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Starting Your Own Tire Service Shop: A 4-Point Checklist

Starting Your Own Tire Service Shop: A 4-Point Checklist

12th Mar 2021

Many American motorists have little to no knowledge when it comes to basic vehicle repair. A survey revealed that 36 percent of drivers in the US are clueless about changing a flat tire.

So, if you’re interested in entering the automotive industry, a tire service shop presents a potentially lucrative business opportunity. Since many vehicle owners are unable to replace tires by themselves, they’ll be looking for a service center that can repair or replace their tires for them.

JMC Automotive Equipment shares a 4-point checklist on how to start a tire shop, outlining everything you need for your business venture.

1. Business Plan

Your business plan will map out the foundations of your business, from your target market, service offerings, and unique selling point, among others.

One of the important parts of a business plan is the finances. You need to estimate your expenses and earnings, including the startup and ongoing costs and your projected profits. This will tell you how much revenue the business can bring in.

The costs of opening a tire service shop vary, but generally include:

  • Space rental fees: $1,500 to $15,000 per month
  • General liability insurance: $40 to $100 per month
  • Business license: $50 to $100
  • ASE certification: $34 registration fee, plus $47 per test, except L1, L2, and L3 which are $94 each
  • Equipment
    • Tire alignment lift: $20,000 to $30,000
    • Wheel balancer: $1,000 to $15,000
    • Tire changer: $1,000 to $6,000
    • Tire repair specialty tools: $2,000 to $10,000

Once you calculate your startup and ongoing costs, you’ll need to price your services accordingly. You can charge your customers on an hourly basis or a flat fee for each service.

According to Small Business Trends, tire repair shops with several employees and service bays can bring in $36,000 and $60,000 per month.

2. Legal Entity Registration

Next, you need to register your business. The most common business structure types are sole proprietorship, partnership, limited liability company (LLC), and corporation. The first two are the most appropriate for small businesses. But you can also start an LLC by yourself to gain liability protection should a customer sue your shop.

To establish an LLC, you need to do the following:

  • Reserve a business name
  • Obtain an Employer Identification Number (EIN)
  • Open a business bank account
  • Appoint a registered agent
  • File the LLC Articles of Organization

You also need to pay the LLC filing fee, which varies per state.

3. Tax Registration

You need to register for various state and federal taxes before you can start accepting customers. If you’re an LLC, you’ll use your EIN to register for taxes, which you can acquire through the IRS website.

Depending on your business structure, you can choose how you want your business to be taxed. LLCs, for instance, can decide between being an S Corp or a C Corp.

On the other hand, sole proprietors don’t have to register for tax purposes. Your business will be taxed through your personal tax return.

4. Permits and Licenses

Finally, acquire all the necessary licenses and permits. Apart from your business license, you’ll need a seller’s permit if you’re selling tires and other merchandise. What’s unique about starting a tire shop business is that you need to go to an orientation course for environmental impact. This covers the proper disposal and recycling of used tires.

You also want to look into licensing requirements specific to your state. Check out the SBA’s guide to state licenses and permits.

Once you sort out the foundations of your business, it’s time to set up your shop and acquire your equipment. You can either rent them, purchase them out-of-pocket, or get an equipment loan for additional funding.

Regardless of the financing method you choose, make sure you source your equipment from reputable distributors. This way, you can ensure the quality and longevity of your investments.

Trusted Automotive Equipment Distributor

For over 10 years, JMC Automotive Equipment has been supplying auto shop owners and car hobbyists with high-quality products. We carry equipment and tools from some of the industry’s biggest names, including Hoffman, Ranger, and Corghi.

Fill out our online form and let's discuss your tire service equipment needs today.