Having helped numerous individuals establish their own trucking companies while guiding them to avoid common pitfalls, we have come across several cautionary tales. The following are the most common mistakes made by new owners:
1. Applying for a USDOT and MC number without incorporating their trucking business first. It is a common misunderstanding among sole proprietors that they can file the application under their own name and social security number. However, doing so may lead to more issues than it solves. The FMCSA, a federal agency under the USDOT, approves applications for commercial entities rather than individuals. Therefore, to safeguard your new trucking company and complete the application process successfully, it is necessary to incorporate it as an LLC or other corporation.
2. Applying for a USDOT and MC number without obtaining an EIN. Even if the business is a sole proprietorship, it is necessary to obtain an Employer Identification Number (EIN) instead of using their social security number for registration and reporting purposes. TCS can assist in obtaining an EIN as part of their trucking compliance services.
3. Failing to activate their MC number within the designated timeframe. After receiving a USDOT number, the PIN provided should be kept safe as it is required to make changes to the business’s information. However, a USDOT number alone does not authorize interstate commerce. The Motor Carrier (MC) number provided by the FMCSA grants this authorization, but it is crucial to complete the necessary steps within the allotted time frame to activate it. This includes filing a BOC-3 and providing proof of proper insurance.
4. Not following regulations. It is insufficient to apply for a USDOT and MC number; they must pass the vetting and approval process before engaging in certain aspects of their business. For example, crossing state lines while for-hire before the MC number is officially active can result in a fine of up to $10,000.
5. Failing to prepare for the next step after submitting an application. It is common for new trucking companies to be unprepared for the Pre-Authorization Safety Audit (PASA) conducted by the FMCSA to ensure compliance with the necessary safety management systems and federal regulations.
6. Not seeking professional assistance. To avoid making these mistakes and others, it is best to be prepared and hire a compliance specialist. This can save time and money in the long run and ensure compliance moving forward.
Remember, it’s always better to contact DOT compliance experts, they will manage all of your compliance needs, so you can focus on the road ahead.