Start an LLC for DoorDash: Learn How a DoorDash LLC Protects Drivers
Think starting a business to be a DoorDash driver is overkill? Think again. While you don’t have to start a Limited Liability Company – or LLC for DoorDash, you won’t have any liability protection if you’re sued. Check out our latest guide to learn the risks of driving as a sole proprietor, how to start an LLC for DoorDash and other gig companies, and protecting your personal assets while you drive.
What is a DoorDash LLC?
L.L.C. stands for Limited Liability Company. There are other common business types, but the LLC has become most popular with startups and small businesses because they’re affordable and easy to manage. Unlike the traditional Corporation structure, the LLC doesn’t have to file business tax returns. Instead, the company owners report expenses, losses, and profits on personal tax returns. The benefit of not having to file LLC tax returns means that business owners are only taxed once – called pass-through taxation.
Learn more about LLC tax requirements
Can I Drive for DoorDash as a Business?
Absolutely! When you sign up to drive, just enter your company name, tax ID number, and business bank account to get paid as a business (details below). If you have already opened a DoorDash account, you can add your business name and tax ID number to your Dasher profile. Simply replace your personal name and social security number with the new business information.
Driving without a Registered Business (LLC or Corporation)
Lots of Dashers have driven without an official company. Many folks are just driving for a little extra cash, or as a hobby, and decide that the cost of forming a business is too much. However, driving without an official company means you are personally liable for any legal claims that occur while you’re driving. Any and all of your personal funds and belongings can be seized to satisfy a legal settlement. Without the liability protection of an LLC or Corporation, you could be financially wiped out. You may be able to protect yourself somewhat with general liability insurance, but you’re still on the hook for whatever insurance doesn’t pay.
4 Benefits of a DoorDash LLC
- Limited liability protection – separate business and personal assets to protect your wealth from lawsuits.
- Pass-through taxation – LLC owners only have to report business expenses, losses, and profits on personal tax returns, preventing additional tax at the company level.
- Easy to manage – LLCs generally require less reporting and forms. They’re also easier to change owners than a traditional Corporation. An LLC can be owned by just one or multiple owners (called managers or members).
- Attract investors – You may not need investors, but if you ever decide to expand your fleet, you’ll have a lot more success raising funds and interest with an LLC. Lenders and investors would rather work with registered businesses over sole proprietors, to protect their investments.
How to Start an LLC for DoorDash
Even if you’re just driving as a side hustle, it pays to form a Limited Liability Company to protect you from costly lawsuits. Business formation costs are tax-deductible, so you can write off your LLC costs on next year’s tax return. Before you sign up with DoorDAsh, register an LLC (or Corporation). Corporations are usually better for large and/or complex businesses. We can’t tell you which type of company to form, but we can tell you that most of our clients form LLCs for gig work businesses.
TIP: Elect S-Chapter, or Small Business status with the IRS to reduce the amount of tax you’ll have to pay. LLCs can request the Small Business status by submitting form 2553 to the Internal Revenue Service.
- Start a simple business plan – taking the time to write out a plan will show you whether or not you can be profitable before you spend any money.
- Choose a catchy business name – Put together a few (2-3) memorable words to describe your service, like Dashers, LLC, IDoorDash LLC, etc.
- Form an LLC or Corporation for DoorDash driving
- Research local and state licenses and permits, then apply for each one. We have partners who can do the research and provide forms specific to your DoorDash gig.
- Get business insurance – you’ll probably need General Liability and Commercial Vehicle insurance to start. If you decide to expand your fleet, you’ll have to buy a workers’ compensation policy to cover workplace injuries. Our recommended insurance partners can help you with free quotes and exclusive MyCompanyWorks pricing.
- Open a business bank account – your local bank may have business solutions. You can also get help from our banking partners to help you find the best banking options.
- Open a DoorDash account – make sure to use your company name and tax ID number to get paid as a business.
- Get paid! You can pay yourself as an employee or business owner, but you should talk with a tax expert to determine the best method.
The Downshift
You can drive for DoorDash as a sole proprietor, but the only way to protect personal assets is by registering an official business, either an LLC or Corporation. Without a business, Dashers are personally responsible for any legal claims, which can wipe out everything you’re worth. To separate business and personal liability, you must form a business and get paid under your company name.
We’ve mentioned 8 steps to start a DoorDash LLC. You can either follow these steps, get help from our State Startup guides, or order a startup package online to save time, money, and hassle. Our team usually processes orders within one business day, and you can track progress live in your free account dashboard.
Signing up to drive for DoorDash is simple. Once you have formed your company, enter your business name and tax ID number (or EIN) to get paid as a business. If you have already started your DoorDash account, you can still update details to start getting paid as a business. Just open your Dasher account and replace personal details with your business name and tax ID number, then save your changes. Voila! You should start being paid under your company name.
Start an LLC for Your DoorDash Gig
Join tens of thousands of satisfied entrepreneurs when you form an LLC with MyCompanyWorks. Since 2001, we have helped startups and small businesses grow into profitable ventures. Make an informed decision by reviewing our latest comparison and thousands of 5-star reviews. Our friendly support team is available during regular business hours, and you can find helpful guides and startup resources 24/7 on our website. Reach out to get help and start your DoorDash gig business today!
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This is a great idea!