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What Licenses Does An Auto Repair Shop Need?

What Licenses Does An Auto Repair Shop Need?

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What Licenses Does An Auto Repair Shop Need?

Starting a successful auto repair shop takes more than knowing how to fix a car. An important aspect of successfully starting a business is researching and applying for the licenses and permits that are needed to operate legally.

The question, “what business license do I need to start my business” is a common one, but in reality, a business will often need multiple licenses, permits, and registrations from federal, state, and local agencies.

Related: Guide to starting an auto repair business

While we have researched what licenses and permits your business may need, please be aware that there is no way for us to have uncovered every state and local requirement.

To not miss any important licenses and permits, we recommend also checking with your local Chamber of Commerce, economic development agency, or use a business license service like Incfile or LegalZoom.

What Licenses Do You Need to Start an Auto Repair Business?

Federal Requirements

While not directly a license, the Environmental Protection Agency requires auto repair shops to comply with several different laws including; the disposal of hazardous waste, working vehicle air conditioners, and servicing air pollution control devices.

State Licensing

Every state regulates auto repair businesses a little differently, and it can be complex finding what requirements there are, but all require some sort of state licensing or registration.

Here are a few examples:

At the state level, for example, In Illinois, auto repair shops are required to follow the Automotive Repair Act, which requires specific disclosures to consumers and prohibits certain unlawful practices.

The Florida Motor Vehicle Repair Act requires anyone who is paid to repair motor vehicles owned by other individuals to register with the Florida Department of Agriculture and Consumer Services (FDACS).

To become a registered repair shop in New York, auto repair businesses will register with the New York State Department of Motor Vehicles.

Local Licensing

If the thought of researching state licensing wasn’t enough, many cities also regulate auto repair shops.

For instance, the City of Chicago has auto repair licensing requirements.

Montgomery Couty, Maryland, requires auto repair businesses to obtain a Certificate of Registration for Motor Vehicle Maintenance Repairs and Towing.

In the City of Grand Prairie, Texas, an Automotive Related Business Permit (ARB) is required in order to operate legally.

As you can see from the state and local requirements that it’s vitally important to research the requirements so your business is legal to operate from day one.

After getting specific licensing for your auto repair services, you will be well on your way to starting your business.  Keep in mind that there will also be some general licensing requirements for starting your shop.  Here are a few of the common licenses and permits to watch out for:

General Business License or Permit

Depending on where the business is located, a general business license or permit may be required. A few states require a business license;  however, they are more commonly found at the city level.

Learn more: Business license requirements by state

Federal Employer Identification Number

The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).

Any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, the business will need to get an EIN.

Learn: How to get an EIN 

Sales Tax Permit or Number

In order to sell parts and/or offer certain services, a state sales tax permit (or tax ID number) may be needed.  This permit creates an account number with the state’s Department of Revenue or a similarly named state taxing agency.

Additionally, hiring employees will also likely require a state tax number.

Learn: How to get a sales tax permit

Resale Certificate

When buying parts like shocks, window regulators, or spark plugs that the customer pays for after the vehicle is repaired, the business can purchase these items tax-free. A resale certificate allows a business to purchase inventory, and instead of paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.

A resale certificate only allows a business to not pay sales tax for items being resold, and sales tax will still need to be paid for supplies or equipment.

Learn: How to get a resale certificate

Certificate of Occupancy

In most communities, a retail business will need to secure a Certificate of Occupancy (CO) before opening.  This certificate is typically obtained from the city, but sometimes from the county, and allows a business to occupy and operate from a building provided the building complies with zoning regulations, building codes, and any other local requirements.

A Certificate of Occupancy  (also referred to as a home occupation permit) is also sometimes required for a home-based business.

Before starting your auto repair business, be sure to check with the local zoning department to ensure the business can legally operate out of the chosen location.

Business Name Registration or DBA

While not necessarily a business license, it’s worth noting that in order to use a name for a business, many states require the registration of that name. Making matters more complicated, the process of name registration is different by state and the type of business entity.

For instance, sole proprietorships and partnerships generally need to register a business name (also referred to as a Doing Business As, DBA, fictitious name, or assumed name).

Learn: How to register a DBA

Corporations and LLCs register are a little easier in that their name is registered when forming the entity.

Related: What is the difference between a sole proprietorship, partnership, Corporation, or LLC?

Certifications

In addition to licensing, auto repair businesses can also obtain certification to gain additional skills and industry-specific knowledge. A few marketing certifications include:

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

What Licenses Does An Auto Repair Shop Need?

What Licenses Does An Auto Repair Shop Need?

2 Responses

  1. Great article. Thank you. I have a question, if you possibly can answer for me.

    If auto Mechanic shop found it more profitable to buy danged cars that insurance company sell in actions and have then fixed by untrained/unlicensed day workers and resale them without obtaining any additional licenses, he then sell the cars without any licensed repair verification.

    What organization in the State of California/Los Angeles should this auto repair shop should be reported to. I contact BAR, they informed me that they only deal with consumer complaint not Auto repair shop licenses.

    1. Hi Sam

      I’m not sure if the person you talked with at BAR understood your question correctly, but they do license auto repair businesses – https://www.bar.ca.gov/licensing-ard/apply.

      Provided you are not fixing any vehicles for a vehicle owner to make the repair, I’m not certain this is the correct license for you, The definition for this license is for a “A business registered by BAR who, for compensation, repairs and/or diagnoses malfunctions of motor vehicles.” https://www.bar.ca.gov/licensing-ard/apply. I would still recommend talking with someone else at BAR to verify.

      As it sounds like you plan to instead sell vehicles, you will need at least a Vehicle Dealer License through the California DMV – https://www.dmv.ca.gov/portal/vehicle-industry-services/occupational-licensing/occupational-licenses/vehicle-dealer-license/

      I hope this helps you get started.

      Thanks!
      Greg

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