Best Car Insurance For Young Drivers

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Your Questions About New Driver Car Insurance Advice

June 9, 2013

Nancy asks…

Many questions on starting a delivery business!?

So my wife and I are looking to start a delivery business. We would deliver anything from cigarettes, groceries, carryout from restaurants…basically anything you can think of. We are planning to work from home and maybe eventually rent a shop out as an HQ. We plan to hire friends as delivery drivers if and when needed…we aren’t sure how to set up employee payment. I’m going to address 1 matter at a time, below:

Employee payment:

Since we, including employees, would all be working from home I can’t imagine hourly wages working, all I can imagine working is having each employee being paid a percentage of each delivery fee along with tips. So say…the delivery fee for having a few items from a local convenience store picked up and delivered would be 6 dollars (prices not yet set), the employee would earn about 2/3rds of the delivery fee, so 4 dollars plus tip (the 1/3rd would go to the owners). Would this be the most efficient way to pay them? The population of this city is around 95,000 and as each employee would be operating from home we aren’t sure if we should split the deliveries up by region, giving each delivery to whoever is closest to said destination or if we should split each delivery up by turn taking. Any advice would be great!

How to fill out EIN for this type of business?

I briefly looked over the online EIN application on IRS.gov…I wasn’t sure if I should register the business as a partnership, sole proprietorship, or corporation..etc. I also wasn’t sure what type of business this would be classified as? Will making a mistake on this application cause any problems in the future?

Most efficient path towards less taxes?

Will we pay more tax money if I register this business in a partnership with my wife or if I register it with myself as the sole proprietor? Will the tax costs change if I upgrade from a DBA to an LLC or some other form of a corporation?

Should I start off DBA then go LLC or stay DBA/LLC from the get go?

I read somewhere that if I’ve got a small business just starting out then I’d want to start off with an LLC, I’ve also read that if I don’t have many assets (which I don’t) that I could just keep my business as DBA. What would you do? Are there any merits to each business model that I should pay special attention to? The only merit to incorporating that I’m aware of is that it removes liability from the owners. I’m not sure how stock shares work or when/if they would matter.

Electronic contracts?

As any customer could easily place orders asking for a ton of expensive things and bail out before refunding us of the costs for their items, I was wondering if we could have some kind of electronic contract on our website/facebook page? For instance, i’d like to ensure that if we purchase and deliver an item for a client that he will be responsible for returning the item/s him/herself (I mean, you can’t just make someone dish out time and money for you and change your mind and make them take responsibility for your irresponsibility.). I’d also like to be able to bill a customer if they choose to purchase something with cash and then are unable to pay because they never had the money.

Electronic contract over email or facebook?

I’ve found that you can set up a shop on facebook. For starts, if possible, I’d like for customers to request our service on a facebook business page. It would be more easily accessed and more easily advertised through likes and sharing of it’s usage…etc. If I can use this, do you think it would be possible to hold customers liable to a service agreement over facebook?

Employee car insurance?

What will I need to do about this?

Advertisement?

I plan on printing out some business cards and flyers. Given this city’s population of 95,000, how many flyers would be enough for starting out? We plan to hang them on doors, put them up for viewing in public areas..etc As we currently only have 1 car and both already work as pizza delivery drivers we will need to quit our jobs before starting this business…I want to make sure I can get things running as quick as possible, or at the very least, be profitable enough to survive on. Advice on advertising would be great! Thanks

Will I need any certificates or licenses?

Last, I’d like to know your thoughts on this business idea? I figure, if someone will pay a restaurant to deliver food to them, why wouldn’t they do the same for anything else?

Administrator answers:

I would say opening up an errand site like this will be similar to something like task rabbit, which is already getting heat from many consumer groups and articles for the way they treat their rabbits.

As far as taxes go, it’s always better to go and get incorporated, once incorporated you will be able to deduct many expenses from your gross income, so your working from home, you can put a percentage of your rent as business expense, driving to deliver some food, you can use a percentage of your gas receipt, car maintenance, etc.

To get people not to bail out you have a reward system, either they pay a downpayment before you start the deliver or they register their credit/ debit card with your payment processor that way the billing is automatic and helps prevent fraud. Also you can have them sign up to be a member, basically like costco or BJ wholesale where they agree to be contractually liable for any charges that they incur.

For employee insurance you don’t actually need any. If they are contract employees that get paid a percentage of the delivery fee then there would be no need to have insurance as they are not permanent employees just contract workers.

You shouldn’t need any licenses or certificates.

Honestly this sounds like a lot of trouble for something that has too many moving parts, all of which need to be in perfect harmony for you to hopefully make a profit. Also any mistakes made on the part of the restaurant will end up in your hands since you are the delivery person, that’s another layer of complication that could become a major headache.

Thomas asks…

What to do when the at fault party’s auto insurance company is dragging their feet?

A week ago I was in an accident. The guy ran a red light and hit me. His car had minor damage, mine had to be towed and I havn’t seen it since. His insurance (state farm) says he will not answer his phone and until they speak to him they can do nothing. My insurance (geico) says the only thing they can do for me is to file it against my insurance, pay my $1000 deductible and hope one day to get it back. I have been without a car for a week now, been to the doctor twice, and can’t get a rental car much less mine fixed until they speak to their customer. I’ve never been in an accident or even filed any type of claim before but this just doesn’t seem right or fair. Any advice you can offer is appreciated.

Side note— my car is brand new with almost 10,000 miles on it.

Administrator answers:

It’s awesome when people don’t cooperate, isn’t it? ;) Go through your insurance, pay your deductible, and get your life back to normal. Let your insurance go after his to get reimbursed – let them deal with the hassle – whenever that happens – who knows if/when this guy is going to answer his phone. Sometimes your insurance company will waive your deductible in situations like this. Unfortunately, a lot of insurance companies have policies like this… When you’re on this end of it, it seems stupid, but you probably wouldn’t want your insurance to pay a claim someone made against you without at least confirming with you it actually happened, etc. They may also need other information to see if the particular car/driver etc would be covered under the policy.

Mark asks…

Loss recovered from insurance for a written off car?

I’ve had an accident in my car (not my fault) and the repairs to my car is going to cost more than the vehicle is worth, hence written off. I’ve spent over £1000 on the car to get it through its MOT a week before the accident. Is this a total loss or will the amount I get from the insurance cover this loss too since it was spent so soon prior?
I asked the insurance company if it is possible to buy the car back not only for the reasons of what I have spent on it but also because the car has low mileage and is extremely reliable. The company says ‘its not normally what they do’. I haven’t discussed this matter further with them yet.
Any advice from anyone who can help please?

Administrator answers:

You need to decide whether you can afford to get the car repaired as you have admitted it is going to cost more than the car is worth which is all the insurers will pay. You make no mention of the accident or whether another driver was involved. If so and they were insured you should get at least some of the money towards the repair costs from them. You also mentioned £1000 to get it through MOT. So really is it worth the aggravation or do you think you would be better off cutting your losses and taking payout and putting it towards another car.

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