# Start Uber small business



## dark knight

Hey I am wondering if anyone has any experience employing drivers with their car/cars. I have some friends who could use some work. I know most people here driver for UberX, but what I am asking about is usually more related to the livery service. I'm considering both options. I can easily get a loan for another car. I called some of the UberBlack and SUV services in my area to see what they offer drivers. Most of the response I got was 40% of the fare. So 40% to the driver, 40% to the company, and 20% to Uber. Out of that 40% for the owner all costs would have to be covered. Does that leave much room for a profit? I would think I would need to have multiple drivers on one car, just running it into the ground. I guess now the weekly phone cost has to be considered. I'd love to here from anyone who employs drivers to work for them using Ubers service. It sounds like maybe you do this is in Australia Sydney?


----------



## Walkersm

It's a tricky legal ground to get into. To do it right and treat them as employees you have to factor in employment taxes and workmans comp if that is required in your state for employees. If you try to go the independent contractor route you have to make sure they meet all the criteria the IRS requires to call them I.C. Do it wrong and you will be liable for back taxes and penalties after your IC gets in an accident, has no insurance for his medical bills and claims he is an employee to get workmans comp coverage. Many companies have been destroyed when this happens. Also if classified as employees you have to make sure that their total pay meets federal minimum wage laws. They slack off and ignore requests their pay could drop based on the hours they are out there to very low levels.

It is debatable if this can be done with Uber only work. Most companies have a solid base of thier own clients that pay much more than Ubers rates so they do that stuff first then do Uber on the downtime. 

But it largely depends on what state you are in and what the rules are around employees and around commercial transportation.


----------



## Jeeves

From my understanding Walkersm is right. Most operations with multiple drivers have other chauffeuring business going on as well and they use Uber as a bonus. I'm sure someone is operating Uber only business but I personally don't know of it or have experience with it. I'm curious if people share a vehicle for UberX, I imagine this could work out, especially with someone say a spouse?


----------



## Walkersm

Actually Jeeves there are many people that share a vehicle on the UberX platform as well, spouce or not. Since they are already committing insurance fraud doing commercial work on a personal policy they may as well go a step further and add some extra drivers to the policy as well and all use the car. See them advertise on Craigslist in every city Uber is in. All payments for the sharing of the car done under the table and all make sure no employment relationship exists. So you have to do this with other shady people o make it all work well. Otherwise someone is going to claim they are en employee when they try to file for unemployment after they get deactivated by Uber.


----------



## Seinfeld

Interesting - whats your situation with Uber Walkersm if you dont mind me asking? 

I have a friend who needs work. So I could in theory add him to my insurance policy and have him drive for Uber but pay me some percentage? 50% of his earnings to cover costs and give me a few bucks for the hassle? I suppose we could make quite a bit just off the referral and new driver incentive. I assume that it doesn't have to be a new car to make the new driver incentive. Do i have to add him to my insurance policy? Is there liability on the car and now Uber insures the driver as long as they are online. At least thats my understanding: that since the NYE tragedy they changed the insurance policy to cover drivers online, not just when carrying a passenger.


----------



## Walkersm

I am a Limousine Chauffeur that uses Uber SUV on our down times or trying to catch a ride back from LAX if we are empty.

If he is a real friend why not just charge him the amount your insurance may charge you to add him plus a per mile charge. That is if you do not mind not using your vehicle in your off hours. 

Yes Uber did add some additional coverages but remember they are still secondary. They do not kick in unless you get denied by your insurance company. which means you either have to tell the truth and get denied (and probably also dropped) or commit insurance fraud and lie about what you (or your friend) was doing driving at the time. 

But here is something to consider. If your friend has no assets and gets in an accident you are the one that will end up facing the lawsuit as the owner of the vehicle. Your insurance company has no obligation to defend you once they deny the claim. So that means hiring a lawyer from dollar one. While Uber will offer up a settlement if it is your fault if the other party does not take it and sues anyway Uber will not pay anyone to represent you because they are going to argue all the liability belongs with you the business owner who owns the asset that did the damage. they are just an app connecting people. Once the lawsuits start uber cannot represent you because their strategy is to shift the liability to the I.C.


----------



## Jeeves

Insurance is designed to profit, not pay claims. Id be interested to hear from someone who has been in an accident. Especially with a passenger in the vehicle.


----------



## Sydney Uber

Walkersm said:


> It's a tricky legal ground to get into. To do it right and treat them as employees you have to factor in employment taxes and workmans comp if that is required in your state for employees. If you try to go the independent contractor route you have to make sure they meet all the criteria the IRS requires to call them I.C. Do it wrong and you will be liable for back taxes and penalties after your IC gets in an accident, has no insurance for his medical bills and claims he is an employee to get workmans comp coverage. Many companies have been destroyed when this happens. Also if classified as employees you have to make sure that their total pay meets federal minimum wage laws. They slack off and ignore requests their pay could drop based on the hours they are out there to very low levels.
> 
> It is debatable if this can be done with Uber only work. Most companies have a solid base of thier own clients that pay much more than Ubers rates so they do that stuff first then do Uber on the downtime.
> 
> But it largely depends on what state you are in and what the rules are around employees and around commercial transportation.


It's a legal mine field "employing" drivers here too. My two regulars are over 70! So I don't have to pay super. and they are under their own business name and tax number, with their own clients. If you can structure it as a neat car rental service you may have a chance at dodging all those crazy requirements like workers comp etc. it's rare to find drivers who cover themselves but often if a driver has a company structure from another business then they could still be technically paid by their company, and you pay his company.


----------



## Walkersm

But also you have to worry about if you are renting out a car now you have to adhere to the regulations of the car rental industry. And special kind of insurance that goes along with that activity. Unless you just do it all hush hush under the table then you do not have to deal with any of it.


----------



## TheSheibs

I have an accounting background and am a tax professional. I would suggest that everyone who drives for Uber tracks everything and treat it as a sole proprietorship business. This will help you track expenses and see your actual profit and loss. Using a program like Quickbooks or even quicken can help make this easier.


----------



## Dave

My business is set up as an LLC (limited liability corporation) and is taxed as a sole proprietorship to get around the 35% corporate tax rate. Plus it keeps liability in the hands of my business, not me personally, just in case.


----------



## Walkersm

What business is that Dave? Your UberX business?


----------



## TheSheibs

Dave said:


> My business is set up as an LLC (limited liability corporation) and is taxed as a sole proprietorship to get around the 35% corporate tax rate. Plus it keeps liability in the hands of my business, not me personally, just in case.


You can't be an LLC and a sole prop. It's one or the other. Also an LLC has different tax filing requirements than a sole prop. As a sole prop, you file everything under your SS and just make estimated payments throughout the year. Your paying more in taxes by being an LLC.


----------



## Dave

Yes, there are different requirements, but the IRS allows two different methods of being taxed under an LLC, either as a corporation (disregarded entity) or as a sole proprietor (individual). These options show up on any W9 you fill out when signing a new contract. I have an EIN (employer identification number) under which I report all of my self employment income, but still file as if I am a sole proprietor on a Schedule C. Either one I choose, I am still liable for the self employment tax as well as California's LLC filing fee (around $800 +), unless something has changed that I'm not aware of.


----------



## Dave

Walkersm said:


> What business is that Dave? Your UberX business?


That as well as everything else I do that's on an independent contractor basis It all falls under my business' umbrella. I also work as a foreclosure inspector, and I haul cars for car dealerships from the dealer auction in Hayward with my 1 ton truck and 4 car carrier trailer.


----------



## TheSheibs

As a sole prop you don't have to pay LLC filing fee. you just have to register your business name with the city you are headquartered in. Also you only pay tax once as a sole prop. The estimated tax would be all you pay tax for. It gets a little bit more complicated if you also have employees to pay. As a degreed accountant, registered tax return preparer, and quickbook pro-advisor, I could help you see where you can save on how much taxes you have to pay. I have my own business, JV Consulting, that is a sole prop and I only pay a city tax for my business license and only income tax to the state.


----------



## Dave

Believe me, I understand the complications of my setup haha. It works pretty well for me, and I do have subcontractors that work for me with my inspection business and possibly for my car hauling business soon as well. No employees yet, but it would be nice to have an assistant to just answer my cell phone some days  I could get away with it being a sole prop, but there is a lot of liability in the other fields of work that I do (that I've fortunately never had to put to the test), that forming the LLC is what made the most sense for me.


----------



## Sydney Uber

Dave said:


> That as well as everything else I do that's on an independent contractor basis It all falls under my business' umbrella. I also work as a foreclosure inspector, and I haul cars for car dealerships from the dealer auction in Hayward with my 1 ton truck and 4 car carrier trailer.


There we go! Here's one UBER operative that is already geared up for "UBER-TOW"

For folk who drive their Bentley to the 5 star Restuarant to make a big entrance then go heavy on the Bollinger. Dave's ready to take them ALL home!


----------



## Dave

Now there's a damn fine idea Sydney!


----------



## dark knight

Thanks for all the replies. Im still trying to figure out if it could be a worthwhile venture. I have two good friends looking for a job. Lets say I buy a 2009/10 Prius for $12k-$14k. I plan to have them both use the car for UberX. I set up a business, LLC I would assume. Shiebs do you have an opinion on the best business model to make this work? Could I just rent them the car by the mile? What I figure is if the average driver can make $12 after car costs, my friends will be happy making $10. I keep $2 for maintaining the car. The logistics of it all are confusing to me.


----------



## franklin

With the way Uber is changing fees, commissions, etc. I'd be careful about designing any business case around the current system. Very easy to be blindsided by a single e-mailed notice which blows up your entire strategy. You might want to think about just doing it yourself for a couple months so you can understand all the relevant details and get a feel for how Uber corporate operates.


----------



## Sydney Uber

franklin said:


> With the way Uber is changing fees, commissions, etc. I'd be careful about designing any business case around the current system. Very easy to be blindsided by a single e-mailed notice which blows up your entire strategy. You might want to think about just doing it yourself for a couple months so you can understand all the relevant details and get a feel for how Uber corporate operates.


That's good advice Franklin. If you went out and financed a car predicated on UBER business solely, you would be very exposed to some of their questionable actions such as deactivating drivers with no prior review or recourse procedure. As a Black car, I've done nicely with the new income stream that UBER has provided and I'm thankful of that. But I also know they are not there for my benefit and my existing private client base will be most important to me.


----------



## Dave

I think your best bet would be to lease the cars to drivers for a daily rate and leave the maintenance to whomever is leasing the car. There are a couple of companies in SF doing just that, it might be worth googling and checking out their business models.


----------



## Boss.T

How about just charging your friends weekly fixed amounts. 250 per week. That covers everything they would need: car payment, insurance, deductible in case of an accident. They only pay for gas.

Thats pretty much what Taxi companies and Limo companies do, at least in Chicago. They let you keep the car and take it home. So long as they get their rent they could give a crap where you are driving the car.


----------



## Anastasia

In Sydney most parters only get 30% driver expects 50% but UBer does pay bonuses which kinda levels it out but over time I reckon most may go belly up - some butters are even buying new cars - recently I have seen a heap of new Lexus cars on Uber - all hang around the same spot and I asked some of the drivers but all claimed to have different owners - I doubt that since they all obviously are connected.

So answer is at 40% which is 30% higher than than the 30% owners get in Sydney must be worthwhile X!X!X!X!X!


----------



## Sydney Uber

Boss.T said:


> How about just charging your friends weekly fixed amounts. 250 per week. That covers everything they would need: car payment, insurance, deductible in case of an accident. They only pay for gas.
> 
> Thats pretty much what Taxi companies and Limo companies do, at least in Chicago. They let you keep the car and take it home. So long as they get their rent they could give a crap where you are driving the car.


Wow! $250 p/wk for a cab lease! Last time I looked it was up around $1,800.00 per wk here in Sydney!

Private Hire cars (Black) sedans are between $500 - $750.00 p/wk depending on the car.

I provide my drivers with an option, a commission basis 45% to them on work I generate (I pay fuel, washes, tolls - the lot ), or 60% to them if they bring the work to the car. Uber work is 60% to them after Uber's cut.

The other choice I give drivers when one of my cars are coming up for changeover in a year is charging a $100-$150 p/wk premium on a weekly lease then at the end of 12 -13 months I hand them the keys to the car.

The advantage of this is they then finish up with a car to kick off their own business without ANY additional capital outlay. Or they just want a good private car. I have a driver that has a stake in looking after a car really well, and the car is sold without fuss and a tax loss.

With this it helps them establish a business, in the first year or so generating their own clients without the cost of car payments. I call this an Equity Lease.


----------



## Boss.T

Sydney you are saying that the transaction is for a cab lease is low. Cab rates I believe are around $500 for a week. This is just a guy loaning his friend a car to use for uberx. Should the same rates apply?


----------



## Sydney Uber

Boss.T said:


> Sydney you are saying that the transaction is for a cab lease is low. Cab rates I believe are around $500 for a week. This is just a guy loaning his friend a car to use for uberx. Should the same rates apply?


$1800 per week isn't low. It's basically a rental with everything provided such as license, insurance, maintenance and capital costs Included. The leasee Pays for fuel and car washes and manages the vehicle and it shifts with one or more drivers.


----------

