Uber and Lyft are known as Transportation Network Companies (TNC)
As an Uber or Lyft driver, you need to become familiar with the term Transportation Network Company (TNC). You are a transportation network driver, and not the company. In the state of Washington, TNC connect with passengers only through an online dispatch application using a smartphone or tablet unlike traditional taxi cabs or for hire vehicles. Looking for information regarding TNC’s will help you stay updated with future information in your city and state.
As an Uber or Lyft driver, you are a self-employed independent contractor
As an Uber or Lyft driver, you are considered an independent contractor. This means that you are not an employee, but your own business owner. Therefore, you will be in charge of making sure you have the licensing and permitting processes in place and pay your own taxes. We will cover all these three topics in the next sections.
Are you required to form a Limited Liability Company as a Lyft or Uber driver?
No, you are not required to form a Limited Liability Company (LLC). However, as any business owner, you will need to choose an ownership structure that is best for your needs. The most common types of business structures for TNC drivers are Sole Proprietorship or a single member LLC, but there are different types of business entities each with unique benefits. The Washington State Small Business Guide that can help you make your decision. see Chapter Plan, Section 2.
Are you required to have a business license?
No, drivers who have a gross fare income of less than $12,000 annually, and have no other taxable income, are not required to register. See WAC 458-20-101. However, your local city, county or company might require you to have a state business license.
Important Note
Most cities and some counties require a separate license (also known as endorsement) to do business within their boundaries. In addition, they have specific requirements to become a TNC driver. These requirements vary from licensing, permitting, insurance, vehicle, and tax requirements and some will have different requirements if you deliver food. We recommend contacting your city or county directly about these regulatory requirements before you begin working with the state process mentioned above. The application process requirements can be costly and timely.
Ready to apply?
- If you decided to be a sole proprietor, you would start directly with Department of Revenue
- If you decided to become an LLC or Corporation you would start with the Secretary of State, and then go to DOR.
Uber and Lyft Drivers Rights and Protections
Working for a TNC means you have protections and rights. Please continue reading if you would like to learn more.
As of January 1, 2023, TNC drivers have new rights and protections. The Washington State Department of Labor & Industries (L&I) is responsible for enforcing these new requirements under RCW 49.46.
If you have questions on driver rights, contact L&I's Employment Standards Program at 866-219-7321 or email tncdriversupport@lni.wa.gov.
L&I has contracted with Drivers Union to operate the Driver Resource Center providing culturally appropriate driver services, outreach, and education.
As a self-employed independent contractor, you have the option to participate in Paid Family Medical Leave or WA Cares Programs. For information about electing coverage, visit:
What state taxes do you need to pay?
As a Lyft or Uber driver you might be required to pay public utility tax. Public utility tax is a tax on public service businesses, including businesses that engage in transportation, communications, and the supply of energy, natural gas, and water. The tax is in lieu of the business and occupation (B&O) tax.
Persons subject to public utility taxes are exempt from payment of this tax for any reporting period in which the gross taxable amount reported under the combined total of all public utility tax classifications does not equal or exceed the maximum exemption for the assigned reporting period.
Monthly… $2,000
Quarterly… $6,000
Annually… $24,000
There are two different rates (motor transportation rate and urban transportation rate) that you will need to pay, and they will depend on how far you are taking riders. You don’t need to worry about public utility tax unless you are exceeding the above numbers. For more information, please contact the Department of Revenue Tax Assistance at 360-705-6705.
Federal: Internal Revenue Service Federal Tax Resources
Gig work is certain activity you do to earn income, often through an app or website (digital platform), like driving for Uber or Lyft. As a self-employed individual, you must report income earned from the gig economy on a tax return and pay estimated taxes quarterly. You must file a tax return if you have net earnings from self-employment of $400 or more from gig work, even if it's a side job, part-time or temporary.
City or County Taxes
Even if you do not meet the state requirements for your business you still need to follow up with your local jurisdiction. For local licensing and tax requirements contact your local jurisdiction for local tax reporting requirements. You can go directly to their website or you can find their website and general phone number via the Municipal Research and Services Center of Washington profile information: City and Town profiles and County Profiles.
Need more help?
If you would like more assistance, contact help@business.wa.gov or try business.wa.gov live chat - start chatting - for state agency resources and local business support providers that can provide more assistance.
Please note: this guide is provided as a convenience, and should not be substituted for advice from a professional legal, business, or tax advisor.