Why create a Golf Cart rental business LLC
6 min read
Starting an LLC for Fenderly Golf Cart Hosts. Is it worth it? We will go over the pro's and con's and things to consider about forming a LLC for your Golf Cart rental business, so you will know what you are getting into.
Starting an LLC for your Golf Cart business. Is it worth it?
As a Fenderly host, you’re welcoming guests visiting you to rent your golf cart. Most of the time, you can have confidence in the people who rent your golf cart will care for it as it was their own. This is something that most guests understand since they are or have stayed at an AirBnB or VRBO. Thanks to Fenderly's solid rental agreements, signed damage waivers prior to booking along with reviews you can be confident your guests will take care of your golf cart.
However, as any golf cart rental dealership, vetran AirBnB or VRBO landlord knows an accident or misunderstanding will inevitably happen with your guest. These situations are rare, especially when renting a golf cart. We surveyed golf cart rental dealerships and those that have a fleet of 100 golf carts stated that in 3 years of renting golf carts to vacation goers less than 1% of rentals have had any issues. It makes sense, why rent something if its going to be a problem....its just not a good business model. By starting your own golf cart rental business it will add an additional layer of protection and help you sleep better at night. In addition to the tax benefits the goverment gives you for owning a business will allow you retain more profit through tax savings. Now who doesn't love paying less taxes?
We aren't accountants or lawyers and encourage all Fenderly hosts to find ways to protect themselves. We consider forming a LLC as a great first step since you will be making money on the assets in your business. This is especially true for Golf Cart owners who have grown their fleet into multiple golf carts. With more golf carts in your stable, you’ll generate more revenue, and with that you will also take on additional risk. Below I will outline the pro's, con's and things to consider about forming a LLC for your Golf Cart rental business, so you will know what you are getting into.
Key Advantages of a LLC:
The advantages of a LLC for golf cart rental hosting include personal liability protection, privacy, tax benefits and credibility.
Personal Liability Protection
The protection of your family's personal assets is one of the most important reasons to consider an LLC for a Golf Cart hosting business. This advantage applies to hosts who simply rent out their golf cart as well as those who even own properties they specifically intend to use for AirBnB or VRBO hosting. You can use one LLC for your entire Short-Term rental business or create multiple LLC's one LLC for each short-term rental and golf cart. It's up to you on how you want to structure your business.
Lets take an very extreme and hypothetical case. Let's assume that a Host decided to not have the Guest sign the Release of Liability Waiver form. I don't know why anyone would do that but for this example lets assume they went outside Fenderly's system. Assume that a guest is driving along obeying the local laws for low speed vehicles, then takes a sharp turn which breaks a wheel tie rod resulting in the golf cart tipping over and injuring themselves. If that guest decides to sue you for damages, your personal assets such as your home, car, bank accounts will all be at risk if you don't have a business or if your business is structured as a general partnership or even a sole proprietorship. On the other hand, if you followed Fenderly's procedures an had the Guest sign the Release of Liability Waiver and in addition you had an LLC for your Golf Cart rental business only the business assets in the LLC would be at risk, in this case the golf cart. All of this is dependent that you are following your business operating agreement and are in compliance with government regulations.
Privacy
This day in age, your personal information should be just that personal and private. As the owner of a golf cart listed on Fenderly, you may not want to disclose your home address or even your personal name. So if you own the golf cart in your personal name, guests can easily find your home address by searching public tax records which is not always ideal.
An LLC gives you an added layer of privacy because guests will find the LLC company name and registered address, instead of your personal home address when conducting research. This is another major advantage to form an LLC as a host.
Tax Benefits
The advantages of a Fenderly hosting business under a LLC includes tax benefits. LLC owners have two basic options for taxing their business, both of which can save money compared to operating an informal business.
The default option is to tax an LLC as a general partnership in the case of a multi-member LLC or a sole proprietorship for single-member LLCs. This taxation method means that the business itself doesn’t pay taxes. Instead, profits and losses pass through the LLC, and the owners pay taxes on their personal tax returns.
An LLC can also be taxed as an S corporation, which is most beneficial when you want to use the tax savings to expand your Fenderly business by buying more golf carts. We encourage anyone considering an LLC to contact a tax professional to review their options as well.
Creditability
An LLC structure can improve the credibility of a Fenderly hosting business to guests. An informal business like a sole proprietorship doesn’t have a unique business name as it typically operates under the owner’s personal name. Guests, even your contractors or other businesses will take you more seriously if your business has a formal structure in place like an LLC.
Keep in mind your LLC business name is the brand for your business which is essential for customer recognition and will be on every document. Finding the right name is tough so do some research online to see the name is already in use. After you choose a name or even a few names you'll be ready to begin the process of filing and creating your LLC along with the documents below with your lawyer or professional registered agency.
- Filing the Articles of Organization
- Designating a registered agent
- Creating an operating agreement
Disadvantages
The biggest disadvantages of an LLC are the additional cost and administrative overhead compared to a sole proprietorship. Specifically, calculating taxes becomes slightly more complex with an LLC. One of the most important things to remember is to keep personal finances separate from your LLC’s finances. Never mix business and personal income when you form an LLC.
Another option to consider is an S corporation this may have a more favorable taxation than an LLC if you have employees and other co-owners. This tax structure can reduce the owners’ self-employment tax by paying them a salary as if they were employees.
This strategy allows owners to only pay self-employment tax on the portion of the business’s income they receive as salary. They can then reinvest the company’s remaining profits back into the golf cart rental business without paying self-employment tax on it.
How to form an LLC in your state?
In most states, forming an LLC is fairly straightforward. First, you will need to determine who will be your registered agent. A registered agent can be an accountant, attorney or a professional registered agent service.
We prefer to use a registered agent service. Most Fenderly hosts will opt for a professional registered agent service as well, mainly because they’re cheaper than hiring your own attorney or accountant or even doing it yourself. Furthermore, this service won’t hinder expansion plans because most of these companies have offices in all 50 states. They also specialize in this field, so they’re likely to be highly knowledgeable about a registered agent’s responsibility and will be able to advise you on the best way to structure your LLC and take care of all the necessary paperwork for you. This might sound expensive but we've found it very reasonable.
We also prefer to use a registered agent service some of our favorites.
LegalZoom
It is hard to beat LegalZoom. They have been in the industry for years and have a 100% money back guarantee. If you are not satisfied with their service you can obtain a refund. They have helped over 2 Million businesses and have over 55k+ happy customers reviews.
Nolo
Nolo is a great place to get started. They have been creating LLC's for over 48 years and their prices are very reasonable. They have over 1,000+ Google reviews and their customer service is top notch.
Conclusion
While it may not be legally required to form an LLC for your golf cart rental or even AirBnB/VRBO business, we strongly recommend it due to the potential liability. A risk of a lawsuit could endanger your family's personal assets and is just too great to ignore. The cost is minimal for this protection and you also get to enjoy the tax benefits of being a business owner and establishing your brand.
Own a Golf Cart? List it on Fenderly and start earning.
As a Fenderly host, you’re welcoming guests visiting you to rent your golf cart. Most of the time, you can have confidence in the people who rent your golf cart will care for it as it was their own. This is something that most guests understand since they are or have stayed at an AirBnB or VRBO. Thanks to Fenderly's solid rental agreements, signed damage waivers prior to booking along with reviews you can be confident your guests will take care of your golf cart.
However, as any golf cart rental dealership, vetran AirBnB or VRBO landlord knows an accident or misunderstanding will inevitably happen with your guest. These situations are rare, especially when renting a golf cart. We surveyed golf cart rental dealerships and those that have a fleet of 100 golf carts stated that in 3 years of renting golf carts to vacation goers less than 1% of rentals have had any issues. It makes sense, why rent something if its going to be a problem....its just not a good business model. By starting your own golf cart rental business it will add an additional layer of protection and help you sleep better at night. In addition to the tax benefits the goverment gives you for owning a business will allow you retain more profit through tax savings. Now who doesn't love paying less taxes?
We aren't accountants or lawyers and encourage all Fenderly hosts to find ways to protect themselves. We consider forming a LLC as a great first step since you will be making money on the assets in your business. This is especially true for Golf Cart owners who have grown their fleet into multiple golf carts. With more golf carts in your stable, you’ll generate more revenue, and with that you will also take on additional risk. Below I will outline the pro's, con's and things to consider about forming a LLC for your Golf Cart rental business, so you will know what you are getting into.
Key Advantages of a LLC:
The advantages of a LLC for golf cart rental hosting include personal liability protection, privacy, tax benefits and credibility.
Personal Liability Protection
The protection of your family's personal assets is one of the most important reasons to consider an LLC for a Golf Cart hosting business. This advantage applies to hosts who simply rent out their golf cart as well as those who even own properties they specifically intend to use for AirBnB or VRBO hosting. You can use one LLC for your entire Short-Term rental business or create multiple LLC's one LLC for each short-term rental and golf cart. It's up to you on how you want to structure your business.
Lets take an very extreme and hypothetical case. Let's assume that a Host decided to not have the Guest sign the Release of Liability Waiver form. I don't know why anyone would do that but for this example lets assume they went outside Fenderly's system. Assume that a guest is driving along obeying the local laws for low speed vehicles, then takes a sharp turn which breaks a wheel tie rod resulting in the golf cart tipping over and injuring themselves. If that guest decides to sue you for damages, your personal assets such as your home, car, bank accounts will all be at risk if you don't have a business or if your business is structured as a general partnership or even a sole proprietorship. On the other hand, if you followed Fenderly's procedures an had the Guest sign the Release of Liability Waiver and in addition you had an LLC for your Golf Cart rental business only the business assets in the LLC would be at risk, in this case the golf cart. All of this is dependent that you are following your business operating agreement and are in compliance with government regulations.
Privacy
This day in age, your personal information should be just that personal and private. As the owner of a golf cart listed on Fenderly, you may not want to disclose your home address or even your personal name. So if you own the golf cart in your personal name, guests can easily find your home address by searching public tax records which is not always ideal.
An LLC gives you an added layer of privacy because guests will find the LLC company name and registered address, instead of your personal home address when conducting research. This is another major advantage to form an LLC as a host.
Tax Benefits
The advantages of a Fenderly hosting business under a LLC includes tax benefits. LLC owners have two basic options for taxing their business, both of which can save money compared to operating an informal business.
The default option is to tax an LLC as a general partnership in the case of a multi-member LLC or a sole proprietorship for single-member LLCs. This taxation method means that the business itself doesn’t pay taxes. Instead, profits and losses pass through the LLC, and the owners pay taxes on their personal tax returns.
An LLC can also be taxed as an S corporation, which is most beneficial when you want to use the tax savings to expand your Fenderly business by buying more golf carts. We encourage anyone considering an LLC to contact a tax professional to review their options as well.
Creditability
An LLC structure can improve the credibility of a Fenderly hosting business to guests. An informal business like a sole proprietorship doesn’t have a unique business name as it typically operates under the owner’s personal name. Guests, even your contractors or other businesses will take you more seriously if your business has a formal structure in place like an LLC.
Keep in mind your LLC business name is the brand for your business which is essential for customer recognition and will be on every document. Finding the right name is tough so do some research online to see the name is already in use. After you choose a name or even a few names you'll be ready to begin the process of filing and creating your LLC along with the documents below with your lawyer or professional registered agency.
- Filing the Articles of Organization
- Designating a registered agent
- Creating an operating agreement
Disadvantages
The biggest disadvantages of an LLC are the additional cost and administrative overhead compared to a sole proprietorship. Specifically, calculating taxes becomes slightly more complex with an LLC. One of the most important things to remember is to keep personal finances separate from your LLC’s finances. Never mix business and personal income when you form an LLC.
Another option to consider is an S corporation this may have a more favorable taxation than an LLC if you have employees and other co-owners. This tax structure can reduce the owners’ self-employment tax by paying them a salary as if they were employees.
This strategy allows owners to only pay self-employment tax on the portion of the business’s income they receive as salary. They can then reinvest the company’s remaining profits back into the golf cart rental business without paying self-employment tax on it.
How to form an LLC in your state?
In most states, forming an LLC is fairly straightforward. First, you will need to determine who will be your registered agent. A registered agent can be an accountant, attorney or a professional registered agent service.
We prefer to use a registered agent service. Most Fenderly hosts will opt for a professional registered agent service as well, mainly because they’re cheaper than hiring your own attorney or accountant or even doing it yourself. Furthermore, this service won’t hinder expansion plans because most of these companies have offices in all 50 states. They also specialize in this field, so they’re likely to be highly knowledgeable about a registered agent’s responsibility and will be able to advise you on the best way to structure your LLC and take care of all the necessary paperwork for you. This might sound expensive but we've found it very reasonable.
We also prefer to use a registered agent service some of our favorites.
LegalZoom
It is hard to beat LegalZoom. They have been in the industry for years and have a 100% money back guarantee. If you are not satisfied with their service you can obtain a refund. They have helped over 2 Million businesses and have over 55k+ happy customers reviews.
Nolo
Nolo is a great place to get started. They have been creating LLC's for over 48 years and their prices are very reasonable. They have over 1,000+ Google reviews and their customer service is top notch.
Conclusion
While it may not be legally required to form an LLC for your golf cart rental or even AirBnB/VRBO business, we strongly recommend it due to the potential liability. A risk of a lawsuit could endanger your family's personal assets and is just too great to ignore. The cost is minimal for this protection and you also get to enjoy the tax benefits of being a business owner and establishing your brand.
Own a Golf Cart? List it on Fenderly and start earning.
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