Starting an LLC for Delivery Services
Going to start your own delivery service? You should form an LLC for your delivery service to enhance the credibility of your business and get flexible tax options. Even though there are national delivery companies like UPS, FedEx, etc., people need to get their packages delivered to close-by locations quickly, and that’s where local delivery services come in to help.
From food and grocery delivery service to a multi-purpose delivery services, the field is wide open for you to invest in. No matter which type of delivery service you decide to run, you should form an LLC for your business to protect your personal assets. Don’t know much about LLCs and how to form one? Don’t worry. In this comprehensive guide, we will tell you all you need to know about starting an LLC for delivery services.
Don’t have enough time to go through the entire review? Don’t worry – we will take you through quick highlights that will tell you why you need an LLC for your delivery service and how will you get your LLC up and running quickly!
Incorporating your delivery services business will protect you from any lawsuits and legal entanglements. All, if any, lawsuits will be brought against the business and not you. As a delivery services owner, an LLC is the right choice because it will:
- Protect your personal assets
- Give you flexible tax options
- Help you grow your business
- Enhance your credibility amongst your clients
When it comes to starting small businesses, delivery service is the easiest option for a budding entrepreneur. With the help of a single vehicle and cell phone, you can get your delivery service up and running.
Similarly, with the help of LLC formation services such as ZenBusiness, IncFile, and Northwest Registered Agent, you can get your LLC formed quickly and efficiently!
- ZenBusiness is perfect for you if you value excellent customer service, feature-packed bundles, and stellar customer reviews! For the best overall value, ZenBusiness is our recommended LLC formation service. Great price of $49 (plus state fees) and everything you need to start your business.
- IncFile is the best friend of those entrepreneurs who are low on money and can’t afford costly service fees for LLC formation. They will form your LLC absolutely free! What more can one ask, right? For the cheapest LLC formation service and great customer support. You can get your LLC formed for free (plus state fees).
Forming an LLC is the best thing a person can do to ensure safety against any future legal actions or lawsuits. However, the million-dollar question is: What is an LLC? Well, we are to answer that for you! LLC stands for Limited Liability Company and it is a type of business structure.
In this business structure, you get the option to separate your personal assets from the company’s assets. By forming an LLC, you will be able to protect your personal savings, house, car, etc., and relax knowing that no matter what happens in the future, your personal assets will be safe.
Importance of an LLC for delivery services
When we say “delivery services”, it is highly likely that big corporations such as FedEx and UPS come in our minds. However, for local and customized deliveries, people need high-quality professional delivery services and that’s where your company can come in and save the day!
Flower delivery service? Grocery delivery service? Customized cakes delivery service? No matter what kind of delivery service business you are going to start, or currently own, an LLC will help you grow your business with real peace of mind.
If you form an LLC, you will get the following benefits.
Liability protection for personal assets
If your delivery service business is an LLC, then all the money you get from your business will be separate from your personal savings. If you take a loan and are unable to pay it, your business might go under but your personal assets won’t be touched.
Moreover, if an employee or a disgruntled client sues you in the future, only the business assets will be at risk. Let’s say that while off for delivery, your vehicle gets into an accident, and the packages you are transporting get damaged. Moreover, the person whose packages you were delivering, decided to sue you. In this scenario, if you have not formed an LLC, your personal assets will be at risk.
However, if you have an LLC, then the scope of any legal action against you will be directed only towards your business.
You will have different options for filing taxes for your delivery services business, which is a huge plus. Since your business will be protected and you will be availing of the tax benefits, the potential for growth will increase manifold!
LLC gives its owners several options for taxation which saves a lot of money. If you are running a single-member company, then you can go for sole-proprietorship or if you are a multi-member company, you can opt for general membership.
In this situation, your delivery service will not have to pay the taxes themselves. The profits will be passed through the company to the owner(s). The owner(s) will then pay taxes on the profit when they file their personal taxes!
Moreover, you also have the option of registering your LLC as an S-corp. It will help your delivery business by reducing the burden of self-employment tax. Usually, self-employment taxes have to be paid that include the employer as well as the employee portions.
By choosing the S-corp structure, you can choose to pay yourself a salary for your role in the business and pay self-employment tax only on the salary. You can reinvest the rest of the profits into your business without paying the tax!
Customer loyalty and trust
If your delivery service has the added prefix “LLC”, not only will your company be trusted more by the customers, but also by banks and potential investors as well. People are not going to trust any random stranger with their important packages and deliveries. However, if you have an LLC next to the name of your delivery service, then you will become a reliable business in their eyes, and your orders will start to increase!
Cost of LLC formation
By now, you are bound to be convinced of the benefits of an LLC. However, the next question is: How much does it cost to form an LLC? Well, this depends on your state of formation. The LLC formation charges vary from one state to another.
Moreover, you will need to hire an LLC formation service to help you with all the legal paperwork and that will cost you too. However, companies like IncFile and ZenBusiness are there for new business owners that are working with a tight budget and want to get their LLC formed professionally, but at affordable rates!
Starting an LLC for delivery services
Now that you know the importance of an LLC for your delivery services, comes the main task: Forming an LLC itself. The procedure for forming an LLC in each state is different, from varying filing fees to different business licenses and permits.
However, there are a few LLC formation steps that are universal and are the same in every state. To form an LLC for your delivery services business, you will have to go through the following steps.
- Choosing your state of formation
- Deciding and selecting the name of your LLC
- Choosing a professional registered agent
- Filing the Paperwork
- Acquiring the EIN
- Creating the company operating agreement
- Getting Licenses and Permits
Choosing the state of formation
The first thing you should do is select your state of formation. The filing fees differ from one state to another and if you are tempted to form your LLC in a state that has lower filing fees. However, you should know that not only is this impracticable, but you will also have to pay foreign qualification fees that will add up to the overall cost.
Moreover, you will also have to find a registered agent in the same state, which will be hard if you opt to become your own registered agent. The bottom is that you should select your own state as the state of formation of your LLC!
Selecting the LLC name for your delivery services
Your LLC’s name is your introduction, your first meeting with your potential customers and investors. It needs to be impressive, unique, and powerful. It will go on the packaging, your business card, your social media pages, and a lot more.
Moreover, you have to select a name that is not already taken up by some other company in your state. You can go through the business database of your state to check if your selected name is up for grabs or not.
A quick tip is to reserve your name as soon as you think of it since the filing process can take anywhere between a few days to a couple of weeks, and some other individual could have used your favorite name by then.
Choosing an official registered agent
Every LLC in the United States is legally obligated to designate a person that will correspond with the government on its behalf. This person is known as the registered agent of the LLC. You can become your own registered agent, make a family member or friend your registered agent, or go with a professional, expert service such as Northwest Registered Agent.
Let’s look at each option briefly. If you become your own registered agent, it will not cost you anything in terms of money but you will pay in the form of your time and energy. A registered agent has to be available during normal working hours always – this means you can never take a personal day off.
Moreover, what if you miss a deadline or an important legal notice gets lost in the mail? Therefore, we recommend that you don’t take on this burden and you shouldn’t pass this burden on to your family or friends as well.
The best and most sensible thing to do is hire a professional registered agent and sit back and focus on growing your delivery services business.
Preparing and filing the Articles of Organization
Done with selecting a name and registered agent? Now you will have to prepare the articles of organization. Articles of Organization are the papers that you have to file with your state to officially form your LLC.
These are very simple and straightforward documents and you can easily find them online on your state department’s website. The details that you have to fill in are different in every state, but you will have to provide the following information no matter which state you are in:
- Your LLC’s Name
- Your LLC’s address
- Registered Agent name
- Registered Agent Address
- Type of Business you are creating
- Hierarchical Structure
If you want to create customized articles of organization, then you are also allowed to do so. A single mistake and your paperwork will be rejected which will mean that you have to start from the beginning! Therefore, we recommend that you leave this important piece of paperwork to expert incorporation services such as ZenBusiness and IncFile since they will know what to do.
Acquiring federal tax ID
Do you have a social security number? As US citizens, we all have a social security number which we use for various purposes such as paying taxes, etc. Similar to social security numbers, LLCs have federal tax IDs called EINs.
You are legally obligated to get an EIN so that you can file your taxes, hire employees for your delivery business, open a separate business account, and a lot more. Even if you don’t have employees, an EIN will help you file taxes efficiently and keep your finances straight.
From the IRS website, it is very easy to apply for your EIN. However, you can do this only once your LLC has been formed and not before that. After providing the necessary details and filling out the form, you will be assigned an EIN.
However, similar to filing articles of organization, we recommend that you leave the work of professionals to the professionals. A trained expert from IncFile or ZenBusiness is the safe choice for you!
Creating the company operating agreement
What kind of world would it be if there were no structure, no rules, and no regulations? A chaotic one for sure! Similarly, an LLC without a defined working structure will soon delve into chaos and you need to lay down a few ground rules for its day-to-day operation.
All this, along with a clear hierarchical structure, needs to be clearly defined and a business operating template does exactly that. In the business operating agreement, you can outline your company ownership, rules for the division of profits, rights, and responsibilities of the owners and employees, along with rules for the dissolution of the company.
Moreover, things such as voting power, percentage interests, rules for buying/selling the shares, etc. also need to be predefined. You can consult the experts available at ZenBusiness or IncFile and they will help you create a tailored business operating agreement for your delivery services business.
Getting licenses and permits
Are you going to deliver medical prescriptions? Is your delivery service linked with an e-Commerce website? No matter what you do, it is very likely that you will need a license or permit to operate. The exact permits and licenses you will need along with their costs depend on two things – your profession and your location.
Every state, every city, and every county has different rules and various permits/licenses. Check the state website and visit the local town hall to learn more. Once you learn all about the licensure requirements, you can start the procedure for obtaining them.
But what if you miss an important license? What if you make some mistake that will land you in a potential lawsuit? To avoid this and a lot of other issues, we implore you to get the services of an expert LLC incorporation service.
Not only will you get your licenses in a timely fashion, but you will not have to get tangled in all the legal red tape!
Starting an LLC for delivery services – Final word
As a new business owner, there are several things you have to keep an eye on. One of those things is liability protection. You don’t want to lose your personal assets due to an unfortunate workplace accident, now do you?
To ensure that your delivery business is credible and has liability protection, you should form an LLC. However, instead of losing yourself down the rabbit hole of DIT-LLC formation, we suggest that you take the help of professional LLC formation services that will take care of your legal needs.
- ZenBusiness is an LLC formation service that gives you all! They not only help you form your delivery services LLC, but they also act as your registered agent for the first year without charging you anything. With affordable rates and excellent customer feedback, they are a great choice!
- IncFile is the only LLC incorporation service that has a free business incorporation package. Simply pay the state fees and they will form your LLC and act as your registered agent! Factor in their responsive customer services and you have a stellar LLC service provider on your hands, folks!
How much does forming an LLC cost?
Usually, the state filing fee for LLC formation ranges from $50 to $400. It is different from one state to the other. LLC incorporation services charge an additional service fee as well to help you get your LLC up and running. However, IncFile offers a free starter package that you can use to form your LLC without paying the service fees.
Can I form an LLC on my own?
Yes, you can create your own LLC. You will have to go through the above-mentioned steps on your own. As new business owners, we will not recommend you take the DIY route, but rather take the help of a qualified LLC formation service. Not only will this save you time, but you will get professional help and not make any errors in the important documentation process.
Are single-member delivery service LLC and sole proprietorship the same?
No, these are two different terms. Single-member LLC is a type of LLC and it gives you all the protection that an LLC provides such as credibility, liability protection, privacy, etc. On the other hand, you don’t get any of this with a sole proprietorship.
How will my delivery service make money?
For the deliveries that you make, you will charge your customers money of course. You can decide on a flat rate or charge them per mile. If you form an LLC, you will get taxation relaxation and your profits will increase.
How much will it cost to get a delivery service up and running?
The delivery services business is probably one of the easiest start-ups that you can invest in. All you would need is a vehicle, a cell phone, and an excellent marketing strategy to hit the ground running!
What kind of ongoing expenses does a delivery service have?
Usually, the main expenses for a delivery service are vehicle maintenance costs, fuel charges, insurance premiums, and employee salaries, if you have any. Keep all these expenses in mind when you determine what you will charge your customers.
Will having an LLC benefit my delivery services businesses?
Yes, it will definitely benefit your delivery services business. In case an accident occurs, and someone sues your company, your personal assets will not be at risk which is a huge relief. You can get to work knowing that your personal belongings are safe no matter what happens at work!