How to FedEx Ground Part 1: Incorporation

Mark

FedEx does not allow contractors to be incorporated as LLCs, LLPs, sole proprietorships, partnerships, or limited partnerships (LTDs). FedEx Ground only contracts with individuals and businesses established under state law as a corporation and are registered and in good standing in the states where they do business. So the first question you may have is, what type of corporation should I be considering?

Your choice on how to incorporate depends on the vision of your business. Although we could advise you to take a singular direction, there isn’t a one-size-fits-all solution.

However, if you don’t plan on an IPO and are not looking to sell shares to more than 100 people or any other investors that are not permitted by Subchapter S, then S corporations are appropriate.

Think about the following considerations for an S corp:

  • The corporation will make distributions of income to shareholders.
  • No plan of issuing preferred stock.
  • The shareholders’ tax liability will be lower using a pass-through entity. You will be able to deduct losses from your personal income taxes, resulting in a tax saving.

On the other hand some of the characteristics of a C corp may be a good option for your vision:

  • Taxation under Subchapter C will result in lower taxes than taxation under Subchapter S.
  • Distributions will not be made to shareholders.
  • You plan on an IPO or seeking investors not allowed for an S corporation.
  • You want shares to be freely transferable.
  • You want to issue preferred stock.

We advise you to work with an attorney or CPA to help structure your business. This process will include:

  • Obtaining FEIN
  • Registration with the Secretary of State (Articles of Incorporation)
  • Obtaining State Tax Withholding ID from the department of revenue
  • Obtaining State Unemployment Insurance #
  • Identifying the corporation’s Registered Agent

Once the corporation has been established, there are a number of items that the buyer will need to compile and ultimately present to FedEx. These items will include:

  • Request for Information (RFI). More details
  • State sealed Articles of Incorporation
  • E-Verify page
  • W-9 for authorized officer. Use business name and FEIN.
  • Good standing check (provided by Contractor Relations)
  • Legal document with FEIN and company name on same page
  • Legal document with state tax ID and company name on same page
  • Legal document with Unemployment Insurance ID and company name on same page
  • 3rd party accountant information should be established with all 
  • known information
  • Shareholder information: names and share count

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