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Getting a truck LLC or not is one of the questions that seem to bother many truck drivers so far. I have seen a lot of truck drivers with different opinions about having an LLC, and some of them weren’t as comprehensive. You just need to know everything about an LLC and how it benefits you. So in this article, we will cover the matter of having an LLC and introduce some of the best services for registering your LLC.
A Quick Preview:
If you want to get a truck LLC, you should consider many things. Whether you have a fleet, you work alone, or you have a small crew will help you decide on if you need an LLC for trucking or not. First of all, these are the advantages an LLC will give you:
- It will protect your assets
- You might pay fewer taxes with its taxing options
- LLC is good for growing your business
Flexibility in Management and Structure
LLCs offer flexibility in both management and structure, which can be a major advantage for a truck LLC. In terms of management, the business can be managed by one or more people. This allows you to tailor the management structure to your specific needs. For example, if you have a small team of experts, you can have them all manage the LLC together. Or, if you prefer a hierarchy, you can appoint a manager who oversees the other members.
As for structure, LLCs can be either partnership- or corporation-based. This means you can choose the type of organization that best suits your business. For example, a partnership-based LLC may be right for you if you want equal ownership and decision-making among members.
On the other hand, if you prefer a more traditional hierarchy with shareholders and board members, a corporation-based LLC may be a better fit. Ultimately, the LLC offers flexibility in management and structure, which can be a major advantage for small businesses starting out.
Limited Liability Protection
Many people think that protection means if you get in an accident with your truck, the LLC will protect you, but that is not the case. If you get in an accident, people can still sue you, and it does not matter if you are guilty or if the accident is not your fault. You can still be sued, and you can even lose. The LLC will not protect you and your personal assets because you were driving your truck.
The only way an LLC can protect you is if you had others driving your truck, but that would make no sense if you did not have a fleet. So if you had a fleet and two or three other drivers were driving for you, and they got in an accident, the LLC would protect you from that accident. If someone wants to sue, they can go after your LLC, but they cannot go after your personal assets. They can also sue those drivers who caused the accident.
This is called limited liability protection, and it means that any business that has risks and damage, will be dealt with separately from the business owner.
The next thing that people consider getting an LLC for is the taxes. Before you consider getting an LLC, we do consider consulting with an accountant or a tax attorney to see if it really benefits you or not. Some truckers believe that you should consider getting an LLC once you make more than a certain amount. Usually, to get a noticeable tax break out of an LLC, you should be making more than 70K to 80K dollars. The reason is that not only is an LLC not free, but also you need to file two taxes, one being personal taxes and the other one business taxes, and business taxes are more expensive so you should be considering that.
So if you are a solo driver, definitely do some more careful consideration on getting an LLC for trucking for the starter.
Based on the information on Trucker, the average margin profit from a truck company is 6%, and with that amount, having an LLC to help in the taxing is handy. You can either choose between an S corporation (S corp) or pass-through taxing. Pass-through taxing is better for a company that does not make a lot of profit. S corporations are better for the type of companies who make a lot of profit and save it through the years.
Our recommendation is to start with pass-through taxing for a year, and after a year, change the way you are being taxed to an S corp and work with that for a year, as well. Once you have the numbers down, analyze them, see which one suits your business better in terms of taxing. We say to start with the LLC pass-through taxing because you probably are not going to make that big of a profit for your starting year.
If you want to start a growing business and have multiple truck drivers working for you, getting an LLC should make more sense to you. With a business of that size, you can make more than 70K, and with that amount, the changes in taxing with a truck LLC will start to become more noticeable. You will also be having other drivers working for you, so if an accident happens, the LLC will protect your assets, and you will not be losing much. At this stage, an LLC would be much handier, and it will promise to do its advantages and help you grow your business.
Starting an LLC will also bring you more trust among people. A brand or a business name will make your business look more professional rather than something without an identity.
Costs for Starting an LLC for Trucking
The amount that an LLC would cost depends on the state you want to form it, and it ranges from $40 to $500. In the picture below, you can see how much it costs to form an LLC in each state.
Also do not forget that you will have to pay business tax and it is more expensive than personal tax.
Form an LLC If You’re a Truck Driver
You have to go through these steps to form an LLC:
- State: First off, you need to select a state in which you want to do business, Wyoming, Nevada, and Delaware have a good reputation.
- LLC name: You give your business a unique name.
- LLC registration agent: An LLC registration agent is someone who notices your taxes and gets your legal documents.
- Certificate of Organization: For some states, you need to get a Certificate of Organization which is a piece of documentation you file in some states for your LLC to become official in that state.
- LLC operating agreement: As you can guess, you need to be declaring who is the owner and each person's duty on a piece of document.
- Get an EIN: EIN (Employer Identification Number) is a number used in the US system for tax businesses and internal revenue services.
When to Form an LLC as a Truck Driver
If you are a sole proprietor and you work solo, there is not much benefit to forming an LLC. If you have a fleet of drivers and you want to scale your business and grow bigger, it is time to convert from a sole proprietorship to an LLC.
Our List of the 3 Best LLCs for Truck Drivers
Best Overall Value - Editor’s Choice — Zenbusiness
ZenBusiness is one of the top three companies that offer LLC, and it is definitely affordable. It has the best customer support, A great set of feedback from its customers. ZenBusiness offers a registered agent for a whole year at a reasonable price. Among all the other competitors, it returns you with the best overall value.
The reason why someone would choose ZenBusiness is simply that it is one of the best, but the reason why we think you should choose it is that it has such a problem-solving and fast-responding support team. For someone who just wants to start in the industry of truck driving, great help and good support are required, ZenBusiness is the best one for it. People sometimes complain about how other companies are not as fast-responding as ZenBusiness.
The Most Efficient Service — IncFile
IncFile is perhaps the most experienced LLC company among our candidates today. The best thing about IncFile is that it is completely free. IncFile is our second choice, and it has great futures. It has great customer service, more than 27,000 reviews since 2004, and it is very efficient.
Many of the people who want to start an LLC go with IncFile. The reason is obvious and it is that you do not pay anything else other than your state fee. If you are not sure that LLC would work for you, you can choose IncFile, and it will keep you as happy as any other company would do. There are also a lot of people working with IncFile. That means it has a very large community out there that you can benefit from.
The Most Experienced Servicee — NorthWest
NorthWest might not have made it to the top, but it is still one of the best. Although it has the highest price on our list, it is still very beneficial, and it has more than 20 years of experience in the LLC field. NorthWest has better customer support than IncFile, and it is fairly easier to use.
NorthWest is still the most experienced in this list, and if you do not mind the amount of money you want to spend on such a thing, it is one of the top options you can get. It has a fantastic customer base, and it is easier to use than all of our other options. In the end, if you want the easier way and you don't mind the money, NorthWest might be the option you are looking for.
As a truck driver, is it better to be taxed as an S corp or pass-through LLC?
If you are a solo driver, we recommend going for a pass-through. However, if you have a fleet, you are not a sole proprietor, and you have a company with a lot of profits, we recommend choosing S corp taxation.
If I have a driver, and my driver causes an accident, will they be protected from a lawsuit?
No. An LLC will only protect the business owner's personal assets, which is you. Your driver can still get a lawsuit, and their personal assets will not be protected by the LLC.
If you are a solo driver, we do not recommend an LLC, but if you are looking to build an empire of truck drivers, we do recommend having a truck LLC. In this article, three services for this purpose were mentioned.
We recommend ZenBusiness because of their great support and the amount of value you will get out of your purchase compared to the other services. If you are just starting off, you will need to lower your risks and get as much help as you need.
Make sure to tell us what you think about this article, or if you have any questions, feel free to ask them in the commence section so we can make more articles for you.
- Mary Ellen Biery (March 7, 2018). Profit margins for trucking companies on the rise. Retrieved from: https://www.trucker.com/business/article/21746996/profit-margins-for-trucking-companies-on-the-rise
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