If you are considering starting your own freight brokerage, you need to get a broker license or a load broker license. Freight brokers’ work is regulated by the Federal Motor Carrier Safety Administration and the requirements can be confusing. Here are 5 steps from Ezlogz for you to provide a successful start of your freight brokerage business:
1. Establish a Business Structure
To start with, determine what type of structure your business would have. There are some structures you can choose from:
- Sole proprietor;
Each of them has specific tax implications and documentation requirements. It’s highly advisable to consult with an attorney when you’ll be making the decisions. He will help you to weigh the positive and negative sides of different business structures with the license.
2. Apply for Broker Authority
Once your business structure has been established, you’ll need to apply for broker authority by submitting Form OP-1 to the FMCSA. It includes general business information (company type, name and address, type of operating authority, etc.). You’ll need to decide whether to apply for “Broker of Household Goods”, “Broker of Property (except Household Goods)”, or both. The filing fee for each is $300 per each type of license you are applying for. We advise you to apply online because you can immediately receive your motor carrier number. And those who opt to mail in their application may have to wait up to 1 month.
The motor carrier number grants the business official authority to operate while the process of getting the license is continuing.
3. Get a Surety Bond (BMC-84)
The next step is to obtain a surety bond which is required by the FMCSA. It is necessary to ensure that you follow all guidelines and regulations. The required amount of the bond for the freight broker is $75000. If you don’t have such money, you can work with a surety company that will put up the bond for you in exchange for a small premium. Assuming you don’t break the rules, nobody pays anything else. But if you violate the terms of the bond, you may be sued by up to the amount of the bond. In this case, the surety company will pay the claim, but you’ll have to reimburse them for the amount they pay on your behalf.
4. Choose a Process Agent
In every place where you write broker contracts, you’ll need a process agent. It is a person who agrees to accept any court papers being served on your behalf. Some freight brokers hire agents in each state, others select a national company that offers process agents in every of 50 states. To declare your choice of process agent you’ll need to fill in the Form BOC-3.
5. Register the Brokerage through the Unified Registration System
It’s the last step in obtaining a license. IURS is an easy-to-use online application form that combines all the forms needed to complete your registration.
After completing your URS application, you’ll have to learn the state regulations on commercial transportation in the states where you plan to operate.