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800.818.6082

Drivers & Independent Operators

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The Company Corporation is America's leading provider of business entity formations in all 50 states. We can help incorporate or form a limited liability company in just ten minutes at a lower cost than most attorneys. Learn more about how incorporating your transport business can protect your personal assets while you are out on the road.

I am an independent truck driver owning one vehicle used in my trucking business. How does incorporating or forming a limited liability company to own and operate my business help me?

Many of our customers form a corporation or an LLC to own their business assets and operate their business in order to protect their other assets and property from claims that might result from their business. If the LLC or corporation is formed and managed correctly, customers can limit their potential liability if there is a claim or lawsuit relating to their business. If there is a claim against the LLC or corporation, then generally only the assets owned by the LLC or corporation, and not the business owner's personal assets, will be potentially subject to the claim. In other words, customers may be able to limit their potential liability if there is a claim or lawsuit relating to their business.

What type of entity should I form?

Although both an LLC and a corporation can help protect a business owner from liability, we find that many of our customers choose an LLC to conduct their business. An LLC can offer more freedom in the conduct, operation and management of the business, and may not require some of the formalities usually required with a corporation, such as annual meetings of stockholders. In addition, an LLC may have tax advantages over a corporation. For example, an LLC with only one owner may not have to file a separate tax return and its profit or loss can be included on the owner's tax filing. In contrast, a corporation must file a separate tax return.

Where should I form the entity?

Many of our customers incorporate or form their LLC in the state where their company conducts the majority of its business. However, in deciding where to form a company, there are many factors to consider, such as the cost of formation, tax laws, and other laws governing the actions and liabilities of the LLC or corporation within each state. Another factor that our customers consider when forming a company in a given state is that the company may also have to qualify to do business in other states where it conducts business.

My insurance covers my liability on my vehicle. However, I use that vehicle not only for personal use but also in the conduct of my trucking business. Should I also purchase business insurance to cover my trucking business?

We find that many of our customers who use assets for both personal and business uses purchase and carry business insurance in addition to any personal insurance that they may have covering their liability with respect to the assets. For example, a personal insurance policy may not provide coverage relating to claims resulting from the use of the assets for business purposes. Our customers often conclude that personal insurance will not provide sufficient protection for even a small business and that separate insurance covering the operations of the business is necessary to protect the business and the assets owned or used in the operation of the business.

If I have business insurance, why should I worry about incorporating or forming an LLC to own and operate my business?

Even though we find that many of our customers purchase and carry business insurance to provide liability and other protection for their business, whether or not the business insurance provides coverage with regard to specific claims relating to the business will depend on a number of factors. Such factors include the event giving rise to the claim, the nature of the claim, and the terms and limits of the insurance coverage. An insurance policy will provide protection only against certain claims, and may not cover all of the losses incurred by the business. In addition, the policy holder may be liable for any judgment that exceeds the coverage included in the insurance policy.

In light of the variety of risks that a business owner may face and the limitations on many types of insurance, we find that many of our customers form an entity, such as a corporation or an LLC, to own and operate their business, in addition to purchasing and carrying business insurance. Many of our customers form a corporation or an LLC to own their business assets and operate their business in order to protect their other assets from claims that might result from their business. If the LLC or corporation is formed and managed correctly, customers can limit their potential liability if there is a claim or lawsuit relating to their business. If there is a claim against the LLC or corporation, then generally only the assets owned by the LLC or corporation, and not the business owner's personal assets, will be potentially subject to the claim. Thus, many of our customers form an entity, such as a corporation or an LLC to own and operate their business in addition to purchasing and carrying business insurance.

I own a taxi business with several vehicles. How does incorporating or forming a limited liability company to own and operate my business help me?

Many of our customers form a corporation or an LLC to own their business assets and operate their business in order to protect their other assets and property from claims that might result from their business. If the LLC or corporation is formed and managed correctly, customers can limit their potential liability if there is a claim or lawsuit relating to their business. If there is a claim against the LLC or corporation, then generally only the assets owned by the LLC or corporation, and not the business owner's personal assets, will be potentially subject to the claim. In other words, customers may be able to limit their potential liability if there is a claim or lawsuit relating to their business.

If I form an LLC, should I form a separate non-series LLC to own and operate each vehicle or should I form a series LLC?

If a business investor owns multiple business assets, he or she may be able to further protect his or her assets by forming a separate LLC to own and hold each separate asset. If the separate LLCs are properly formed and maintained, then theoretically only the assets owned by a specific LLC would be subject to claims or lawsuits against that LLC. However, there are costs and administrative burdens associated with forming, qualifying (if necessary), and properly maintaining multiple LLCs, which should be considered in deciding whether to form separate entities for each business asset. For example, each separate entity will have to obtain the necessary licenses to conduct business.

Another option to consider, if permitted under applicable law, is a series LLC, which is an umbrella entity consisting of one LLC with multiple "series" or "cells." Series LLCs may be of interest to individuals who have several large assets (such as multiple vehicles) for which they desire to maintain separate liability protection.

To best understand how an LLC and a series LLC differ, a typical non-series LLC (if properly formed and maintained) will generally protect its owner's personal assets from the LLC's business obligations. However, it will not protect one asset owned by the LLC from being used to satisfy a judgment relating to another LLC asset. Under a non-series LLC, all assets owned by the LLC are potentially subject to any claim or lawsuit against the LLC. For example, assume that a typical non-series LLC holds several assets. If a person is injured by one of the LLC's assets and sues and wins, then all of that LLC's assets -- even the other assets that it owns -- can be used to satisfy the judgment obtained against the non-series LLC. The LLC could potentially lose all of its assets based on a lawsuit or claim that is related to only one of its assets.

A properly formed and maintained series LLC will treat each created series as a separate entity, with its own rights and obligations. Theoretically, under a series LLC, if someone is injured by Asset #1 (which is an asset of Series #1) and sues the LLC and wins, then only the assets of Series #1 should be at risk with regard to the claim. Companies should consult the applicable state and federal laws and registration requirements to determine if it is necessary for each Series of a series LLC to separately register its vehicles or obtain licenses in the name of the Series.

The series LLC originated in Delaware, but the laws of some other states (such as Illinois and Oklahoma) also provide for the formation of a series LLC. The Company Corporation has extensive experience in setting up series LLCs in Delaware, Illinois or Oklahoma, and can help business owners properly form and maintain a series LLC.

My new trucking business involves transporting cargo from state to state. What should I be concerned about?

Depending on the laws of a particular state and depending upon the activities conducted in that state, a business entity, such as a corporation or an LLC, may have to register or qualify as a business entity to do business in a state other than the state in which the entity was formed. The entity is often referred to as a "foreign" entity in states other than the state in which it was formed. Generally, qualifying an entity to do business in a state other than its state of formation is similar to the formation process, and the entity may be required to pay filing fees and provide certain information and documentation to the state. If an entity is required to qualify to do business in a state but fails to do so, it may be subject to penalties.

In addition, a trucking business is generally required to have a registered agent (sometimes called a process agent) in each state in which it is authorized to operate and in each state traversed during such operations. (See www.fmcsa.dot.gov for additional information). In addition, a trucking business may be subject to various state and federal registration and licensing requirements.

The Company Corporation provides process agent services. For more information, please call 800-818-6082.

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