Do Rideshare Drivers Need To Get Business Licenses? (2022)

In this Throwback Tuesday Classic, RSG contributor Paula Gibbins answers a question many drivers are worried about: do we need business licenses to drive with Uber and Lyft? Many LA Uber drivers recently received a notice from Uber stating they need a business license to operate in the city, which came as a surprise to many drivers. This isn’t the first time this has happened to rideshare drivers. Here’s what all drivers should know about business licenses and rideshare driving.

Update: Since SB 182 passed in California, California drivers now only need one business license to work statewide. Drivers can obtain this business license in the city where they live.

The Case Of San Francisco

The actual language of the letter drivers in SF received was “if you drive on San Francisco streets seven days or more a year and work as an independent contractor rather than an employee of your TNC, you are required to obtain a Business Registration Certificate.” It gave me 30 days to either register for “both the current registration period and the 2016-2017 registration period.”

Or I could to go to a different website and declare I do not need to register. Now, it gives you 15 days from starting business to submit your registration.

For those of you who are interested, here is the full letter that drivers received from the SF Office of the Treasurer & Tax Collector, along with the response that Uber and Lyft gave to drivers:

(Video) Do Uber & Lyft Drivers Have to Get a Business License?

Related Reading: SF to Require Lyft, Uber Drivers to Obtain Business Licenses

Official Letter From the City of San Francisco

As you can see, there isn’t much information in the city’sletter. It does not even tell drivers how much the registration fee is. Uber quickly sent drivers an email which provided little information, stating “we will be in touch when we have more information.” Both companies state they are against the new requirementand will continue to fight it.

Uber’s Email to Drivers About the New Requirement

I think it’s important to stress that both Uber and Lyft have not changed their policy on business license requirements. They do not require a business license to get started or continue driving in San Francisco, or any other Bay Area city. That means we can be sure there are thousands of drivers out here who are not complying with this city requirement. RSG contributor and SF driver Christian Perea told the SF Chronicle “most drivers will ignore the letters until they start getting ticketed.” I agree with him.

(Video) Do I Need Business Licenses To Do Rideshare In Las Vegas? #uberdriver #lyftdriver #vegasrideshare

These letters were sent out shortly after the announcement oftwo settlements, which, if approved, will maintain drivers’ current status as independent contractors in California. It seems to me that SF is trying to use the classification of drivers as independent contractors against Uber and Lyft. The spokeswoman for the SF treasury said“we don’t intend to treat these (ride-hailing) businesses any differently than we’ve been treating all other businesses in San Francisco.”

They are using the fact that Uber and Lyft insist drivers are independent contractors, not employees, against the companies. As if the city is saying “oh, you insistall your drivers are independent contractors? Fine, they all have to pay for individual business licenses then.” The intention may have been to punish Uber and Lyft for not playing by the rules, butdrivers are the ones who are actually hurt by this requirement sincethey are the ones whohave to pay thefees, and it is their privacy that isat risk.

Do Rideshare Drivers Need To Get Business Licenses? (5)Related article:Essential gear every rideshare driver should have

California Business Licenses

Uber has a section on their website dedicated to questions about this licensing requirement. They stress that not all cities require it, so it’s up to you to learn what your city deems necessary.

Do Rideshare Drivers Need To Get Business Licenses? (6)

Below this statement is a section for FAQs pertaining to permitting. This section links the reader to the requirements as laid out by Los Angeles, San Francisco, Oakland and San Diego. Keep in mind, the cost also varies by city and the license is only required if you drive more than 30 days in the previous calendar year. You also only need one license even if you drive for both Uber and Lyft.

Here’s how SB-182 phrases it: “It is the intent of the Legislature to limit any requirement for a business license imposed by a local jurisdiction on a participating driver for a transportation network company to a single business license, regardless of the number of local jurisdictions in which the participating driver operates.”

Lyft has a more extensive list of cities requiring licenses, so again, be sure to check your local laws so you know you’re covered properly.

The Issue Of Privacy

There are two points I’d like to make about privacy. First, how did the City of San Francisco obtain the personal information of drivers operating in San Francisco? Lyft has said it released the tax informationon its drivers in 2014 and 2015 because it was legally required to do so. While Uber told drivers in San Francisco they don’t know how the city obtained our names and addresses (see image above), we can assume that Uber was required to also provide the information to the city, just like Lyft. The city has statedthat it requested this information and it took almost two years of enforcement to get it.

(Video) California Law Already Requires Business Licenses For Rideshare Drivers

On to my second point: registering as a business in San Francisco requires the owner to put their physical address in a publicly available directory. This directory presents some security risks. Insurance companies could use this information to figure out which drivers haven’t disclosed their rideshare activity and drop those drivers from their plans (not the worst thing, though, since you should probably have rideshare insurance).

There are also some people who dislike Uber and could use this information maliciously. Making a driver’s personal information publicly available puts them at risk of harassment or even property damage by disgruntled taxi drivers or maybe even an angry passenger. As you can tell, I am against my information being publicly available.

Fees, Fees And More Fees

Many of you may be wondering: how much is an SF business license anyway? Well, it’s an annual fee of $91. However, drivers are also getting penalized for past years registration, plus late fees, plus next year’s fee. There is a late filling fee of up to $100, a late payment penalty of up to 40%, interest of 1% per month, and a $55 administration fee:

Do Rideshare Drivers Need To Get Business Licenses? (7)

SF Fees for Late Registration

One driver wrote into TheRideshareGuy.com reported to the city that he began driving on January 1st, 2016 and he was required to pay $240. And those fees would have grown had he waited.

However, the deadline for drivers receiving this notice has actually come and gone. So, what happens to the drivers who ignored it? This remains to be seen. It is possible thatSF police will start pulling drivers over and ticketing those who don’t display abusiness license, but that hasn’t happened yet, and it would be difficult to enforce with tens of thousands of drivers on the street.

Another important point is from a strictly legal standpoint, since I’d have to register my business inevery city I drive in: that means San Francisco, Oakland, Berkeley, San Mateo, Palo Alto,San Jose, and… you get the idea. This business license requirement just doesn’t make much sense for rideshare drivers since we operate in multiple cities.

(Video) Do I need A LLC As An UBER Driver? | LAWYER Explains

One possible solution could be modeled after agreements Uber and Lyft has worked out with airports. At San Francisco International Airport (SFO), drivers must display a placard that Uber and Lyft gave us. This lets airport security know we are here legally and have paid our dues. The added cost of this placard is passed onto the riders. A feeof $3.85 is charged to all pick ups and drop offs at SFO. This way SFO gets paid and the cost is not an undue burden to drivers.

I do think cities should be collecting taxes from local businesses, and a model like this could charge each rider a small amount that goes directly to the city. If the city wants $91 per driver, they could charge riders less than $0.50 per ride to come up with that money. If SF received 45 cents per ride, it would only take 200 rides (approximately 10-14 days in SF) for the city to get it’s $91. The city wants anyone who works over 7 days in the city a year to pay for a business license. A model likethis could guarantee the city is getting every penny without penalizing drivers or adding much cost for riders.

Bottom line: Do rideshare drivers need to obtain a business license? Officially, yes. Can you get by without it? Probably, depending on your city or state. If you are in San Francisco,here are useful instructions Lyft created to register.

In addition, here are some cities’ and states’ specific instructions on business licenses. You can see if your city has rules on business licenses by typing in “[your city] + Uber business license” into a search engine.

So, what do you guys think? Do you have a business license to drive for Uber/Lyft?

-Paula @ RSG


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FAQs

Is Uber Driving considered a business? ›

Working for Uber or Lyft is about more than just driving. As a self-employed worker, you are treated as a business by the IRS. It's important to understand the tax implications of your side (or full-time) gig.

Is rideshare qualified business income? ›

The Qualified Business Income (QBI) deduction reduces your qualified taxable rideshare income by up to 20%. But like every tax rule, there are exceptions. For one, you can put the QBI deduction in your rearview mirror if you or your spouse have a second job that pulls in some significant $$$.

Do Uber drivers need a business license in Los Angeles? ›

If you reside within the City of Los Angeles, and are a driver for a rideshare services, and drove for more than 30 days the prior calendar year then you would need to register with the City.

Do Uber drivers need a business license in San Francisco? ›

and other transportation network companies won't be required to obtain a business registration certificate from the city of San Francisco to conduct rides there, after a state judge on Monday upheld a California law mandating that such drivers need only obtain one license to operate in the entire state.

What happens if you don't report Uber income? ›

1099-K and 1099-Misc are reported to the IRS. If you don't report, the IRS will send you an underrpoerter notice (CP2000). If you ignore it, you will receive a statutory notice of deficiency. If you ignore that, they will file a return for you (Substitute for Return, or SFR) and you will have an assessment.

Can I write off my car payment if I drive for Uber? ›

As a self-employed worker, tax deductions for business expenses are the best way to prepare an accurate tax return and lower your taxes. You can deduct common driving expenses, including fees and tolls that Uber and Lyft take out of your pay. Your biggest tax deductions will be costs related to your car.

Is Rideshare considered self-employed? ›

Uber drivers and Lyft drivers are not considered “employees” by the IRS. Instead, they're classified as independent contractors, meaning the rideshare services don't withhold taxes from their payments. Independent contractors also receive a 1099 at year-end rather than a W-2.

How much money should I set aside for taxes Uber? ›

As an independent contractor, you should set aside enough to cover the 15.3% self-employment tax and at minimum 10% federal income tax.

How often do Uber drivers have to file taxes? ›

Every year, Uber will file IRS Form 1099-MISC and/or 1099-K with the IRS and your state tax agency reporting how much it paid you. This applies if you were paid over $600 during the year.

Do I need a business license for Lyft in California? ›

Business license. If you drove with Lyft for more than 30 days in the last fiscal year, the city or county where you live may require you to obtain a business license.

Do you need a business license to drive for Uber in California? ›

Here's what all drivers should know about business licenses and rideshare driving. Update: Since SB 182 passed in California, California drivers now only need one business license to work statewide. Drivers can obtain this business license in the city where they live.

Do you need a full license for Uber? ›

In order to drive on the Uber app, you'll need a private hire licence from a council that Uber is licensed by. If you don't have one, that's OK - we'll help you get started with a personalised Ignition appointment where we offer advice and support after you sign up.

Who needs a business license in California? ›

Any business owner must obtain a general business license in the city in which your business is located. Some California cities refer to a business license as a business tax certificate. Businesses that are operated in unincorporated sections of the state must obtain their license or tax certificate on a county basis.

Who needs an LA city business license? ›

All individuals or entities conducting business activities within the City of Los Angeles are required to apply for and obtain a Business Tax Registration Certificate with the City of Los Angeles, Office of Finance.

Does LA County require a business license? ›

Failure to obtain a Business License is a violation of Title 7 of the County of Los Angeles Code and a misdemeanor.

Does the IRS know about Uber income? ›

You will most likely report the income from your 1099s on Schedule C, Profit or Loss from Business. Since Uber reports this income information directly to the IRS, you don't have to include the actual 1099 forms with your tax return. Schedule C can also be used to list your business-related expenses.

Do I need to report Uber income if I didn't get a 1099? ›

All rideshare drivers must report their income to the IRS whether or not they receive a 1099-K or 1099-MISC from the companies they are working for.

How much can I make and not report? ›

Depending on your age, filing status, and dependents, for the 2022 tax year, the gross income threshold for filing taxes is between $12,550 and $28,500. If you have self-employment income, you're required to report your income and file taxes if you make $400 or more.

What deductions can I claim without receipts? ›

But consider the following when filing your tax form next time: Membership or Union Fees: Itemized deductions like these are in your pay-as-you-go summary. As long as you have the document, you usually don't need a receipt.
...
Claimable items include:
  • Maintenance.
  • Loan interest.
  • Registration.
  • Insurance.
  • Fuel.
Dec 6, 2021

What can rideshare drivers write off? ›

Deduct the actual expenses of operating the vehicle for business, including gas, oil, repairs, insurance, maintenance and depreciation or lease payments. Take the standard IRS mileage deduction. For the first half of 2022 the rate is 58.5 cents per mile and increases to 62.5 cents per mile for the last half of 2022.

What if someone pukes in my car Uber? ›

To request a cleaning fee, please submit a photo and brief description of the mess. In some cases, you may also need to provide an “after” photo showing that the mess was cleaned along with a photo of the cleaning receipt showing the date and cost of service.

What type of business is Uber classified as? ›

Uber
Headquarters in San Francisco (2020)
IndustryTransportation Mobility as a service
FoundedMarch 2009
FoundersGarrett Camp Travis Kalanick
HeadquartersSan Francisco, California, U.S.
17 more rows

What business category is Uber? ›

If you drive for a rideshare company like Uber or Lyft, you'll use the same business activity code as taxi and limousine drivers. The code is 485300. For delivery drivers such as Doordash and Postmates the code is 492000 -- couriers and messengers.

What is the difference between Uber and Uber business? ›

Differences Between the Two

Also, the Uber company account allows employees to integrate their personal Uber apps to the company account to request rides. Uber for Business is specifically meant for corporate travel management.

What is considered business driving? ›

The IRS considers business mileage as any driving done solely for business purposes. For example, driving out of the office to meet clients, get supplies, or run other business errands. Note that commuting between your home and your place of work is not considered business mileage.

What is the biggest challenge in Uber's business model? ›

Perhaps the biggest hurdle is Uber's failure to mandate that their drivers obtain the same license types as professional taxi drivers even though Uber drivers offer many of the same services as professionally licensed taxi drivers.

How do I file my taxes as an Uber driver? ›

Using Schedule C. You will most likely report the income from your 1099s on Schedule C, Profit or Loss from Business. Since Uber reports this income information directly to the IRS, you don't have to include the actual 1099 forms with your tax return. Schedule C can also be used to list your business-related expenses.

Why is Uber not profitable? ›

Uber classifies its driver payments as a "cost of revenue" in the company's financial statements. Uber spends 46% of its total revenue each year on these costs, which causes Uber's business losses.

Does Uber report to IRS? ›

Uber income reporting

Uber sends Form 1099-K to drivers who earn more than $20,000 in rides and give at least 200 rides during the calendar year. If you are a resident of Vermont, Virginia, or Massachusetts, you will receive Form-1099-K if you earn at least $600 in rides.

What is the business code for delivery drivers? ›

NAICS Code: 492110 Couriers and Express Delivery Services | NAICS Association.

How much does Uber deduct from drivers? ›

More than 25% The amount that Uber says it charges their drivers is 25%, but it actually takes a little more than that from their earnings. This is all due to the fact that some additional fees are taken by rideshare companies, resulting in a higher percentage for the cut.

Who gets more business Uber or Lyft? ›

Research firm Statista notes that Uber has significantly higher market share, which means you might have more driving opportunities than with Lyft. Both companies provide discounts on auto-related expenses and offer perks for drivers. Uber and Lyft also have similar payment policies.

How do I start a rideshare business? ›

8 Actionable steps to start a rideshare business in 2022
  1. 🔍 Find your rideshare business niche. ...
  2. 📈 Do market and competitive research. ...
  3. 💡 Validate your business idea. ...
  4. ⚖️ Check the online business laws & regulations. ...
  5. 🏭 Register your business & get all the permits. ...
  6. 💰Determine how to monetize your business. ...
  7. 📱 Create a rideshare app.
Feb 10, 2022

Which is a better business Uber or Lyft? ›

Lyft and Uber drivers earn approximately the same average per month, but the tips and earnings per trip are higher for Lyft. Lyft drivers have the opportunity to earn a much larger amount of tips, while Uber just recently introduced in-app tipping features for passengers.

Can I drive my personal car for business? ›

If you use your own car or van for business travel, there is the statutory system of tax-free approved mileage allowances available. The maximum amount per business mile is known as the approved mileage allowance payment (AMAP). Your employer can pay or reimburse you up to these amounts on a tax- and NIC-free basis.

What is the difference between business and commuting miles? ›

Commuting miles are the amount of mileage that an employee drives to and from work. In comparison, business miles involve the mileage that employees drive to different work locations throughout a workday.

Can I use my private car for business? ›

Section 66 (1) of the Motor Vehicle Act 1998 states: No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a ...

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