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1.0 Getting Organized & Getting Your Broker Authority

Atex Freight Broker Training, Inc. –  El Paso, Texas

Lesson 1.0 Getting Organized and Getting Your Broker Authority

Overview for Lesson 1.0

Before You Begin

FMCSA guidelines for setting up a freight brokerage

Forms of doing business

Choosing and registering a business name

Getting a federal ID number (EIN)

Licensing Requirements

Getting your broker authority (URS)

View your pending application online

Process Agent Permit – BOC-3

Unified Carrier Registration (UCR)

Trust fund or Surety bond

Grant Letter

What about contingent cargo insurance?

Setting up a checking account

Let’s get started! …

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Before You Begin

FMCSA guidelines for setting up a freight brokerage

Here is what is required:

  1. An available business name
  • Legal business entity – corporation, sole proprietorship, limited liability company (LLC) partnership, i.e.
  • A business address
  • Federal ID number (EIN) if applicable

Forms of doing business

Here are the most popular forms of doing business:

Limited liability Company (LLC) – popular, flexible, can have members

C Corporation – this is a good option, can have shareholders

Sub S Corporation – check with your accountant on this option

Sole Proprietorship – most simple and least costly – for the individual

Partnership – when husband and wife are in the business or other partners from outside the family

Choosing and registering a business name

Use an attorney? Or use a third party vendor?

To explore name searches –

To register your business name –

When forming a corporation – use a search engine and type in “secretary of state XXXXX” where “XXXXX” represents the name of your state. 

When working as a sole proprietor – use a search engine and type in “county clerk XXXXX  XXXXX” where the X’s represent the name of your county and the name of your state.

Special note for owners of trucking companies:

If you are currently operating a trucking company …

a. Segregate your accounting revenues and expenses

b. Consider the MAP21 legislation regarding an “interlining” situation

c. Set up an entirely different company for the freight broker operation – best practice

d. Other unforeseen problems …

Getting an IRS federal ID number (EIN) or (FEIN)

IRS Form W-9

“Single-member LLC”. You may choose to be taxed as a “Corporation”, “Sub S Corporation” or as a “Sole Proprietor”.

Other than “single member”, you would be multi-member.

When it asks “What Does Your Business or Organization Do?”, select “Other”. Then select “Service” and then type in “Property Broker”.

How to work with the W-9 form

Go here:

>>> IRS Form W-9

Have your accountant help, if you desire

You are now ready to apply for your broker authority.

Licensing Requirements

Getting your broker authority

The freight broker authority consists of:

1. A MC# and DOT#,

2. Evidence of a Surety Bond or Trust Fund,

3. BOC-3

>>> URS Registration Wizard

IMPORTANT – READ THIS FIRST!

BE AWARE: when you come to the page asking Will Applicant Transport Property, you will select >> NO <<.When you come to the page asking Will Applicant Provide Property or Household Goods (HHG) Broker Services, you will select >> YES <<.For the Type of Broker Services, select >> General Freight << unless you plan on specializing and will never do general freight.   

Clicking the yellow Next button on the right side

Have your EIN ready, if applicable

Have your MC or DOT number for ANY PRIOR TRUCKING AUTHORITY during the past three years where you had ownership

Your Portal Account – sign up for this if your are asked

Cost – $300 (credit/debit cards accepted)

After submission – many calls from vendors. You don’t need them.

View your pending application online

View your authority status here to enter your MC#:

>>> Licensing and Insurance Public

On the right side, click on the HTML button to review more detail.

  1. Authority Status,
  • Insurance Required, you will see “Yes” for Bond,
  • BOC-3 will indicate “Yes” after you obtain it.

90 days deadline.

Keep this link >>> Safer FMCSA

Your confirmation Grant Letter will arrive via regular mail in about 30 days.

Important FMCSA Phone Numbers:

Information Line –  800-832-5660 After hours –  202-385-2400 Licensing Information –  800-832-5660

NOTE: You will receive more than several, unofficial, unauthorized phone calls, mailings or faxes from third parties. Ignore them …

You will receive a PIN number via mail – keep it safe

To make a change, go to this Form 5889:

>>> Motor Carrier Records Change Form Before completing this form, you may want to call the FMCSA to see if there is more recent information on making changes to your submission.

Process Agent Permit – BOC-3

You must designate a process agent in each state in which offices are located

List of states and the companies providing the BOC-3 service:  >>> Form BOC-3

Preference – >>> Evilsizor

Cost is $50.

Unified Carrier Registration (UCR)

Wait for several days …

To register for this UCR requirement go to:

>>> UCR Registration

Cost is less than $50 – an annual requirement. Fees on this will be going up.

Trust fund or Surety bond

The purpose of a surety bond or trust fund?

Two methods for satisfying the requirements:

1. Surety bond – Form BMC 84 with the Dept. of Transportation (DOT), or

2. Trust fund Form BMC 85 with the Dept. of Transportation (DOT)

Discuss your options by checking out the source below

Pacific Financial Associations, Inc. Phoenix, AZ

800-595-2615 – talk to David Carneiro

Grant Letter

What about contingent cargo insurance?

This is NOT cargo insurance

Learn the policy exclusions

A resource for contingent cargo insurance:

Registry Monitoring Insurance Services, Inc. (RMIS) Westlake Village, CA

Now with Truckstop load board

Go here: >>> RMIS Carrier OnBoarding

Setting up a checking account

Open a new checking account with your EIN number

Sole proprietorship, Owner

Limited liability company (LLC), Member

C Corporation, President

Partnership, Partner

Articles of Incorporation (or Organization) or Certificate of Formation and your EIN number.

Corporate Bylaws

>>> Sample Bylaws

Note: just use this link above as a sample – do not fill it out.

If you need more personal help, consult an attorney.

Several other comments …

  • Do not co-mingle businesses
  • Printing checks one at a time, more likely
  • QuickBooks has checks to order
  • Writing checks by hand – then enter transaction into QB

Summary:

  1. Decide on a business name and register it,
  2. Get EIN number,
  3. Complete URS,
  4. Get BOC-3,
  5. Get UCR,
  6. Purchase Trust Fund or Surety Bond,
  7. Get Contingent cargo insurance, if desired,
  8. Open the checking account,
  9. Look for the Grant Letter.