Lease On vs Own Authority: What Changes on Paper

Many drivers start leased on to a carrier. Later, some think about getting their own authority. Lease on vs own authority is a big choice, and a lot changes on paper. This guide does not tell you which one is better or which pays more. It shows which filings and records are yours in each case, so you know what you are signing up for.

What leased on means

When you are leased on, you sign a lease agreement with a motor carrier. You drive under that carrier's USDOT number and operating authority. The carrier is the one with the authority, so it usually handles many of the federal filings for its operation.

Your lease contract is the key document. It says what the carrier handles, what you handle, how you get paid and who pays for what. Read it closely before you sign, and keep a copy.

Even when leased on, you still have your own personal requirements, like your CDL and your DOT medical card. If you own the truck, some truck costs and taxes may be yours, depending on the truck's registration and your lease. For example, the heavy vehicle use tax on Form 2290 is owed by the person the truck is registered to. Our Form 2290 guide explains it.

What changes when you run your own authority

With your own authority, you are the motor carrier. The filings and records that the carrier handled are now yours. Here is the common list for an interstate for-hire carrier:

• USDOT number in your company's name.
• MC number (operating authority). Our guide on MC operating authority explains how to get it.
• BOC-3, the form that names your process agents in each state.
• Proof of insurance filed with FMCSA. This is a legal requirement. Your insurer files it for you.
• UCR, the yearly Unified Carrier Registration.
• IFTA fuel tax license, decals and quarterly returns.
• IRP apportioned plates for trucks that run in more than one state.
• Drug and alcohol testing program, usually through a consortium, plus Clearinghouse queries.
• Driver qualification files for you and any driver you hire.
• Hours of service and ELD records.
• New entrant safety audit during your first period as a new carrier.

Lease on vs own authority: questions to ask yourself

This is not about which one earns more. It is about what you are ready to manage:

1. Paperwork. Are you ready to track deadlines every quarter and every year?
2. Customers. Do you have brokers or shippers ready to work with a new carrier?
3. Cash flow. New filings, deposits and waiting to get paid all take money up front.
4. Safety records. Are your logs, maintenance and driver files in order for an audit?
5. Time. Who will do the office work while you drive?

Steps if you decide to get your own authority

1. Read your current lease for rules about ending it.
2. Make a list of all the filings above and their deadlines.
3. Apply for your USDOT number and MC number.
4. Line up your BOC-3, your insurance filing and your testing program.
5. Set up UCR, IFTA and IRP.
6. Build your files before your first load.

Our new authority checklist puts all the steps in order.

Mistakes to avoid

• Hauling under your new MC before your authority is active.
• Forgetting the filings your old carrier used to handle, like IFTA or UCR.
• Keeping the old carrier's decals or placards on your truck after you leave.
• Signing a new lease without reading it.

When to call us

Thinking about going on your own? Call TCZ Permits at 956-526-6727. We build your whole file, and filings can come at no cost when you factor with us.

Common questions

If I am leased on, do I need my own MC number? Usually no. You run under the carrier's authority. Your lease should say so.

Do I pay the Form 2290 if I am leased on? The tax is owed by the person the truck is registered to. Check the registration and your lease.

Can I go back to being leased on later? Yes, many drivers switch. Talk to the carrier and check what happens to your own filings.