# Limited Liability Company - LLC



## Fabius (Oct 12, 2015)

Has anyone formed a LLC specifically for their UBER/LYFT driving activities?


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## 5 Star Guy (Nov 7, 2015)

There is at least one thread about it, very recently. I think the two theories are its good for taxes or liability. For taxes you need to file your accounting four times a year so there's a higher accounting cost and hassle with that. You have to pay to form an LLC in your state and then pay the annual fee or its no longer valid. Filing LLC taxes cost more too. For liability, you will need the car, the car insurance and your new business insurance to have the new LLC name. The car insurance would go up and business insurance is another cost.

Some here disagree but I think having an LLC when you are a part-time, independent contractor, working with a TNC is not only a waste of money but I think it opens you up to more liability. People see your LLC and will go after you more than if you were just some poor guy trying to make a little extra cash on the side. For taxes, being an independent contractor I think has the same deductions and works the same way if you are an LLC or doing this on the side, the deductions go first and you pay taxes on the bottom line.

There are benefits to an LLC, for a business. Doing this job is not a business, its a job. As soon as you stop working at your job, there is no business. It's only you, no employees so if anything its the same as Fabius Taxi, D/B/A. The taxes and liability are about the same as if you didn't make any changes, today.


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## Tim In Cleveland (Jul 28, 2014)

5 Star Guy said:


> There is at least one thread about it, very recently. I think the two theories are its good for taxes or liability. For taxes you need to file your accounting four times a year so there's a higher accounting cost and hassle with that. You have to pay to form an LLC in your state and then pay the annual fee or its no longer valid. Filing LLC taxes cost more too. For liability, you will need the car, the car insurance and your new business insurance to have the new LLC name. The car insurance would go up and business insurance is another cost.
> 
> Some here disagree but I think having an LLC when you are a part-time, independent contractor, working with a TNC is not only a waste of money but I think it opens you up to more liability. People see your LLC and will go after you more than if you were just some poor guy trying to make a little extra cash on the side. For taxes, being an independent contractor I think has the same deductions and works the same way if you are an LLC or doing this on the side, the deductions go first and you pay taxes on the bottom line.
> 
> There are benefits to an LLC, for a business. Doing this job is not a business, its a job. As soon as you stop working at your job, there is no business. It's only you, no employees so if anything its the same as Fabius Taxi, D/B/A. The taxes and liability are about the same as if you didn't make any changes, today.


You do NOT have to move your car into the LLC's name. I state the primary purpose of my LLC as "Labor and all legal activities". Then I can use it to claim any old income. I claim rideshare income, things I sell for profit, independent contractor income in other fields, and just anything. This is far easier than just trying to do seperate reporting for each income source. It also lets me throw all my expenses at it without trying to divide them among the activies: All cell phone costs, all internet costs, any entertainment for my pax (I provide satellite radio and Sling TV). I had so many deductions for Uber, it negated my income from all my activities and I only paid taxes on my traditional employment income. That let me hit near the sweet spot of earned income and I'm getting a HUGE refund!
As far as having to file 4 times a year, that would vary by the state. We don't have to do that in Ohio and we don't have an annual fee either. Another advantage of the LLC is that if you are sued, they have difficulty getting beyond the assets of the LLC. If the LLC doesn't have much in assets, they can't get squat.


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## 5 Star Guy (Nov 7, 2015)

Tim In Cleveland said:


> You do NOT have to move your car into the LLC's name. I state the primary purpose of my LLC as "Labor and all legal activities". Then I can use it to claim any old income. I claim rideshare income, things I sell for profit, independent contractor income in other fields, and just anything. This is far easier than just trying to do seperate reporting for each income source. It also lets me throw all my expenses at it without trying to divide them among the activies: All cell phone costs, all internet costs, any entertainment for my pax (I provide satellite radio and Sling TV). I had so many deductions for Uber, it negated my income from all my activities and I only paid taxes on my traditional employment income. That let me hit near the sweet spot of earned income and I'm getting a HUGE refund!
> As far as having to file 4 times a year, that would vary by the state. We don't have to do that in Ohio and we don't have an annual fee either. Another advantage of the LLC is that if you are sued, they have difficulty getting beyond the assets of the LLC. If the LLC doesn't have much in assets, they can't get squat.


I know I wouldn't do that, if you claim to be running several businesses under one LLC you would either need the company car or the compensation to operate your personal car. If you confirm with an LLC attorney and accountant that you have everything taken care of then that's fine but it sounds like you're still mixing personal with business which negates any point of the LLC.


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## Tim In Cleveland (Jul 28, 2014)

5 Star Guy said:


> I know I wouldn't do that, if you claim to be running several businesses under one LLC you would either need the company car or the compensation to operate your personal car. If you confirm with an LLC attorney and accountant that you have everything taken care of then that's fine but it sounds like you're still mixing personal with business which negates any point of the LLC.


You would not need a company car. The IRS gives deduction for work use of company car and it's based on mileage. You just track personal vs business use. Sherpashare is THE BOMB for that! Open an account and install the mobile phone app. Once you do that, it detects ANYTIME YOU GO ANYWHERE and you just simply go back later and say Work, Work, Personal, Work, Work to classify them. Soooooooooooo much easier than a mileage log! I tend to put my Uber app on even when shopping so I actually have minimal personal use of my car. I only label it personal if I refuse to take a rider during that time. This could also help you track rides when they "disappear" off your trip summary. Furthermore, some states are REQUIRING drivers to keep their own trip log independent of what Uber does. This may be an easy way to do that.


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## UberEddie2015 (Nov 2, 2015)

The whole idea of setting up a LLC is to limit liability. If you have the vehicle in your name you are personally liable. If you want the protection of an LLC the vehicle has to be registered to the LLC and auto insurance.


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## Tim In Cleveland (Jul 28, 2014)

UberEddie2015 said:


> The whole idea of setting up a LLC is to limit liability. If you have the vehicle in your name you are personally liable. If you want the protection of an LLC the vehicle has to be registered to the LLC and auto insurance.


No, Uber insurance is liable anytime the app is on. They could only come after you if a judge allows it, and they likely wouldn't.


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## UberEddie2015 (Nov 2, 2015)

What are you talking about. If you hurt someone badly and they were crippled the rest of there life and Uber liability policy did not cover the award you would be liable. Do you know how much they cover. If you were crippled in an accident your insurance would not cover you and Ubers only cover the pax. Do you really think they give a [email protected] about you.


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## 5 Star Guy (Nov 7, 2015)

You're screwed with an LLC no matter how you try to slice it. It screams this is my business. I like to stay under the radar, I'm just some poor guy who rents.


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## 5 Star Guy (Nov 7, 2015)

Has anyone set an LLC up yet? Just a couple thoughts to continue the discussion, first the business insurance you need should probably be over 1M since Super only covers 1M when there is a pax in your car. The business insurance you need would be for driving pax in your car since that is your business model where your sales are made for your business. I don't see how or why you would have personal auto insurance when you are using your car for business. In order to protect your vehicle, you must register it as a business with commercial plates. If for some reason you keep the car under you and not the business, you would need to show you are paying all of the car expenses with a business credit card.


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## 5 Star Guy (Nov 7, 2015)

The largest SF taxi company just filed for bankruptcy due to the TNCs and multiple lawsuits that were over 1M. Looks like 1M business insurance is not enough coverage. The insurance company will suggest what coverage you need based on your industry.


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## cferrel (Dec 14, 2015)

I did a LLC to get my royalty checks if I accidentally made a million in apps. LLC has good tax perks if you make enough.


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## StarzykCPA (Aug 6, 2015)

Tim In Cleveland said:


> You do NOT have to move your car into the LLC's name. I state the primary purpose of my LLC as "Labor and all legal activities". Then I can use it to claim any old income. I claim rideshare income, things I sell for profit, independent contractor income in other fields, and just anything. This is far easier than just trying to do seperate reporting for each income source. It also lets me throw all my expenses at it without trying to divide them among the activies: All cell phone costs, all internet costs, any entertainment for my pax (I provide satellite radio and Sling TV). I had so many deductions for Uber, it negated my income from all my activities and I only paid taxes on my traditional employment income. That let me hit near the sweet spot of earned income and I'm getting a HUGE refund!
> As far as having to file 4 times a year, that would vary by the state. We don't have to do that in Ohio and we don't have an annual fee either. Another advantage of the LLC is that if you are sued, they have difficulty getting beyond the assets of the LLC. If the LLC doesn't have much in assets, they can't get squat.


You are perfectly fine doing all those things under one LLC. But for tax purposes, different activities should be accounted for separately and should not be combined. If they are all rideshare related, which sounds like it may be the case, then it should be fine.

Talking about an LLC without talking about its entity type doesn't do any good. By default, a single member LLC will be treated as a disregarded entity and you will file a Schedule C for it anyways. The only difference would be the "limited liability" advantage of the LLC assuming you are treating your business like a business.

You can choose how to have your LLC taxed, such as a Corporation or an S Corporation. This is where possible tax savings come into play, but, for most, it's really not worth the hassle.


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## DMVDriver77 (May 28, 2016)

Tim In Cleveland said:


> You do NOT have to move your car into the LLC's name. I state the primary purpose of my LLC as "Labor and all legal activities". Then I can use it to claim any old income. I claim rideshare income, things I sell for profit, independent contractor income in other fields, and just anything. This is far easier than just trying to do seperate reporting for each income source. It also lets me throw all my expenses at it without trying to divide them among the activies: All cell phone costs, all internet costs, any entertainment for my pax (I provide satellite radio and Sling TV). I had so many deductions for Uber, it negated my income from all my activities and I only paid taxes on my traditional employment income. That let me hit near the sweet spot of earned income and I'm getting a HUGE refund!
> As far as having to file 4 times a year, that would vary by the state. We don't have to do that in Ohio and we don't have an annual fee either. Another advantage of the LLC is that if you are sued, they have difficulty getting beyond the assets of the LLC. If the LLC doesn't have much in assets, they can't get squat.


I agree with you, except that I do advise folks (LLC or not) to pay those federal estimated taxes four times a year. Even if you're not going to form an LLC, or corporation, your ridesharing income has to be separated from your day job income (unless of course, the ridesharing income is your income) But those taxes have to be paid to avoid those underpayment penalties, regardless of how an Uber/Lyft driver has his business structured.

Forming an LLC is not a requirement to be an Uber driver, but it is still a very good idea. The limited liability, (if you structure it correctly) helps, but the fact that I can deduct expenses for gas, maintenance, car washes, and just about anything I buy for my car can and will be bought under the LLC. The LLC is a separate legal entity now. Assuming you are like me, and your day job covers your basic needs (housing, food, the occasional good time, etc) then your Uber driving is bonus money, which you can just sock away. Stuff that you buy for your car? Tax deductible. Going on "business trips" in locations you always wanted to visit (or visit again) where you have a chance to attend a conference or otherwise try to "attract investors" for your LLC? Tax deductible. Could you do all of that as a sole proprietor? Probably, but why co-mingle your tax liability? Form an LLC, get a business checking account that has no fees under the name of that LLC, buy stuff that you need under that LLC's credit/debit card, save receipts, drive for the weekly amount you're comfortable with, get yourself a CPA and deal with him/her for 4 times a year and give him/her your stuff, and enjoy the profits from your Uber adventures.

I just became an Uber driver, but I won't be driving until I set my LLC up, which I will after I click post. I am also hoping that if there are those who are on the side of drivers being employees, I hope Uber gives drivers the choice of being an employee OR staying as an independent contractor. I definitely would want the latter...

Disclaimer: I'm not a lawyer or CPA. What I said above is what I plan to do, but does not constitute legal or tax advice...please consult with a professional (I will...  )


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