To open a properly licensed freight broker business or also legally known by the FMCSA as a Property Brokers Authority, there are a few steps to take before starting. You would first want to get the proper training so that you can make better decisions with knowing the direction you want your freight broker firm to go. While you’re in the process of getting proper training with a freight broker training school, you can begin to work on getting your business name along with forming your freight broker business plan. Below we will show you the right steps to take with getting your freight broker business started quickly and with the right tools.
Step #1: Obtain Your Business License
Getting your business license is a must and you cannot open your freight broker firm without this. We highly recommend in speaking with the people at Incorporate.com about your needs within the state you live. We have been working with Incorporate.com for some years and can highly recommend them. You should be able to have a licensed business within your State in just a few days after working with Incorporate.com. You will also need an EIN. Employer Identification number. You can do this for free on the IRS website. Make sure your EIN and business name and address match with all of your paperwork when setting up your own freight broker business license.
Step #2: Obtain MC and DOT Number
To begin the process of obtaining your MC Authority online, You must register your freight broker business through the URS (Unified Registration System). The website portal can be found here https://portal.fmcsa.dot.gov/UrsRegistrationWizard/ . Once you begin the registration process, you will be asked to open an account with the URS. FMCSA would like for you to create an account for accessing the application. The account will allow you to return to complete your application if you are not able to complete it in a single sitting. The FMCSA will assign an Applicant ID to you. You will be asked to specify a password and security questions This application process will lead to you obtaining an MC# and US DOT#. You will be given a PIN # emailed to your business address that allows you to log into your Accounts provided by the FMCSA. You must keep this PIN safe and secure as the only way to get another PIN is through mail.
Cost $300.00 with FMCSA
Step #3: Obtain Process Agent BOC-3
You will need a Process Agent representing you in all 50 States. You can learn more about Process Agent and BOC-3 filing here. LFS Process Agent Info . The easiest way for you to obtain your BOC-3 filing for a process agent is to have a Process Agent company do this for you. Logistical Forwarding Solutions can help you with this and once you have filed your BOC-3 form, it will be automatically attached to your FMCSA Property Broker Authority Application.
The role of the processing agent is to be the person who can be served papers if a claim is filed against your brokerage in that. This is mandatory for you to be approved by the FMCSA to be a property broker.
Step #4: Financial Responsibility By Bond
Your next step is to move forward and begin to obtain your Surety Bond. We recommend into getting the BMC-84 as this can be done with a low down payment and quarterly payments thereafter. BMC-84 premiums can range from $850 - $9,000 per year (this will vary based on your financial strength, e.g. personal credit). The BMC-84 bond usually requires zero collateral and can be obtained within 2 business days. Learn more about the difference between a a BMC-84 surety bond and BMC-85 trust fund here LFS Surety Bond Information . The bond process is not to much of a hassle and Logistical Forwarding Solutions can refer you to the best Freight Broker Bond Company. Once you have obtained the freight broker bond, the Bond company will attach this as financial responsibility on behalf of your freight broker business with the FMCSA. Once the FMCSA has received your Bond information, you will be within a 21-day waiting period for the FMCSA to grant you as an active Freight Broker Company. Hooray!
Cost $ To Be Determined
Step #5: Obtain Your Unified Carrier Registration (UCR)
As a professional freight broker owner, being compliant is the key to having your business long term. Applying for your UCR Registration is vital to stay in good standing with the FMCSA. You can learn more about the UCR Registration by visiting LFS UCR Registration Info Page. For new freight brokers registering their business for the first time the cost is around $76. You can visit the UCR registration site here https://plan.ucr.gov/ . The UCR Registration Plan operates in all States except for :Oregon, Wyoming, Nevada, Arizona, Florida, Maryland, New Jersey, and Vermont. If you are doing business within one of these States as a new freight broker business, then you will need to contact the State your doing business in about registration. The main purpose of UCR Registration is for generating funds for road improvements and safety plans within each State. Please visit LFS UCR Registration Plan for more information
Step #6: Get Freight Broker Insurance
The FMCSA does not require a freight broker to obtain insurance in order to receive a property brokers authority. The only financial responsibility of the freight broker business is to have a Surety Bond in place. Liability insurance is legally required by the FMCSA for all freight forwarders and motor carriers, but not for property brokers. For this reason it is possible to open your new freight broker firm with absolutely no insurance coverage. The down side to this is you probably will not obtain qualified shippers because they do require you to have some form of insurance. You can learn more about the different types of insurance at the LFS Freight Broker Insurance Page. You also leave yourself open to liability issues when operating with no insurance and this is not advisable.
When it comes to insurance, our experience is you want to look professional and qualified on paper. This means you definitely want to have the right amount of coverage as this determines if a shipper will do business with you or not. The premiums can be a bit pricey, but in the end the cost of insurance could be well worth it. Having the right coverage and appearing on paper to be a solid freight broker business is the difference in companies surviving the long road ahead of them of building their shipper customer base.
Always remember that once you’ve obtained your DOT registration, you must file a biennial update by submitting an MCS-150 form online., this process is free. Learn more about a freight brokers compliance obligation at LFS Freight Broker Compliance Info
You are required to always update your company even if nothing has changed, ceased operation, or made changes.
Logistical Forwarding Solutions can help you with each of these steps and more. We can offer a package deal to filing all of the necessary steps on your behalf. LFS has been working with freight broker license for more than 17 years and we can make sure your freight broker license filings are done accurately and quickly. Contact Logistical Forwarding today about how to get your freight broker license.