Getting a LLC

I went through this and my advice is yes do it first. Then as soon as you get it go to irs.gov and get an ein number and be sure to print the letter as you will need it in the future. LLC shouldn't cost much some states let you do it on their website (cheapest by far if available if not shop online) but be sure and do it in the state where you will be based for IRP and fuel tax account or there will be both hassle and cost.

Basically get LLC first then use it for everything and don't mix and match later when you get your first DOT audit it helps them to see everything the same.

 

Usually LLC's are used for asset protection. As a lease purchase driver if you arent broke now you will be soon so I'd save my money.

 

Asset protection works IF you keep accounts separate and only draw a salary or wages from the business account to your personal account. Business account for anything truck related, personal account for personal items. That protects your personal assets as the truck owner.

If you're also the truck driver, your personal assets are still fair game if you wreck.

If you're the owner AND driver, an LLC won't protect you. It is there to protect the carrier, because on paper all of their interactions with you are B2B. You are acting as an agent of your LLC, which is the entity with which they have a contract. That makes it more difficult for you to claim you're really an employee of the carrier later on if things don't go your way.

 

I was wondering why all these lease purchase guys wanted LLC'S lol. These mega scams get more clever everyday.

 

As a single member LLC, you are a "disregarded entity" by the IRS, so you file your taxes no different than as a sole proprietor. If you incorporate (S-corp or C-corp), you have more rules to follow (officers designated, annual meeting, etc...) that you must do and keep records of in order to protect the corporate veil in a lawsuit. That also allows you to pay yourself a salary (on which you pay personal income taxes, ss & medicare). You pay corporate income taxes on the business's profits. Contrast that with a sole proprietor where the gross minus deductions equals your income, and that's what you pay income taxes as well as ss & medicare taxes. If you're doing really well, it would make sense to incorporate for the lower wages for the ss & medicare. Or, you could say the added hassle ain't worth the savings and just go LLC.

Whether you're an LLC, S-corp, or C-corp doesn't change the fact that if YOU are the one driving the truck, YOU can be personally named in the lawsuit if you wreck, which puts your personal assets at risk. Hell, that's the case as a company driver, too. Forming a corporate entity won't really do much to benefit you personally unless you start hiring drivers to put in your trucks. It is required by the carrier to protect the carrier from you as long as you're the only driver you've got in your truck.

 

No business structure protects you when you are the driver and owner. They will just name you both in the lawsuit.

To protect assets onshore an irrevocable trust is best. Asset protection trusts are available in some states,but either will cost you 5k a year to maintain.

To protect assets offshore a foreign trust in a place like the cook islands will do the trick,but cost 10k a year to maintain.

Odds are if your lease purchasing a truck you dont have much to protect and cant afford these options anyway so dont worry about it.

 

The poor mans tools for asset protection are your states homestead act and protected retirement accounts.