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
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:
