5 Steps to Start a Car Repair Business

If you have always been passionate about cars, you might want to consider opening a car repair shop. You might remember the days when you spent time with your father in his garage repairing everything from the Honda Jazz to other domestic cars. At the time, it was a great opportunity to learn about cars and to bond with your father. Now, all of the experience you got as a child can pay off in your adult life. Starting a car repair business involves more than just knowing how to install an engine or troubleshoot a transmission. To legally start a car repair business, you need to follow steps to ensure everything is filed with the state. Here are the steps you must take to ensure you open your doors without a hitch.

Step 1: Create a Product and Service Checklist. Start off by determining what types of services and products you want to offer. If you are going to be offering only minor repairs and maintenance, you will need to determine which services you will offer and how much you will charge. If you are going to offer major repairs in addition to minor repairs, make sure that you consider everything. You can use service lists from other mechanics to help you. You will also need to decide if you are going to sell vehicle parts to the public. Determining this will help you figure out what types of licenses and permits you will need.

Step 2: Contacting the City Clerk and State Department of Business Regulation. After you decide which services you will be offering, you need to contact the city and the state to obtain a business license, local approvals, permits, and inspections that will be required. You will also need to make sure you already have a mechanics license when you are applying for your car repair business license. All of this must be in order before you proceed.

Step 3: Contact the State Department of Taxation. You will now need to contact the Department of Taxation in your state to apply for business tax registration. If you are selling products, you may also need a retail sales certificate. Verify which certificates you might need based on the services you are providing. This is where your checklist will come in handy.

Step 4: Apply for an EIN. All licensed businesses need an Employer Identification Number when they hire employees. If you are going to have a part-time assistant or a full-time technician, make sure you contact the Internal Revenue Service and apply for your EIN and Taxpayer Identification Number. If you will be the only employee at the shop you are not required to apply for these numbers. Keep in mind that ordering the numbers are free and it will be nice to have them when you are ready to expand and hire employees.

Step 5: Purchase Insurance Before You Start Repairs. Most states will require that you purchase liability insurance for your repair shop before can obtain your business license. If you do not already have liability insurance for your shop, you should apply for insurance at a commercial insurance agency before your grand opening. Even if insurance is not mandatory in your state you should purchase it. It is designed to protect your business from liability lawsuits that can be a huge hassle.


Now that you know what you need to do to start your business, get to work. Starting your own business may be a lot of work, but it is well worth the effort in the long run. Keep the business in the family and one day you can teach your children and grandchildren the business.

NOTE: Opinions expressed in this article are not to be taken as a legal advice, but as the experience of the writer, who keeps the full responsibility for the information provided