Well, there’s big news coming. Nah, not the US presidential elections. Taxi giants like Uber, Lyft, etc., that work on the aggregator model will have to halt their proceedings according to the recent law that currently stays in the Court of California. This law comes as a big blow to entrepreneurs as California isn’t ‘another’ taxi market. The Golden State houses more than half a million taxis that either work independently or collaborate with taxi aggregators like Uber, Lyft, etc.
Does that mean emerging entrepreneurs have to hesitate to invest in the on-demand taxi market? Absolutely not! An entrepreneur with the right approach can develop an ultra-modern taxi app and hit the streets of California in no time.
So, what’s with the new California law on taxis? Can a budding entrepreneur rely on their stakes of investing in the evergreen taxi market? How does one start a taxi business in California? Eager to know the answers to these questions? Read further to find out.
All About The New Law
October 22, 2020
Reclassifying drivers as employees
The Californian Appeals Court mandated that Uber & Lyft would have to reclassify drivers that operate within the state as employees.
This order meant that the taxi giants would have to transform contracted gig workers into full-fledged employees who can receive associate benefits throughout the year. While the court specifically focused on employee benefits, taxi companies run efficiently with contracted workers as the core of their operation.
However, Proposition 22 can help these taxi giants get back on their feet as the clause has the capability of granting them special exemptions.
November 4, 2020
Uber, Lyft win in California
In an interesting turn of events, Prop.22 did save Ubers & Lyfts. The Californian court passed a ballot measure that would exempt Uber, Lyft & other ride-hailing businesses to adhere to the state law.
This victory ensures that numerous on-demand businesses like Uber, Lyft, Instacart, DoorDash, etc., to conduct business operations effortlessly by not specifying contracted workers as full-time employees.
How important is the business model for a platform’s success?
Business models, in simpler terms, determine how a taxi platform conducts operations. There are two popular models worth-considering while launching a taxi app? They include,
- The Aggregator model: Most of the successful & prevalent taxi apps are based on this model. In this model, an entrepreneur needn’t own or lease taxis. The platform acts as a centralized hub connecting drivers with people in need. The business model is simple, efficient, and highly remunerative. One gains revenue from various sources, including commissions from drivers, ad charges from third-party vendors, subscription plans, etc. Rolling out a taxi app in California can be a ground-breaker for an entrepreneur because the state is the center for Hollywood and houses the all-famous Las Vegas in the proximity.
- The Cab Owner model: This model works the best for cab rental agency owners because they needn’t give up hefty commissions to aggregators. All they have to do is establish a taxi app to connect with their potential customers. Even with the cab owner model, one can gain revenue from a multitude of sources, including subscription charges, in-app ad charges, etc. In today’s fast-paced world, connecting with customers is becoming increasingly challenging for a cab rental agency owner. Launching a smartphone app for taxis can prove beneficial and profitable to the entire taxi ecosystem.
How to start a taxi business in California?
It’s a piece of cake for entrepreneurs to initiate a taxi business in California. The steps involved in establishing an Uber clone app in California include,
#1 Ideate and come up with a feasible plan
As simple as it may sound, ideation can open the floodgates for unparalleled success and unrestricted revenue. Come up with inquisitive ideas and brainstorm your ideas for feasibility with a technical team.
Devise a sustainable plan considering all the external factors like availability of resources, time, etc., and adhere to your plan cohesively to eliminate errors in the future.
#2 Register your business with the State of California
The next major milestone in successfully launching your taxi platform is registering your business with the State of California. There are different business structures like,
- Limited Liability Company (LLC): No double taxation or extra paperwork.
- S Corporation: Up to 100 US shareholders.
- C Corporation: Unlimited shareholders from all over the world.
- Sole Proprietorship: The least formal structure.
#3 Business licensing & Tax obligations
Complying with all the three forms of government can be quite tedious, but with the right approach, one can sail past the procedures in a flash. The three mandatory licensing include,
To shield your taxi business from extensive fines, never compromise on the licensing part.
#4 Distinctly separate your business assets
It is vital to separate your business and personal assets to establish your taxi app as an independent business identity.
You can separate and protect your assets via the following five steps,
- Open a bank account for your business.
- Avail the business credit card.
- Allocate authorities to take care of funds.
- Take care of accounting.
- Build a business credit score.
#5 Fund your business & build your brand
By separating your business assets, you’re good to go. Find a suitable funding partner to keep your business afloat. Similarly, promote your brand across different marketing channels to build positive value.
Funding can either be personal resources or from angel investors. It is better to determine the controlling authority in investments as investors usually demand equity shares.
The Californian market will expect new players to make their presence in the flourishing taxi sector. By overruling the new law, on-demand companies can have a stronghold of the region, growing in numbers in the upcoming years. Choose your best-suited business model and follow the set of procedures to establish a taxi app in California without any hassles.
Reach out to an expert app development company, tell them your visions and needs, and launch your on-demand taxi app that is robust, resilient, and easy-to-use!