Sole Proprietor or LLC for Owner Operators?

It makes sense for me to run my truck as a sole proprietor. Forming an LLC would only serve to add more paperwork at this point for me.

It's somewhat of a misnomer that an LLC reduces your risk. If you are independently wealthy and have a lot of asset's to protect then maybe so. But don't think that simply forming the LLC will protect you, there are still ways someone can always sue you personally in addition to the LLC.

 

If you're driving the truck and are involved in an accident you most likely are going to be sued personally as well as the company (LLC). I run as a sole proprietor BUT if I had a hired driver I would likely go the LLC route.

 

I prefer a corporate structure. There is more to consider other than the risk to be sued. There can be some tax advantages to operating under a corporate structure rather than a sole proprietorship. There are some protections afforded a corporation that might protect personal assets should your corporation be sued. But, there are no guarantee's. Lawyers will often sue everyone to make it easier for them to access your cash. That doesn't mean that they will be successful, but there are cetain things that you need to do in order to protect your personal assets. Having a separate legal structure can help keep personal and business separate. Since everyone's situation is different, you need to consult with a reliable CPA or corporate attorney to advise you. What works for me may not work as well for you.

 

I am a sole-proprietorship and just drive for myself (with no major plans to ever have anyone else drive under my authority). So, for me, an LLC or incorporation is a little excessive. If I do any damage to anything while operating the vehicle, I will be sued as the driver.

LLC/incorporate if you're hiring people under you.

Also, NJ requires money for operating a business in their state (per vehicle), while sole-prop doesn't have to pay.

 

If you are driver and owner a LLC will not protect you as the driver and the company would be sued in an accident. Also, I believe, A LLC only protects you in whatever state it is established in.

Now there are advantages once you cross a certain income threshold where paying the corp taxes is cheaper than paying income and self employment taxes. Your best bet is to talk to a tax professional. My cousin does trucker taxes, including mine, and said she will let me know when it would be beneficial for me to go LLC.

 

Sole proprietor

 

Just because an individual or company is named in a lawsuit doesn't mean that they will be successful. In most states you can set up a corporation or LLC for about $100, providing you do the filing yourself.