Article provided by ZenBusiness
Every RV owner loves the freedom to hop in their home-away-from-home and ride off to their destination. However, paying the costs of financing, maintenance, storage, and seasonal preparations can be costly.
Is there a way to recoup the costs of RV ownership?
As many savvy individuals have discovered, renting out an RV can be an easy stream of extra income. It helps recoup some of the ownership costs, while still maintaining the perks of being an RV owner.
The truth is, very few people use their RVs in a way that doesn’t allow at least a week or two of notice before taking a trip, so scheduling isn’t typically an issue. Even more enticing? There can be tax deductions and other benefits associated with renting out your RV when you don’t have an excursion planned.
To get the ball rolling, your checklist is relatively simple:
- Attain the RV of your dreams (if you haven’t already)
- Form an LLC
- Join RVshare
The first step is up to you. The options are endless, and it seems like the diesel-vs-gas argument will simply never be settled. We’ll go ahead and skip to the second step.
What do RV rentals and LLCs have to do with each other?
A limited liability company, or LLC, is a business entity that legally separates your personal assets/income/expenses from your business assets/income/expenses, and brings with it two key benefits: tax breaks and asset protection.
If you’re still paying off your RV, forming an LLC in order to rent out your vehicle is a great way to maximize the amount of money you’re able to keep in your pocket. This means you’ll be able to potentially pay off your vehicle sooner rather than later.
How can I earn a tax break by renting out my RV?
First of all, the IRS often allows business owners to deduct up to $5,000 in startup costs in the tax year that the business is opened. As an RV rental owner, you’re something of a landlord on wheels. That makes you eligible to form your LLC and claim these startup expenses.
From there, the money you make renting out your RV is considered taxable income. Consequently, you are required to pay taxes on that income. However, as part of an LLC, you have the option to classify this income as business income, and your tax professional may be able to claim certain benefits that help mitigate the tax bill you’re responsible for paying.
LLCs also have the advantage of income distribution, meaning RV owners can easily use funds from their RV rental business bank account to pay for vehicle repairs and regular upkeep costs.
To sweeten the deal, LLC owners also have the option of opening up a business credit card that can be used to build credit and designate business-specific spending toward RV repairs and upgrades. As a result, you’ll also benefit from that upkeep every time you use your RV for personal travel.
Additionally, by using a business bank account to keep your personal assets separate from your LLC income, you’ll have an easier time filing your taxes. This is because you’ll already have separate accounts representing your personal assets and your business’s expenses.
How does an LLC protect my assets?
In addition to insurance, an LLC better safeguards your personal assets in the event another individual seeks damages against you. Most often, this happens with a lawsuit being filed. Without an LLC, your personal assets, such as your checking and savings accounts (and even your home), may be fair game if you’re successfully sued.
Think of your LLC status as a barrier that helps better protect your personal assets in the event that a lawsuit is filed against you and your LLC. One common misconception is that insurance will cover these unfortunate events. Carrying insurance is still required, but it may not cover all costs associated with a lawsuit. If your insurance can’t cover all costs, your personal assets may be at risk.
How can I form an LLC?
ZenBusiness can help RV owners protect both their recreational investment and their personal assets at the same time. Requirements and costs to form LLCs vary from state to state, but in all instances Articles of Organization (or that state’s equivalent) must be filed with the state in order to obtain LLC status.
Fortunately, ZenBusiness makes it simple to find out what you need to do to form an LLC wherever you’re located. As an RVshare member, you already have peace of mind knowing your financial transactions and private information are protected by the platform, but by securing LLC status to rent out your RV, you’re able to maximize both your tax benefits and your overall return on investment.
RVshare members also receive an exclusive discount on ZenBusiness LLC formation services, so there’s never been a better time to form your LLC.
RVshare and ZenBusiness: The Perfect Pairing When It Comes to RV Rentals
When it comes to learning more about renting out your RV, the experts at RVshare already offer a ton of useful information for RV owners. And now that RVshare and ZenBusiness have teamed up, you can also learn everything you need to know about establishing an LLC. To claim your special discount, visit ZenBusiness for more details about forming your LLC.