THERE ARE NO REFUNDS. In my fifteen years of working in the Transportation Industry, I have never witnessed a refund be given. It’s very important you know what you’re applying for beforehand and why.
Common mistakes I see daily are listed below in hopes you don’t make these same mistakes!
1. You apply for operating authority using an incorrect legal name and/or doing business as name. What do I mean?
a. If you’re a sole proprietor, your legal name goes in the legal name field and then your DBA will be what you want your company name to be.
b. You apply as a Corporation or LLC when you have not yet become a Corporation or LLC. The issue here is the name you’re choosing may already belong to someone else. If that’s the case, you will be required to choose a name that is available with your State and then you’ll need to request a name change with the FMCSA by completing the request online (using your DOT PIN number or via fax/email/mail.
2. Many people believe when they apply for operating authority and pay the $300.00 fee, that’s it. For whatever reason they do not realize there many more steps to be completed. DO YOUR RESEARCH. Know as much as you can prior to completing the application so you know what to do next and why.
3. Company applies for operating authority and believes that as soon as the MC/MX number is issued, operations can commence. No. There is a 20-25 day hold after applying for operating authority. In the interim, you can run under your DOT number in your base state ONLY as long as the correct commercial insurance is in place while in your FMCSA waiting period.
4. Applying using your social security number. It’s not that this is a mistake; it’s just frowned upon. Identity theft is real. You will be dealing with many, many other companies working in the transportation industry so the smartest thing you can do for yourself is to apply for an employer identification number (EIN). This is a unique nine digit number assigned to your company issued by the IRS. This number is free so take advantage of it. Visit IRS.org and take your SSN off the radar.
5. Not having a process agent in place BEFORE applying. Anyone with operating authority is required to have a designation of process agents. The name of this is a BOC-3 filing. When applying for operating authority, the best thing you can do for yourself is leaving OUT your phone number. It DOES require a phone number to move to the next screen but you can use your area code and then all zeroes. (Ex.: 843-000-0000). The logic behind this is as soon as your information drops into the FMCSA database, it is immediately available to ALL third party companies in your industry. This means your phone is going to ring non-stop for at least two weeks. Let’s not even discuss the spam emails and letters you’ll receive via USPS.
6. Quote insurance prior to obtaining operating authority. I have seen many people spend $300.00 for operating authority just to find out the insurance premium is not in their budget. When this happens the person feels even worse because $300.00 has been spent that cannot be refunded. Make sure you can afford to have a few slow months in the beginning. Planning ahead should always be your #1 priority.
I hope by reading this article, you have a better understand of how many operating authorities you will be applying for and how. If you have any questions, feel free to reach out to Government Filings LLC for clarification.