Getting Started
If you’re considering a dealer license or any other business, you must decide whether to start it as a Sole Proprietorship, LLC, or Corporation.
It is important to make the right choice right now. Once you choose your business structure and start your dealership, you cannot change it without starting over and reapplying for a new license.
Create your LLC or Corporation Online
Use the form below to create your LLC for the same price as filing directly with the state but with the added advantage of expediting the process. All you need is the LLC/Corp and EIN number to start. While additional upgrades are available to suit your specific needs, they are optional. We aim to provide a streamlined, efficient service tailored to help you start your dealer license successfully.
Start your LLC or Corporation today for only $70 using the form below or click here to visit Inc Authority directly.
What Should I Choose?
A Sole Proprietorship (an individual person(s) or partners) is the easiest and least expensive option for individuals. However, it is also the most risky and restrictive as you become personally liable for your business. Dealer 101 does not recommend Sole Proprietorships.
An LLC (Limited Liability Company) is the most popular option for new dealers and small businesses. LLCs are simpler to organize and have flexible ownership and liability protection.
A Corporation is more complex and suited for business founders who plan to sell shares of their corporation or expand into other countries.
Anyone listed on the dealer’s LLC or Corporation can be included on the dealer license. This allows them to attend dealer-only auctions to purchase and operate dealer inventory vehicles without paying sales tax or DMV fees.
Sole Proprietorships vs LLCs vs. Corporations
| Criteria | Sole Proprietorship | LLC | Corporation |
|---|---|---|---|
| Ownership | Single owner | One or more Members | One or more Shareholder(s) |
| Liability | Personal liability | Limited liability protection | Limited liability protection |
| Income Taxation | Personal income tax | Pass-through taxation | Double taxation for “C” Corps. Pass-through taxation for “S” Corps. |
| Formation Complexity | Simple and inexpensive | Moderately complex | Most complex and expensive |
| Management Structure | Owner/Operator managed | Flexible management | Managed by a Board of Directors |
| Change People Listed on License? | Not allowed | Yes – Members can be added or removed. | Yes – Officers and Directors can be added or removed. |
| Access Dealer Auctions? | Only the owner | Any LLC Member | Any Officer or Director |
| Use Dealer Plates for Personal Use? | Only the owner | Any LLC Member | Any Officer or Director |
| Pay Sales Tax or DMV Fees? | Not required when vehicles are purchased for resale & driven with dealer plates | Not required when vehicles are purchased for resale & driven with dealer plates | Not required when vehicles are purchased for resale & driven with dealer plates |
Why Choose an LLC, not a Corporation?
Choosing between an LLC and a Corporation depends on your business needs. Both structures allow you to obtain a dealer license, but an LLC offers more flexibility and simplicity.
An LLC can have unlimited owners (known as Managers or Members), and a Board of Directors is not required.
A Corporation provides a more structured setup with the ability to issue stock. Corporations tend to be more formal, requiring documented meetings to change their operations.
Flexibility in Changing Managers & Members
You can add or remove members from your LLC and dealer license at any time. This flexibility is particularly beneficial if you expand your business and need to add new business partners as Members of the LLC.
To change or add directors to a Corporation, shareholders must host a meeting and vote on whether or not to make that change.
Protection and Convenience
LLCs and Corporations safeguard your personal assets by providing protection against business debts and liabilities, which a Sole Proprietorship does not.
Steps to Create your LLC or Corporation
1. Choose Your State and Business Structure
Select the state where your business will be based and decide whether to form an LLC or a corporation. This step is crucial, as the requirements and benefits can vary by state.
2. Pick a Name
Fill out the form with your chosen business name and details. This includes selecting a name that complies with your state’s LLC naming requirements and providing the necessary information. Most states allow you to use any address, such as your residence, accounts office, or business address.
3. Processing and Filing
Once you submit your information through our trusted partner, they will handle all the paperwork, ensuring everything is filed correctly and promptly. You’ll receive an email and physical copies of your LLC or Corporation documents in 15 days or less. Expedited processing is available if needed.
Once your company is officially established, you can proceed with various business activities, such as applying for your dealer license or starting other business ventures.
