Start an LLC for Lyft: 6 Steps to Protect Assets and Drive to Earn Cash
Lyft drivers are cashing in on the rideshare business, and it’s a great way to make extra cash, but did you know you could be personally liable for claims that aren’t covered by Lyft’s insurance? If you’re driving without a registered company, you could be on the hook in a lawsuit, and your personal assets can be seized to pay an outstanding judgment. You can start an LLC for Lyft to distinguish your business and protect personal assets.
Find out how to protect your earnings with a Lyft LLC (Limited Liability Company) and drive with peace of mind. This guide covers rideshare industry stats, what happens when Lyft drivers work as Sole Proprietors, and how to start a Lyft business to separate yourself from business-related legal matters. If you decide that a Lyft gig suits your interests, we can form your LLC online to save you time and money. Read on to find out how to protect yourself as a Lyft driver.
Lyft Rideshare Stats
In 2018 alone, approximately 4.2 billion rides were taken using rideshare apps. To date, Lyft is the second-largest rideshare provider following Uber. They proudly dominate about 31% of the rideshare market.
Driving for Lyft as a Sole Proprietor
It’s no secret that rideshare drivers are signing up daily to take advantage of the rideshare gig industry. If you have a driver’s license, qualifying vehicle, and car insurance, you can sign up and start driving almost immediately. Unfortunately, without a registered LLC or Corporation, the IRS considers you a Sole Proprietor or unincorporated business. If you’re ever sued, the courts can take your personal savings, retirement fund, and other hard-earned assets to pay the judgment. Without a company, you could be personally wiped out.
Advantages of Starting an LLC
The major benefit of starting an LLC for Lyft is personal liability protection. It doesn’t mean you’ll never be sued, but it does mean that only your business assets can be used to pay a claim if you’re found to be at fault. So for instance, if your business bank account only has a few hundred bucks in it, that’s all the courts can take to pay legal claims. An LLC is considered a separate entity from its owner(s), so personal property and funds can’t be seized to pay business claims.
LLC owners generally pay less tax than traditional Corporations. You’ll have to pay self-employment tax, but the LLC itself doesn’t file tax returns or pay tax at the company level. This can save a lot of money, which is another benefit of starting an LLC.
Limited Liability Companies are easier to maintain compliance and change ownership. They also have fewer reporting requirements, which makes it easier for startups to manage. Traditional Corporations are more heavily regulated, which is another reason many entrepreneurs go with the LLC business structure.
How to Start an LLC for Lyft
Even if you’ve already started driving, you can still register a company – either an LLC or a Corporation to gain personal liability protection. The traditional Corporation setup is usually more than a small business needs. Most entrepreneurs choose the LLC (Limited Liability Company) structure to save on maintenance costs and make management easy.
- Choose a unique business name – put together a few memorable and descriptive words to come up with a catchy name.
- Form a company – either a Limited Liability Company (LLC) or Corporation.
- Open a business bank account to get paid and keep business finances separate from personal finances. If you order a formation package from MyCompanyWorks, you’ll get access to business banking solutions in your free account dashboard.
- Apply for licenses and permits – you’ll need city, county, and/or state business licenses to operate legally. Your state may also require additional permits. Our business license partners can do the research and send your the forms to save time.
- Apply for insurance policies – Lyft provides third-party insurance for covered accidents. Ask your insurance provider or one of our insurance partners if you need additional coverage.
- Open a Lyft business account using your business name, EIN (employer identification number), and business bank account. If you have already signed up, simply log into your account to add your business name, EIN, and business bank account.
Get Paid as a Lyft Business
Earnings obviously depend on when and how much you work, but Lyft drivers who work 45-50 hours per week can take home about $800. Ridester.com reports that drivers make anywhere from $13 – $23 per hour across the US.
If you haven’t already signed up, use your company name and employer identification number to get paid as a business. If you signed up before your business was registered, simply open your account and update it with your business name and bank account information. TaxAct provides a free self-employment tax calculator to help you figure out how much to withhold for tax payments.
Wrapping Up
Lyft holds a respectable market share in the rideshare industry. Dedicated drivers can make some serious cash, but unless you’re driving under a registered company name, you are personally liable for any claims that aren’t covered by Lyft’s insurance. You can drive without a business, but you’re putting all your personal assets at risk without limited liability protection. Registering either a Limited Liability or Corporation establishes a separate entity from the owner (you) and protects personal assets from benign taken to satisfy legal judgments.
When you form an LLC for Lyft, you only have to report and pay tax on your personal income tax returns. The company doesn’t have to file tax returns or pay taxes at the company level. In general, LLCs cost less and are easier to manage than traditional Corporations, so many entrepreneurs choose the LLC business structure.
Most businesses are required to carry General Liability and Commercial Vehicle insurance. Check with your insurance agent or one of our partners to find the right policies and best pricing.
Your Lyft business should have a separate business bank account to collect funds and pay yourself. You can ask your bank if they offer business solutions, or check with our banking partners to set up an account fast. Your free account dashboard offers banking solutions when you order an LLC or Corporation package from MyCompanyWorks.
Get Your Lyft LLC
Order your Lyft LLC online and track real-time progress in your account dashboard. We can usually process your order within one business day and our support page is available 24/7 for guidance and tips to run a successful business.
To maintain state compliance, add MyCompanyWorks Premium™ to your order. We’ll file your annual reports and keep tabs on your business status so you can stay on the road and keep making money. For more information, check out our latest comparison and reviews, then order online to make your Lyft gig an official business.
This page may contain affiliate links, which means MyCompanyWorks may receive a commission if you make a purchase using these links.