LLC for RV Sales and Rentals

Do you need an LLC for an RV rental business?

If you’re considering starting an RV rental business, you might be wondering whether forming a limited liability company (LLC) is necessary or beneficial for your venture. In this guide, we’ll explore the key considerations and advantages of forming an LLC for your RV rental business. Forming an LLC for your RV rental business can offer several benefits that provide protection and structure to your operations. 

One of the primary advantages of forming an LLC is the limited liability protection it provides. By establishing your RV rental business as an LLC, you can separate your personal assets from the liabilities of your business.

Additionally, forming an LLC can enhance your professionalism and credibility in the eyes of customers, suppliers, and potential partners. Last but not least, an LLC has the tax benefit of flexibility, letting you pick the tax structure that’s most advantageous for your finances. 

In this guide, we’ll walk you through the process of creating a rental RV LLC so you can navigate the process with confidence. Whether you’re an experienced entrepreneur in the RV rental market or considering entering the industry for the first time, forming an LLC can be a crucial step toward building a successful and sustainable RV rental business.

Why Starting an LLC for an RV Sales and Rental Business is Important

Personal Asset Protection

The top reason to form an LLC for an RV sales or rental company is to gain access to the personal asset protection provided by this business structure. Whether you sell RVs from a retail lot or rent RVs to travelers for short-term vacations, you need the limited liability protections that an LLC can provide.

As an example, let’s say that you sell an RV that has some faulty parts. One of your new RV owners drives the RV off the lot, it breaks down on the highway, and an accident occurs. If you operate your RV rental business as a sole proprietorship or general partnership, your personal assets — like your house, car, or personal bank accounts — would be at risk if that customer decides to sue your business.

On the other hand, if you form an LLC for your RV sales or rental business, and you operate and maintain that LLC in a compliant fashion, the scope of your customer’s lawsuit will usually be limited to your business assets. In other words, your personal assets will be protected by the business structure you’ve chosen.

Taxation

Another perk to the LLC structure is the tax benefits this business type brings. An LLC actually provides its owners with a selection of options regarding how they want the business to be taxed, which can save you a considerable amount of money compared to simply operating as an informal business entity.

Sole Proprietorship/General Partnership

Your RV sales or rental LLC can be taxed as a sole proprietorship (for single-member LLCs) or general partnership (for multi-member LLCs), which is the default option. With this tax structure, your RV business itself doesn’t pay taxes, but rather the profits are passed through the business entity and your owners pay taxes on that money when they file their own personal taxes.

C Corporation

You can also choose for your RV business to be taxed as a C corporation, although this option isn’t very popular because it subjects your business to what’s known as double taxation — meaning that your profits are taxed first on the corporate level and again on the personal level when they’re distributed to your owners.

S Corporation

The other option is S corporation taxation. There are quite a few limitations to electing S corp taxation, but most U.S.-based RV sales or rental companies have no trouble meeting these requirements — your business cannot have more than 100 owners, they all must be either residents or citizens of the United States, and so on.

S corp taxation can help your RV business save money by reducing your self-employment tax burden. Instead of paying self-employment taxes (a 15.3% tax that includes the employer and employee portions of Medicare and Social Security) on all of your business income, you can pay yourself and your co-owners a reasonable salary for your roles and only pay self-employment tax on that portion of your income, while you can reinvest the rest of it into your business without paying this tax.

Compared to operating a sole proprietorship or general partnership as an RV seller or renter, the S corp taxation model can potentially save you quite a bit of cash that you can use to buy more RVs or make improvements to the ones you already have, rather than writing a big check to Uncle Sam.

Note: we highly recommend chatting with a tax professional if you’re not sure which structure is best for your unique business. That way you can be sure you’re picking the structure that works best.

Enhanced Credibility and Name Uniqueness

Finally, an LLC structure can enhance the credibility of your RV rental business venture. Informal business entities don’t have exclusive assumed business names and typically operate under the personal name(s) of their owner(s). For instance, if your name is Johnny Smith and you operate an RV sales or rental sole proprietorship, your company’s name is also “Johnny Smith,” which obviously isn’t a great name for a business.

In this scenario, you could register a DBA (doing business as) name to give your business the ability to operate under an assumed business name, but DBAs have no exclusivity regarding their naming rights in many states. This means that if another RV business wants to use your DBA name as their own, they’re not only allowed to do so, but they can actually register a formal business with that name, preventing you from continuing to use your own assumed name.

With an LLC, you not only have the rights to exclusive use of a business name, but you’ll also have either the phrase “limited liability company” or the letters “LLC” in that business name. This provides your business with a jolt of respectability because customers respect the professionalism displayed by an LLC. Also, the soon-to-be RV owner who shops with you will likely feel more comfortable writing checks to a business entity rather than to an individual.

What is an LLC?

LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses from rental fees and RV purchases in their personal returns — the LLC itself does not owe income taxes.

An LLC may also elect to be taxed like a corporation, although this is not a very common option for a small business’s taxable income.

There are similarities to corporations, too, especially when it comes to responsibilities for the business finances. In an LLC, the owners (known as members in an LLC) are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk in most cases. For more information see our LLC definition page.

How to Start an RV Sales and Rental LLC

The formation process for LLCs varies depending on which state you’re forming one in, but in general, the process has some universal steps that need to be taken no matter what state your business is located in. If you want a more thorough overview of all the steps required to form an LLC, check out our complete guide on the topic. The basic steps in the LLC formation process in any state are as follows:

1. Choose an LLC name

Coming up with the perfect name for your new LLC is an important step. You’ll need to choose a name that represents your company and describes what you do, and you’ll also have to make sure it isn’t already in use by checking your state’s business database.

2. Designate a registered agent

Your LLC’s registered agent (which can be an individual or a professional service) is responsible for receiving important document deliveries from the state — like service of process or annual report reminders — and forwarding them to you. The registered agent ensures that the state always has a reliable point of contact for your business.

3. File your formation documents with the state

The form used to create an LLC is usually called the Articles of Organization, although the name can vary (some states call it the Certificate of Formation or something similar). You’ll need to provide the state with some basic information about your business and its owners. In exchange, the state will formally create your LLC.

4. Acquire an EIN

The Employer Identification Number (EIN) is a federal tax ID number that essentially functions as a Social Security number for a business. The EIN allows your business to hire employees, pay taxes, apply for bank loans, and more. You can obtain an EIN from the Internal Revenue Service free of charge.

5. Create an LLC operating agreement

Most states don’t require operating agreements, but every LLC should have one regardless. This is an internal document that outlines several key operational aspects of your LLC. The value of the operating agreement is how it can help prevent ownership disputes down the line by clearly explaining how the LLC will be run.

6. File a BOI report

Beginning in 2024, LLCs are required to file a beneficial information report, or BOI report. You submit this report with the Financial Crimes Enforcement Network (FinCEN). When you file, you’ll be asked to provide information about your beneficial owners — the people who hold 25% or more of the LLC’s ownership interest, exert control over it, or benefit from it economically. 

By requiring this information, FinCEN hopes to deter some financial crimes like money laundering. It’s free to file the report online. 

7. Create a financial infrastructure

You will need a business bank account for your LLC, and you’ll probably want a business credit card for work-related expenses, as well. Having a dedicated business bank account helps ensure that you keep your business expenses and finances separate from your personal ones. It’s also a good idea to use accounting software like QuickBooks or even hire an accountant to handle your bookkeeping for your RV rental business.

8. Handle taxes, licenses, and permits

Depending on your state, you may need a general business license to operate your LLC in compliance with state requirements. Most states have extensive licensing requirements for RV dealer licensing. For instance, we took a look at the requirements to apply for an RV sales license in the state of Washington, which includes a nine-step process before you even apply for your license.

Don’t forget to check with your state to see if there are franchise or privilege taxes assessed on LLCs, and also see if your municipal or county government entities have any further licensing requirements.

9. Understand maintenance requirements (annual reports, franchise taxes, etc.)

Again, these requirements can vary by state, but most states require some sort of regular report to ensure that your LLC’s info is up to date in the state’s business database. Some states require reports each year, while others only require them biennially or not at all. No matter what your state requires, you’ll need to stay on top of it to keep your LLC in good standing.

Additional Resources for Starting an RV Sales and Rental Business

1. RV Industry Association (RVIA)

The RVIA is an organization dedicated to supporting and representing companies in the recreational vehicle market, including manufacturers, suppliers, dealers, aftermarket retailers, and associates. All told, the RV Industry Association represents “the companies and people who work together to build more than 98% of all RVs produced in the U.S.” They’re an excellent resource for anyone who makes a living in the RV world.

2. RV Business

RV Business is the leading website for RV industry-related news and updates. The site is updated daily, sometimes with dozens of fresh posts per day. They also maintain a handy industry events calendar, and their industry partners directory is an incredibly valuable resource for anyone who has a career in the RV industry.

3. Outdoor Hospitality Industry

If you’re in the RV rental business, the Outdoor Hospitality Industry, (formerly known as the National Association of RV Parks & Campgrounds) is an organization you’ll want to follow. They advocate for the legal rights of RV rental businesses, and they also provide education, support, events, and more.

4. The National RV Dealers Association

Those in the RV sales business will want to check out the National RV Dealers Association (RVDA). The RVDA is an organization by RV sellers for RV sellers, and they have a wealth of information for anyone in this market. They maintain news and resources for RV dealers, and they also provide info about events, publications, media opportunities, and RV advocacy.

5. Route 66 RV Network

The Route 66 RV Network is “North America’s largest network of independent RV dealers.” This group has nearly 150 RV dealers as members, and they also have access to more than 1,200 nationwide service bays operated by certified RV technicians. Joining the Route 66 RV Network is a great way to gain some extra exposure for your RV sales company.