How to properly set up my own authority

Discussion in 'Ask An Owner Operator' started by Dedrick, Jan 4, 2021.

  1. Dedrick

    Dedrick Bobtail Member

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    Aug 30, 2016
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    I'm sitting here with a bunch of pieces I'm trying to figure out how I can best put it all together.

    I am 27 have just relocated myself from Texas back to Michigan. I am well connected here and it's where I want to be. And, I am very close to hot freight areas like Joliet, South Bend, etc.

    I am getting ready to buy a house that I had previously rented and set this up as my home base.

    I have a corporation set up in Texas for the truck I was running under landstar for the last year, now paid off and I'll be receiving the title within the next week or so.

    I did not have a legitimate address in Texas. I was living in the truck all over the US and I had my parents TX address on my CDL, but I hardly ever go there at all. Also, they are selling the house in April. So I will likely need to change my license. I would like to keep my license in Texas, for the taxes, but like I said I hardly ever go there. What types of problems could that lead to? Mail going somewhere where I wont see it?

    For the corporation I was using my friends apartment in Fort Worth as the address of the business. I could probably move my license to that address as well. He is a good friend and he sees and reports all of my mail to me, so that has worked fine.

    But again, I never go to Texas. So maybe I should transfer all of this stuff to Michigan? I mean, I can go to Fort Worth, its just out of my way.

    I also actually have an MC number, under a different corporation. See, before I decided to go to landstar, around September of 2019, a different long time friend and I wildly decided we wanted to start a trucking company and got as far as making a business name in Texas, and then we actually applied for and received an MC number and a US DOT number.

    We were both enrolled in college at the time (lol). Since then he has finished a 4 year degree that it took him 8 years to do, and then he moved to San Francisco where he has some family and has not done much. He was super burned out. He worked his way through college, and had to financially support a younger sibling for most of it. He also didnt allow those things from stopping him from living his life to the fullest. So that explains the long degree but he earned it and I didnt so good on him. He is having fun out there in SF riding motorcycles and such, not working. But I know him, he will be looking to get into something. Only a matter of time. He is also way way way more professional than I am as far as watching deadlines and paperwork things of that nature. Also presents himself very well when dealing with people. I think we can still work together on something.

    I am asking my friend to send pictures of the business articles, because I can't remember how we set the whole thing up. Who we listed as what. I think we listed both of us as 50% owners. We didn't know much about we are doing at the time. So I'm assuming there are things we need to go in and change.

    We never did anything. I ended up making my own and going to landstar. But theoretically, there is an MC number I have access to that already has 1+ years of time on it.

    I understand a MC number with time on it gets you lower insurance starting out. Is it really a big deal? How high will insurance really be for a fresh MC?

    So I am under the impression that doing whatever i need to do to restructure or relocate my friend's corporation, that already has an MC, might be a quicker path to setting this up than doing it under my own corporation.

    If I want to apply for my own MC number, I am looking at the different questions on the FMCSA website and wondering things like, which one of the many addresses I am associated with do i put down under the many addresses they ask for. And, what happens if I change the business address or the address on my CDL. Do I need to go back and change something on file with the FMCSA?

    Maybe i should just get in touch with a legal person?

    Sorry for this myriad of questions. To sum it up, I have:

    - house in Michigan i am soon to buy
    - paid off 2013 cascadia
    - Texas CDL
    - Texas corporation with business bank account with plenty of funds and 1 year established business credit
    - 2nd Texas Corporation with many forgotten details, and an MC number

    I guess if it helps, my goal is to get a trailer, maybe two, and then get my authority. I will bite the bullet on whatever insurance costs I have upfront, and I will take the learning curve dealing with brokers. ####, I dealt with landstar agents for a year, how hard can it be?

    I've also got 4 renters in bedrooms of the house I'm buying in Michigan. Stable people I knew from before. One of them has offered to let me set up a desktop in his room and teach him how to look after the paperwork, work the DAT board and deal with brokers while I'm on the road.

    So maybe he is an asset. Maybe. Maybe he can serve the same purpose my Texas-SF friend would've.

    My real goal is to solicit myself to businesses in my area and get a dedicated customer, then work with brokers for the backhauls. Try to build a fleet from there.

    Here's another idea I have:

    After working at landstar and seeing their structure, I've wondered what it would be like to "lease" my own corporation onto my friend's one that already has an MC number. Basically, use mine to finance all the equipment. And then go through my friends corporation to manage insurance and the MC number. Essentially put him in charge of the "paperwork," whatever that means. He doesn't have a CDL.

    Setting up that one as the "parent company" over mine.

    My thinking is if I did that, we would basically be setting up the skeleton of something similar to landstar. To where eventually, if we have a dedicated customer, we can just buy trailers to set up a drop and hook customer, and then we will know how to let other owner ops lease onto us. So it seems like setting it up that way might be a worthwhile learning curve to go through.

    Alright, I know there is a lot there but I know plenty of you guys are smart and have game to offer. I'm all ears.

    I did make a very different post a few weeks ago, but I got a lot of variables and ideas. That's life lol, so take this post for what it is.
     
    Last edited: Jan 4, 2021
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  3. Chattduck

    Chattduck Light Load Member

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    Oct 1, 2013
    North Ga
    0
    It's been a while since I set my business up, but I'll throw a few things out.
    First, of all business entities, partnerships have by far the greatest failure rate. Set your business up as an LLC or corp, hire your buddy as an employee if you wish.
    If the corp in Tx is in your name only, there's no problem keeping it and living in MI. Just use a registered mail forwarding service in Tx as the corp address, $100 per year. NV and Wy are the cheapest/easiest LLC's to setup and maintain if you don't use the Tx corp. I found the folks in Cheyenne, Wy very good to work with and cheap.
    Get with an insurance broker that can get you some quotes. He can advise on the the tx cdl, but you prob want to establist domicile where u live and get your cdl there.
    If the mc you have is in your name only along with the corp, you can apply to have it activated. You still have to repay the fees and update everything. I would call fmcsa and see what works best. You will be in their system with your ssn tied to the mc, so you have to deal with that either way. Once everything is applied for, you still have the 6 weeks wait to go active.
    Will need a fed tax id # from irs website
    Your authority must show active on the fmcsa website before you can get a plate for your truck.
    Also, as far as booking loads with brokers, it doesn't matter how old your mc number is, only how long it has been active.

    Hope this helps
     
  4. Dino soar

    Dino soar Road Train Member

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    26,858
    Dec 8, 2017
    0
    Be careful about where you are living and where your license is and how you insure your equipment.

    Be completely transparent with the insurance company because if they find you are living in one state but your equipment is insured in another state and you have an accident if they believe that you committed insurance fraud they have every right in the world to deny your claim which basically means you have no insurance and no protection. You personally will be liable for all of it.

    I'm not suggesting you're trying to defraud the insurance company I'm just saying make sure you're on the same page with them.

    As far as having any corporations in another state as far as I know it only cost you more money in taxes. This is because you have to pay tax in the state that your Corporation is in and you also have to pay taxes in the state that you live in.

    It is best to consult a lawyer and a Tax Advisor.
     
  5. Midwest Trucker

    Midwest Trucker Road Train Member

    5,871
    21,124
    Aug 31, 2018
    0
    Man your all over the place. lol.

    I like your imagination and creativity though. You’ll find your footing eventually and do great. I highly suggest owning everything yourself and hiring others for help.
     
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