RIDEGURU
For an avid driver, there are certain benefits for officially incorporating your ridesharing work as an official business. These include benefits and convenience aroudn tax filings and deductions, as well as protecting yourself from certain liabilities.
The below is an excerpt from a resourceful article. It is by Doug on RidesharingDriver.com.
Driving with an LLC or Corp? How to send your EIN to Uber or Lyft
Most Uber and Lyft drivers are sole proprietors who will report their ride share earnings on their Schedule C tax form, but some of you may have an LLC, corporation, or other tax entity that you prefer to operate under. It’s a smart move — by taking your Uber and Lyft earnings under the umbrella of a corporation, you can lower your tax bill.
Neither Uber nor Lyft makes it totally clear how to have your earnings filed under your Employer ID Number (EIN) or another tax ID. And after you do figure out how to navigate each Uber & Lyft’s tax reporting system, there’s often not a lot of reassurance that you’ve done it right and everything will be correctly reported at tax time.
I’ve operated as an Uber and Lyft driver under my S-Corp for a few years now, so I’ll walk you through how you can let Uber and Lyft know that you are operating under an EIN or another tax classification. And I can tell you what happens at tax time each year.
Which tax classifications does Uber accept?
Uber will allow you to operate under many different tax classifications. Most drivers will fall under individual/sole proprietorship, but Uber also allows drivers to operate under the following tax classific…
For an avid driver, there are certain benefits for officially incorporating your ridesharing work as an official business. These include benefits and convenience aroudn tax filings and deductions, as well as protecting yourself from certain liabilities.
The below is an excerpt from a resourceful article. It is by Doug on RidesharingDriver.com.
Driving with an LLC or Corp? How to send your EIN to Uber or Lyft
Most Uber and Lyft drivers are sole proprietors who will report their ride share earnings on their Schedule C tax form, but some of you may have an LLC, corporation, or other tax entity that you prefer to operate under. It’s a smart move — by taking your Uber and Lyft earnings under the umbrella of a corporation, you can lower your tax bill.
Neither Uber nor Lyft makes it totally clear how to have your earnings filed under your Employer ID Number (EIN) or another tax ID. And after you do figure out how to navigate each Uber & Lyft’s tax reporting system, there’s often not a lot of reassurance that you’ve done it right and everything will be correctly reported at tax time.
I’ve operated as an Uber and Lyft driver under my S-Corp for a few years now, so I’ll walk you through how you can let Uber and Lyft know that you are operating under an EIN or another tax classification. And I can tell you what happens at tax time each year.
Which tax classifications does Uber accept?
Uber will allow you to operate under many different tax classifications. Most drivers will fall under individual/sole proprietorship, but Uber also allows drivers to operate under the following tax classifications.
- Individual/Sole Proprietor
- C Corporation
- S Corporation
- Parntership
- Trust/Estate
- Limited Liability C Corporation
- Limited Liability S Corporation
- Limited Liability Partnership
- Disregarded entity
To read more about how to submit your busines information such as EIN and what to do come tax time, read the rest of the article at RidesharingDriver.com
Comments
For Uber and Lyft I formed a LLC, which is a wholly owned subsidiary of my C Corp. This allows me to consolidate not only my rideshare business, but also my rental properties, etc.
Your LLC has your riding business and landlord business under one? What is the business supposed to be? Aren't you supposed to open two businesses then? Too funny. I'd do the same too.
Rideshare business is an LLC. Real estate is a separate LLC. Both are owned by my C Corp.
Awesome. Sounds like you know exactly what you are doing.
It's a conglomerate. Hahaha.
Gosh, all you guys are so good and astute. I better get on this. I haven't even gotten my rideshare insurance yet.
The problem is I am part-time, and I feel like all this trouble won't be worth it. I mean, the insurance? There's gotta be a price point.
Looked into incorporating in Mass. Costs $500 every year. Ouch.
Thanks for this great article. I have what might be a unique situation and would appreciate your thoughts. I already have a small consulting business (just me) for which I have an LLC. Business has fallen sharply due to the pandemic but I do expect it to rebound and want to supplement my income for the next few months. I wonder if I'm able use my existing LLC as an Uber Driver.
You can be operating as a small business and have an LLC and driver for Uber. It's up to them whether to accept that or not, but from my experience (and from what I hear), they are not that selective about it. They basically want that for payment (EIN) and they don't inquire too much about what your LLC is about and what the business is about. I don't think you will have an issue.
Technically though, you should probably check with a) your accountant, b) insurance agent, and c) the state as well. Usually when you register your business with the state, you have to declare what your business is about and what it offers. If it's significantly different than "driving people around," I think they might have an issue about it.
The accountant will give you a financial advice. I don't think they care too much about the type of business. However, the state and definitely the insurance company will care. (e.g. insurance company needs to know what you are doing in order to assess the risk and provide coverage.)
That's very helpful, thanks. You just touched on something else that I'm curious about: insurance. Looks like Uber provides some coverage as a supplement to my personal insurance when giving a ride. (https://www.uber.com/us/en/drive/insurance/). So, if I understand you correctly, I'd need to inform my personal auto insurance company that I'm driving for Uber.
First of all, I am not a insurance expert, so my advice should be taken with a grain of salt. I am not sure if it's required by your insurance carrier, but some of them will ask and you may be obligated to tell them. Mine for example asks if the vehicle is ever used for business purposes. Driving for Uber is indeed for business, and this may affect the level of coverage. In case of an accident, you do not want something like this to limit the payout.
Some companies even offer rideshare insurance. The price is usually reasonable so it's worth asking about it. You could also use additional liability coverage to supplement the policy Uber provides.
You should also do research on whether you are actually covered at all times while you are driving. For example, Uber only provides coverage for while you are actually "working" for Uber and providing rideshare service. So when your app is off, you aren't covered by their policy and you'd have to rely on you…
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First of all, I am not a insurance expert, so my advice should be taken with a grain of salt. I am not sure if it's required by your insurance carrier, but some of them will ask and you may be obligated to tell them. Mine for example asks if the vehicle is ever used for business purposes. Driving for Uber is indeed for business, and this may affect the level of coverage. In case of an accident, you do not want something like this to limit the payout.
Some companies even offer rideshare insurance. The price is usually reasonable so it's worth asking about it. You could also use additional liability coverage to supplement the policy Uber provides.
You should also do research on whether you are actually covered at all times while you are driving. For example, Uber only provides coverage for while you are actually "working" for Uber and providing rideshare service. So when your app is off, you aren't covered by their policy and you'd have to rely on your personal policy. Then the complexity arises when you are in the middle, let's say when you are on your way to picking up a passenger. Uber provides some liability insurance but may be at a reduced rate. (from what I remember)
Here's a great article:
https://ride.guru/content/newsroom/rideshare-auto-insurance-information-2019
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I have read about this but the filing fees hurt too much. I stick with sched C.