Becoming An Owner Operator
4) Operating Authority or Leasing?
FAQ for the Owner Operator
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
6) How To Do Bookkeeping and Other Necessary Paperwork
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools
The definition of an "authorized for-hire” carrier is a person or company that provides transportation of cargo or passengers for compensation. If you are a for-hire carrier, in addition to the USDOT Number you will also need to obtain an Operating Authority (MC Number). CONTRACT CARRIERS provide for-hire truck transportation to specific, individual shippers, based on contracts. Contract carriers must file only liability (bodily injury and physical damage) insurance.
What services they provide and how much they charge you varies from company to company, so ask a lot of questions before you lease on your truck and find out exactly what they do and what you would have to do.
Some of the common services provided:
1. they buy your license plates (and usually you have to reimburse them,
These are all things you would have to do and pay for yourself if you had your own authority.
You need to check with trucking companies and see if they have enough freight and if they are leasing on more trucks. Ask other drivers of the company you think you might like to lease to if they are happy (they will probably say no), how much they gross, and how much they net (they will probably lie), and if they are planning to stay with the same company they are leased to. Why did I say they will probably tell you they are unhappy? Because truckers are notorious for complaining. They complain about the dispatchers, the loads, the dispatchers, the truck, the dispatchers, the pay, and, oh, did I mention the dispatchers? So, when they tell you how unhappy they are, ask them how long they have been with that company. If it is more than a year or two, they are probably happy. I also called them liars, but in reality, they just like to stretch the truth. Most people will tell you they are doing a lot better than they really are, but then you also get those who just like to exaggerate in the other direction. Ask to see their revenue statements. A lot of them will be glad to show you.
After you have asked all of your questions, DON'T sign your lease until you have read it completely and understand what it says.
You are the lessor (the party who is giving the right for the use of the equipment). The company is the lessee (the party getting the use of the equipment).
The lease is a legal contract. It spells out what what percentage or mileage rate they pay, what expenses you are responsible for, and what expenses they are responsible for. It should tell you when you will be paid and how (percentage or mileage). It will tell you who is responsible for fines, damages, and losses. It will tell you if you have to have an escrow account.
"Escrow fund – Money deposited by the lessor with either a third party or the lessee to guarantee performance, to repay advances, to cover repair expenses, to handle claims, to handle license and State permit costs, and for any other purposes mutually agreed upon by the lessor and lessee"Although you can be required to carry insurance on your equipment, you can not be required to buy your insurance through the company you are leased to. They can not require you to have work done in their shop, rent or buy equipment (covers anything from load locks to trucks) from them, or buy their fuel. You are an independent, and as such have the right and option of obtaining your own services or equipment from where ever you want. This does not mean that you can't use their equipment of services, it just means you can't be required to.
If you are being paid a percentage, you have a right to see the freight bills, showing the amount the load pays.
If you have your own authority, none of the leasing information applies to you unless 1) you lease a truck from someone else (you are the lessee) or 2) you lease your equipment to someone (you are the lessor), which you can do.
Alphabet soup definitions:
USDOT: United States Department of Transportation
- their vehicle is over 26,000 pounds gross vehicle weight (GVW); or
- has three or more axles, regardless of weight; or
- is a power unit and trailer whose combined GVW is in excess of 26,000 pounds, and
- your truck operates in at least two IRP jurisdictions
FMSCA frequently asked questions – registration and licensing: "FMCSA"
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