Dollars & Sense

Kevin Rutherford

The hurdles of cash, fees and paperwork

Kevin Rutherford | September 11, 2012

Last month I covered one of the first steps in moving from being a leased operator to an independent operator: Finding customers. (Search “Dollars & Sense” at to find that column.)

This month – financial and technical prep. The work is tedious, so consider using companies that will complete the process for you.

Cash flow

It’s not unusual for a carrier to wait 30, 60 or even 90 days to get paid. Sometimes you never get paid. This initial lull can make it difficult to launch your business.

Before you head off as an independent, you need to take care of insurance and governmental filings, some of which involve fees. You also will need a cash cushion to see you through the initial weeks of waiting for invoices to be paid.

Cash and credit. Your ultimate goal should be to have enough cash in reserve, ideally $5,000 to $10,000, to operate without borrowing. This may take months to accrue. If you don’t have that kind of money, consider a revolving line of credit with your bank.

Broker quick-pay. If you plan to use brokers, ask about a fast-pay option that, for a fee, guarantees your money in a certain number of days.

Factoring loads. Having a third party collect your receivables for a fee can be confusing and costly. Learn about the costs and risks involved with different forms of factoring.

Getting insurance

Carriers must have liability and cargo insurance. You will need to get both within the first two weeks of the Motor Carrier number being filed. Check with an agent before applying to make sure you are insurable.

Federal filings

MC number. A Motor Carrier number gives you authority to transport freight for hire across state lines.

USDOT number. Issued by the U.S. Department of Transportation, this main tracking number registers the number of trucks and drivers and the safety rating of your company.

BOC 3 Process Agents. Process agents can accept legal documents on your behalf and then return them to you in your home state. Designating them is required to obtain federal authority.

State filings

UCRA. The Unified Carrier Registration Agreement states that as a carrier, you are subject to fees based on the number of trucks you run.

IFTA and IRP. Both the International Fuel Tax Agreement and International Registration Plan are for trucks with a GVW of more than 26,000 pounds operating interstate for-hire or private. Once registered with IFTA, quarterly tax filings will be due. You are required to keep track of the mileage traveled in each state and all of your fuel purchases. The IRP covers the apportioned tags for the truck. There is a yearly fee of $1,000 to $3,000 to register and operate your truck in each state or province.

Simple permits. New York, New Mexico, Kentucky and Oregon require an extra permit. There will be tax filings due based on the miles traveled in each of these states and registration fees, except for Kentucky.

NEXT MONTH: Compliance, safety, drug testing, hours of service, fuel tax and mileage tax.

Kevin Rutherford is an accountant, small-fleet owner and the host of “Trucking Business & Beyond,” which airs on Sirius XM Radio’s Road Dog Trucking Radio. Contact Rutherford through his website,

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