A sole proprietor running a small business may decide to re-structure his business holdings at some point to reduce the level of liabilities. In a limited liability company, personal assets are no longer subject to business liabilities and business assets can not be seized in the event of a personal bankruptcy. A personal vehicle used for business purposes can be transferred into the LLC with certain considerations.
Open a Registered LLC
- Open and maintain a registered LLC in the state you do primary business operations in. This doesn't need to be in the state you reside in, though you may need a registered agent in an outside state to represent you within the state. LLCs are filed with the secretary of state and have a filing fee that ranges between $100 and $800.
Contact Your Insurance Agent
- Call your insurance agent and discuss the insurance ramifications of transferring the car to the LLC. In many cases, the business costs will go up as insurance companies equate business usage with higher liabilities compared to personal usage. If the insurance premiums make transferring the car cost-prohibitive, you may prefer to keep the car in your personal property but have the LLC place a "friendly lien" on the title.
- A friendly lien is a contract that where the asset is given loan terms by the LLC to the owner with no payments required until demanded by the LLC. Friendly lien samples can be found through the Small Business Association, local Chamber of Commerce website or through online legal forms providers.
Contact Your Lender
- Contact the lender and get approval to move the car into the LLC if a loan balance exists. Obtain the proper paperwork from the lender and submit it for approval.
Prepare a Title Transfer Form
- Go to the department of motor vehicles where the car is registered and request a title transfer form. List the LLC's full legal name as the new owner. Sign the title request, having it notarized that you are the authorized signer for the private vehicle and the LLC.
Submit the Title Transfer
- Submit the title transfer to the DMV. Show proper proof of insurance and pay any transfer fee for the title change.
