Do You Need an LLC for a Trucking Company?

When forming a trucking company, one of the first things you will need to decide upon is a business structure. Possible business structures for trucking companies include limited liability corporations (LLCs), sole proprietorships, general partnerships, S corps, and C corps.

What is the best business formation for a trucking company?

While there are advantages and drawbacks to each of the options we listed above, hands down, the answer is LLC. This post will explain in detail why an LLC is superior for an owner-operator business, and what you can do to quickly and easily form an LLC.

What is an LLC?

As we mentioned already, LLC is short for “limited liability corporation.” You will discover that many trucking businesses operate as LLCs. There are two chief reasons why:

• Liability protection
• Pass-through taxation

Let’s explain each.

Protect Yourself from Personal Liabilities

The name “limited liability corporation” refers to the fact that when you operate an LLC, there is separation between you and the business as an entity. If something goes wrong, the business will be liable, but you personally will not be held liable as an individual.

While this type of liability protection can be helpful in any business, it is especially crucial for truckers. Why? Because there are so many risks involved with hauling cargo.

Here are examples of some of the many things that could go awry when you are operating a trucking business:

• You could be involved in an accident with another vehicle on the road.
• Your vehicle could go down on the roadside, and your cargo could all spoil.
• A trucker who works for you could be injured while loading or unloading.

It’s true—you do buy insurance to help you cover these types of costs. We can help you get great insurance rates here.

But if they exceed what your insurance can cover, at least you know it will be the business that is liable for the remaining charges, not you as a private individual.

You also are protected from being personally liable for your company’s debts with an LLC. So, let’s say you purchased your company’s truck with a loan. It is the business that owes on that loan, rather than you a an individual.

Avoid Double Taxation

The other big benefit of an LLC concerns taxes. People who operate their trucking businesses as C corps get taxed twice. First, you pay corporate taxes. Then, you have to pay personal taxes on the same profits—big ouch.

But LLCs have pass-through status. That means that you do not get double-taxed when you run your business as an LLC. So long as the qualified business income (QBI) deduction still exists, you can claim that as well (it’s a hefty tax break).

Reputation

The phrase “LLC” tends to reassure customers when they are reading a business name. Perhaps this is because they know the business owner went through the steps to appropriately form the company.

So, you might even find that forming an LLC helps you to attract and reassure new customers when you are first starting out as an owner-operator.

Sole Proprietorship or LLC for Truckers?

You should note that if you do not go out of your way to form an LLC or choose a different structure for your company, your business will default to being classified in your state as a sole proprietorship.

Benefits of an LLC

• You are protected against double taxation with an LLC.

• Your company’s debs and liabilities do not become your individual, personal debts and liabilities.

• “LLC” at the end of a company name can cause some prospective clients to take it more seriously.

• If you have or want to have a business partner in the future, you can do that with an LLC.

Drawbacks of an LLC

• The LLC formation process requires jumping through a number of annoying government hoops (though you can pay an LLC formation company to do it for you).

Benefits of a Sole Proprietorship

• Like an LLC, a sole proprietorship is not double-taxed.

• A sole proprietorship is the default structure for many businesses and does not require a special formation process. You still need to register the business and obtain an EIN, but a lot of the steps involved in forming an LLC can be skipped.

Drawbacks of a Sole Proprietorship

• A sole proprietorship does not separate your personal and professional liabilities and debts. As a private individual, you can be held responsible for both.

• As the name suggests, a sole proprietorship is owned by a single individual. You cannot have a co-owner without changing your business structure.

• You do not get to put “LLC” at the end of your sole proprietorship’s name, nor do you get to enjoy the perception of professionalism those letters can confer upon your business.

As you can see, the benefits of forming an LLC outweigh the drawbacks for a trucking business, and make it superior to operating as a sole proprietorship.

An LLC not only has a friendly tax profile, but keeps you safe from the company’s liabilities and debts, and offers you greater flexibility with respect to ownership structure. So, it is well worth the extra effort.

Trucking LLC 101

Use Zen Business For A Fast and Easy Way to Form Your Trucking LLC

Why we love Zen Business:

• Affordable service with clear, easy-to-understand costs. Contrast this with other LLC formation services, which are often anything but clear about their pricing.

• Awesome communication and customer service through every stage.
  
• The job gets done fast! If you plan ahead, you can save money, but if you are in a rush, Zen Business can form your LLC for you within just a few days.

When you first start looking into forming an LLC on your own, you will quickly realize that it is not an easy or straightforward process. Thankfully, you do not need to do it yourself. The easiest LLC formation for a trucking company is to work with an LLC formation company.

We’ve had great experiences working with Zen Business for LLC formation.

Here is what Zen Business will do for you:

• Connect you with a registered agent
• File your LLC formation documents
• Obtain your EIN
• Create your financial infrastructure
• Create your operating agreement
• Obtain your licenses and permits

Along the way, Zen Business will be there to answer your questions in detail and address any concerns you have. Through the whole process, you’ll be impressed by their great communication, transparency, and commitment to customer service.

One more reason to appreciate Zen Business is the pricing. It is both affordable and transparent, with each package listing a full breakdown of what is included and what is not.

In fact, you can actually start for free, so long as you want to file in 2-3 weeks (if you need to file in 1-5 days, you will need one of the paid packages). All three packages, including the one that starts free, include the standard LLC file and a 100% accuracy guarantee. After the first year, the price for the free Starter package bumps up to $199/year, which is the same as the Pro package.

Take note that regardless of which package you choose, you will need to pay the applicable state fees when you file.

There are a number of add-on features available for the Starter and Pro packages at an additional cost, or you can have them included at no extra charge as part of the Premium package. These include obtaining an EIN, taking care of business documents, setting you up with a business email address, and also providing a domain name and a business website builder so you can start growing your online presence.

So, no matter your needs and budget, it should be easy to find a Zen Business package that will help you form your trucking LLC quickly so you can start doing business.

Form Your Trucking LLC

For most owner-operators, an LLC truly is the most beneficial business structure. When you run your trucking business as an LLC, you can steer clear of double taxation, and you can avoid becoming personally liable for your company’s debts and liabilities.

Ready to form your LLC?

Click the link below to start your trucking LLC the easy way with ZenBusiness.