Last Updated on 3 months by Komolafe Bamidele
As a rideshare driver, taking into account an LLC could shield you from responsibility and simplify tax filing.
You should understand the financial and legal ramifications before creating an LLC as an Uber or Lyft driver.
All the information you need to decide if an LLC is right for your Uber business is here.
Continue reading for Uber drivers’ step-by-step instructions to Form an LLC for Uber or Lyft Drivers and the pros and cons of this type of business firm for liability protection.
Uber and Lyft LLC: What Is It?
An LLC is a type of company organization resembling a sole proprietorship and a S corporation (S corp).
Regarding tax filing, personal responsibility protection, expenses, and other aspects, each business structure has advantages and disadvantages of its own.
Suppose you want to do business as a new company owner without worrying too much about risking your personal assets and bank accounts.
In that case, LLC incorporation can be the best option regarding tax savings on your returns.
If you’re in a hurry to Start an LLC for Uber & Lyft Drivers (Rideshare LLC) let Zenbusiness do the work for you for $0 + state fee, which includes LLC formation paperwork then Start an LLC in Texas With Zenbusiness
Advantages of an LLC
Tax Benefits
Ride-sharing companies have fewer assets than other firms, making LLC tax benefits less attractive.
This type of company relies on vehicles, frequently your first. When you lease more corporate automobiles or make $50,000 in income, an LLC’s tax benefits become more apparent.
After $50,000, retaining profits depends more on tax cuts.
Building a ride-sharing firm will be challenging since almost anybody can afford a vehicle lease and get Uber payments.
This is only possible if you want to start your taxi service without using other apps to attract customers.
Personal Privacy Protection
Depending on the state, an LLC can shield your identity as the company’s owner.
In jurisdictions like New Mexico, where owner anonymity is legally protected, many owners create LLCs.
There is nothing to reveal because these states need to keep documentation on the ownership or management of LLCs.
The LLC’s Articles of Organization, which must name the organizer and registered agent, are the only documents owners must submit.
But none of these organizations have to be the LLC’s legal owner.
Personal Liability Protection
LLCs help ride-sharing enterprises most by protecting personal assets. You need this protection whether you drive ride-shares full-time or infrequently.
Consider a Lyft or Uber lawsuit for breaking their terms of service.
If you run a single proprietorship ride-share firm, your automobile and bank account may be in danger.
If you operate as an LLC lawfully, the lawsuit would only cover your business assets.
This incentive alone should make you create an LLC for your ride-sharing business before you pick up a passenger.
Disadvantages
The main drawback of incorporating an LLC or S corp is that it costs money, unlike being a single owner.
Each state determines LLC operating agreement filing fees.
If you drive for Uber or Lyft and desire an LLC, the formation process will cost $50–200.
Depending on your state, you may have annual filing costs. This can hurt your finances, especially if you choose an LLC provider that costs the owner extra for support and assistance.
How to Start a Rideshare LLC or Form an LLC for Uber or Lyft Drivers
Depending on every state you’re creating an LLC in, the formation procedure differs, but generally speaking, there are a few procedures that are the same regardless of where your firm is based.
Step #1: Choose an LLC Name
Choosing the ideal name for your new LLC is a crucial first step.
By consulting your state’s business database, you must select a name that accurately characterizes your firm and ensure that it is not already in use.
Step #2: Pick a Registered Agent
When filing formation documents, you must provide a registered agent to receive state and legal mail for your LLC.
Being your LLC’s registered agent isn’t realistic for a rideshare driver since a registered agent must be at a specified address during business hours.
Due to these and other privacy concerns, you may hire a professional registered agent service.
Step #3: File Formation Documents.
Your state formation paperwork formally creates your LLC.
This is often included in a document known as the Certificate of Formation or Articles of Organization.
Your state will need fundamental knowledge about the business to approve its formation.
Step #4: Get an EIN.
For federal tax purposes, businesses need what is akin to a Social Security number: the Employer Identification Number (EIN).
In addition to paying taxes and applying for bank loans, your company can recruit people with the help of the EIN.
An Employer Identification Number (EIN) is readily available and cost-free from the IRS.
#step #5: Write an operating agreement
A limited liability company’s (LLC) operating agreement is an internal document that lays out the rules and procedures for running the business.
You need an operating agreement if you want your limited liability company (LLC) to stay on track and avoid ownership disputes.
Step #6: Create a Banking System
To run an LLC, you’ll need a business bank account and possibly a business credit card for company costs.
Plus, using financial tools like QuickBooks or hiring a professional to do the work for you is wise.
Step #7: File Reports and Taxes
LLCs must report regularly in most states to update state records.
Annual reports are typical, but biannual or decennial ones may be necessary. Be sure to track your state franchise taxes and annual report fees.
Your ridesharing LLC may need state or local business permits for local operations. A driver’s license is required!
How much does a ride-sharing LLC cost?
Depending on the service, LLC formation costs vary substantially.
IncFile now Bizee offers a free business creation package, but you must pay the state filing charge. This bundle covers one year of registered agent service.
ZenBusiness offers LLC incorporation with a year of registered agent service for $39.
The firm provides upgrade packages with more services at a higher price. Customer reviews rank ZenBusiness highly in this industry.
Northwest Registered Agent creation costs $225 plus state filing fees.
This firm scans all papers it gets for you, not only those needed by law, which is why it charges more. Northwest has excellent customer service.
Conclusion
Creating an LLC can be a good idea if you’re serious about developing a ride-sharing business and want to safeguard your assets better.
Suppose you want extra help making the most of your new business structure.
In that case, you may employ a professional formation service or handle the formation process yourself by following the guidelines in this guide.
Continue reading; Can You Use Virtual Address For LLC Registration? The Whole Truth Reveals!