Incorporating a freight brokerage: the corporation, then the US bond

The Canadian side: an ordinary corporation

Freight brokerage is not a regulated profession in Canada. An OBCA or CBCA corporation is the standard vehicle. The choice comes down to the same factors any operating business weighs — where the brokerage operates, and whether cross-provincial name protection matters. Whether to incorporate at all comes down to the usual factors. Liability separation from personal assets is one. The ability to leave income inside the corporation at the small business rate, rather than pulling it all out personally every year, is another.

The US side: FMCSA broker authority and the BMC-84 bond

A brokerage arranging freight by motor carrier in US interstate commerce generally needs its own FMCSA broker authority. That means an MC number, obtained through the Unified Registration System. It also has to be backed by a surety bond or trust fund of $75,000 under 49 CFR Part 371, commonly called a BMC-84 bond. This is a US federal requirement layered on top of, not instead of, the Canadian corporate structure. It applies whether the brokerage is based in Brampton or Baltimore. The trigger is arranging US interstate freight for compensation, not the brokerage's own address. Brokerages that only arrange domestic Canadian freight, or that always act through a US-authorized partner rather than holding authority themselves, may not need this layer at all. We confirm which model actually applies before recommending the bond.

Federal incorporation earns its keep for a multi-province operation

A brokerage operating across several provinces often benefits from federal incorporation over an Ontario-only corporation. That is especially true for one recruiting agents or booking shippers in multiple provinces, since federal status protects the company name nationally. It also avoids a separate name search if the business later registers extra-provincially to operate elsewhere. A single-location brokerage doing most of its business through Ontario shippers and carriers usually does fine with an Ontario corporation. The choice is worth revisiting once agents start operating out of other provinces, rather than deciding it once and forgetting about it.

The surety bond itself usually comes with its own underwriting layer, separate from incorporation but worth planning alongside it. Bonding companies typically require a personal indemnity agreement from the corporation's principals before issuing a BMC-84 bond, particularly for a newly formed brokerage with no financial track record. That is much like an equipment lender asking for a personal guarantee. That does not defeat the purpose of incorporating, but it means the bond, like early-stage financing, may carry personal exposure the corporate shell alone does not remove.

Insurance and the bond are two different protections

The BMC-84 bond protects shippers and carriers if the brokerage fails to pay what it owes them. It is not liability insurance. It does not cover cargo loss, errors in booking, or a lawsuit over a bad match between shipper and carrier. Contingent cargo coverage and errors-and-omissions insurance sit alongside the bond as separate protections. Most shipper and carrier contracts expect to see both in place before they will work with a new brokerage at meaningful volume. We review the full insurance and bonding stack at incorporation, not as an afterthought once the first big shipper contract is on the table.

One entity is usually enough

Unlike an asset-heavy business, a brokerage typically owns little more than office equipment and software licences. So the usual argument for splitting equipment into a separate holding company rarely applies here. Where a second entity does come up is a brokerage expanding into warehousing or dedicated fleet services alongside its brokerage arm. That is a genuinely different risk profile that can justify a separate operating company. Short of that, one well-capitalized corporation, properly bonded and insured, is the right starting point. It is worth being genuinely well-capitalized at the outset. A brokerage with thin reserves and a large bond claim, or a slow-paying shipper, at the same time can find itself unable to pay carriers on time. That damages the carrier relationships the whole business depends on. The ongoing corporate compliance runs on the fixed-fee basis described on our incorporation and compliance page.