A ridesharing service is a service that utilizes mobile apps or websites to arrange one-way transportation within a short time.
Examples of the two largest and most popular ridesharing apps are Uber and Lyft.
As a rideshare driver, you can Form an LLC As An Uber Or Lyft driver for the services you render.
Here are a few specifications you need to know as an Uber and Lyft driver.
You are an independent contractor, that is, you are not directly employed by Uber or Lyft.
Uber and Lyft are not responsible for your actions while you are driving. As such, you are liable to:
- Your car insurance.
- Car accidents, and many others.
However, not every Uber or Lyft driver needs an LLC. Owning an LLC as a part-time Uber or Lyft driver is not very important.
On the other hand, if you are a full-time Uber or Lyft driver, it is necessary to own an LLC.
In this article, I will show you the ways to form an LLC as an Uber or Lyft driver.
LLC can save you from big expenses and any legal issues. Hence, having that separation between your personal and business finances is very important.
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
Let’s read down together.
What is LLC?
LLC denotes Limited Liability Company.
- LLC is a separate legal business entity that many small business owners choose to use.
- The main aim of an LLC is to create a partition between you and your business. For instance, if your business is sued, your opposition can’t come to take your personal assets.
- LLC is taxed the same way as a sole proprietorship.
Why You Need LLC As An Uber Or Lyft Driver?
Here are a few reasons why you need an LLC as an Uber driver:
1. Protection Against Personal Liability
An LLC can provide Uber and Lyft drivers with protection from personal liability because it is a separate legal entity from the business owner.
This implies that as a member of the LLC, you are not personally liable for lawsuits, judgments, or debts against your business.
2. Serves as a Formal Entity
Forming an LLC as an Uber or Lyft driver serves as a formal business entity that can help you build a professional image.
Hence, this increases credibility in the eyes of business partners and customers.
3. Tax Advantages
Forming an LLC as an Uber or Lyft driver will give you flexible offers concerning taxation.
An LLC is taxed either as a partnership, sole proprietorship, or corporation.
With LLC as a Lyft or Uber driver, you can choose your method of taxation, in turn, maximize tax deductions and overall tax burden.
Step to Form an LLC As An Uber or Lyft Driver Using Zenbusiness
Forming an LLC as an Uber or Lyft driver is not very easy, it requires a lot of paperwork, especially if it’s your first time.
Hence, I will recommend you use an LLC formation service.
A few of the popular LLC formation services include:
These services can help you can create your LLC in five to ten minutes. It is super affordable and has easy processes.
Tip: Use any one of these LLC formation service.
Here are a few steps on how to form an LLC for rideshare drivers (Uber & Lyft) using Zenbusiness:
- Choose an LLC name.
- Designate a registered agent.
- File your information documents with the state.
- Get an EIN.
- Create and an LLC operating agreement.
Step #1; Choose an LLC Name.
You must choose a business name that best complies with the state regulations.
Hence, you need to research existing business names to make sure the name you choose is available and not already in use by another business.
You can do this research by checking the Secretary of State’s database or conduct a search of trademark databases.
Also, the name you choose must be:
- Easy to remember.
- Represent the nature of your business.
This will improve the visibility and recognition of the LLC.
Step #2; Designate a Registered Agent.
Designating a registered agent is the next step in how to form an LLC as an Uber or Lyft driver.
A registered agent can be an individual or professional service responsible for receiving important document deliveries from your state of residence.
Examples of these documents can be annual report reminders and service of process.
This registered agent will make sure that the state will have a reliable point of contact for your business.
Tip: The registered agent must be a resident of the State you reside and must have a physical address.
You can file your information documents either online by mail, fax, and many others.
Step #3; File your Information Documents with the State.
The information documents entail legal document that officially creates the LLC and contain certain information like the chosen name of the LLC, the address of the business, and the name and address of the registered agent.
Step #4: Get a Federal Employer Identification Number (EIN)
An EIN is important when forming an LLC as an Uber or Lyft driver.
EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS).
The EIN allows the LLC to conduct and file taxes, payroll taxes, and open a business bank account.
Step #5 Create an LLC Operating Agreement.
An operating agreement is a legal document that shows the structure and operation of the LLC, including the rights and obligations of the members. It serves as a roadmap.
An operating agreement will include information like:
- The management structure of the LLC.
- Allocation of profits and losses.
- Duties of each member.
Other steps include:
- Create a financial infrastructure.
- Handle taxes, licenses, and permits.
- Understand maintenance requirements (franchise taxes, annual reports, etc.)
Pros of Forming an LLC as an Uber or Lyft driver
These are a few advantages:
- Easy to set up.
- Tax advantages.
- Limited liability.
Cons of Forming an LLC as an Uber or Lyft driver
Below here are a few cons of forming an LLC as an Uber or Lyft driver:
- It is expensive.
I will say forming an LLC as an Uber or Lyft driver is worth it.
An LLC comes with diverse benefits like tax advantages, credibility, professionalism, protection against personal liability, and many others.