Start an LLC for Uber: Make Money and Protect Personal Assets
Why Start an LLC for Uber? An Intro to the Rideshare Business
It may be well-known that anyone with a driver’s license and a suitable vehicle can be a rideshare driver and start making cash almost instantly. The rideshare industry is valued at over $61 billion dollars, and there’s plenty of opportunity to earn side hustle or full-time gig income. If you’re looking to make extra cash, or even start a business, rideshare driving doesn’t require a lot of money and can be a profitable opportunity.
What’s not as well known, is that rideshare drivers are paid as “independent contractors”. An independent contractor is not an employee and is considered to be “self-employed” (called Sole Proprietorship) by the IRS. Being self-employed means you’ll have to pay self-employment tax, but you can set your hours and control when and how you will work. It also means you are personally liable for damages and legal claims if you’re named in a lawsuit. Yikes! Business and commercial vehicle insurance can help, but it may not cover legal costs and settlement fees. Without a registered company, everything you personally own could be grabbed up to repay what insurance doesn’t cover.
Find out how to start a Limited Liability Company (LLC) for Uber, get paid as a business, and protect your personal assets from business-related legal matters. We can help you start your rideshare business in as little as one business day. Read what thousands of startups are saying about our services. Check out our guide and find tips and resources to put your new gig business on the road fast.
Will Uber Pay Me as a Business?
The short answer – yes. Many gig companies will only pay you as an individual, but Uber will allow you to sign up using your company name and an Employer Identification Number (EIN). An EIN is like a social security number for your company. Using it in place of your personal social security number reduces the risk of identity theft and fraud. Once your business is registered, you can sign up on the Uber platform with your company name and EIN.
What Happens if I Don’t Have a Business (LLC or Corporation)?
Without a registered business, you’re operating as a sole proprietor. You can drive as a sole proprietor, but you don’t have any asset protection unless you form a Limited Liability Company (LLC) or Corporation. An official business becomes its own entity, so if you’re sued or involved in a tax audit, your personal assets can’t be seized to satisfy legal judgments or tax bills.
No one wants to be sued, but if a client is injured or damages are incurred while you’re working, you may find yourself in the middle of a lawsuit. General liability insurance offers some protection, but the only way to separate business and personal assets is to form a Limited Liability Company or Corporation. Without a business, you are personally liable to settle legal and tax matters, which can wipe out your business for good. If you have an LLC or Corporation, only the assets that are owned by your company can be seized to satisfy judgments or tax debts. So for example, if you have $1,000 in your LLC bank account and no other business assets, you can only be sued for the money in your LLC. Unless you’re in trouble with the IRS, in most cases none of your personal assets can be seized for business legal or tax purposes.
Uber LLC Advantages
The biggest advantages to forming an LLC for Uber or other ridesharing gigs are liability protection, pass-through taxation, and simple, flexible management.
- Limited liability protection – prevent your personal assets from legal claims and tax issues.
- Pass-through taxation – LLCs don’t file company tax returns. Instead, owners add business income and losses to a Schedule C form and file with personal income tax returns. Pass-through taxation prevents being taxed at both the corporate and personal levels, which can save money.
- Simple and flexible management – LLCs have fewer reporting requirements and are easier to change ownership than traditional Corporations. Just one person can form an LLC and be the managing member.
- Investment opportunities – if you want to expand your business, lenders and investors would rather work with official businesses than sole proprietors. This protects their investments in the event of bankruptcy and other legal matters involving your business.
Why Uber Drivers Should Form a Company (LLC or Corporation)
If you’re just driving as a hobby, you may be thinking that it’s to form a company. But forming an LLC or Corporation is the only way to prevent being sued personally. You can sign up with Uber as a business, which makes your company liable for damages and legal claims – not you personally.
How to Get Paid as a Business
Before you sign up with Uber, you’ll want to register your business – either an LLC or a Corporation. The traditional Corporation setup is usually more than a small business needs, and they are more heavily regulated than an LLC. Most entrepreneurs choose the LLC (Limited Liability Company) structure because it’s easier to manage and costs less to maintain on a yearly basis. If you already have an Uber Driver account, you can still get paid as a business. Here’s how to change payment settings after you form an LLC.
- Open your Driver app, then tap the 3 menu lines to edit your profile.
- Tap the ‘Account’ button, then tap ‘Edit Account’.
- Select the ‘Name’ field to change your personal name to your business name.
- Select the ‘ID Number’ field to change your social security number to your EIN.
- Enter a verification code or current password to confirm changes.
TIP: Elect S-Chapter, or Small Business status with the IRS to lower your tax rate. Even though the designation is called an “S-Corporation” or S-Corp for short, LLCs can elect the Small Business status by completing form 2553 and submitting it to the IRS.
- Start a business plan – it can be simple, but a solid plan will show you if your rideshare gig can be profitable before you spend any money.
- Pick a great name to stand out from competitors – 2-3 catchy and memorable words that describe your products or services.
- Form a company – either a Limited Liability Company (LLC) or Corporation.
- Apply for business licenses and permits in your state. Our business license partners can find all the necessary licenses and permits for you.
- Start business insurance policies – most businesses require General Liability and Commercial Vehicle insurance, and you’ll also need Workers’ Compensation insurance if you hire employees. You can take advantage of free quotes and exclusive pricing from one of our recommended insurance partners.
- Open a business bank account – check with your local bank or with our banking partners to find the best banking solutions for your business.
- Sign up with Uber using your business name and EIN (employer identification number).
- Pay yourself.
Summary
We’ve covered how you can get paid as a business while driving for Uber and other rideshare platforms. We have also discussed what happens when you operate without an official business and the risk of working as a sole proprietor. Registering a company for ridesharing separates your personal assets from your business. If you’re ever sued (and we hope you’re not), claims can only be made against your company, not you personally. If you form an LLC for Uber driving, you can only be sued for the assets that belong to your business.
The main advantages to forming an LLC are limited liability protection, pass-through taxation, simple management, and opportunities to appeal to investors. Unless you form an official company, you’re personally liable for damages and legal claims, which can wipe out your personal assets and shut down your business. You can register an LLC or Corporation and get paid as a business to protect your personal wealth from lawsuits and tax issues.
Start an LLC for Uber
Since 2001, MyCompanyWorks has helped tens of thousands of entrepreneurs start and manage their businesses all in one place. You can start an LLC for Uber anywhere in the US, and we usually start working on your order within one business day. Read our latest comparison and thousands of 5-star reviews to see why so many startups choose MyCompanyWorks. For help and more information, check out our Startup FAQ page or contact our friendly support team. We’re here to help you start and manage your Uber business with helpful resources and affordable solutions. Contact us today.
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What is the difference between LLC and S Corporation?