How To Open a Car Detailing Business
Do you love cars and making them look brand new? If you're looking for a business that is easy to start and includes your love of cars, you may consider opening a car detailing business. The car wash and auto detailing industry is growing. This trend is expected to continue.
People are holding on to their cars for longer and paying to keep them in good condition. Nearly 80% of Americans prefer professional car cleaning services to washing their vehicles.
Get To Know the Business
Before you begin, having the know-how to detail a car correctly is best. First, you start with a deep cleaning of the car's interior and exterior. Then, you use polishes and waxes to restore and protect the vehicle. To get experience, you can work for an auto detailing business and learn the trade.
Alternatively, you can watch videos or take online courses teaching you cleaning and detailing methods. You can also find online certification courses to teach you the techniques. But you don't need certification to operate a detailing business.
The International Detailing Association (IDA) provides helpful resources and information to help you start a successful car detailing business.
Perform Market Research
Learn more about the demographics of the area you plan to serve. Understanding your target market will help you decide and organize all the various business details.
Once you understand how to clean and detail cars, decide what services you plan to offer. Will you have a mobile car detailing service, or will you need a building? Will you provide interior detailing and upholstery cleaning? Will you have self-service options? These choices will also influence your startup costs.
Once you work out these details, it's time to plan your business's legal and financial structure. This step-by-step guide will help you set up your auto detailing company for success.
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Write a Business Plan
A business plan organizes the framework for your venture. It will guide you as you begin your new business. Creating a business plan helps you identify what you need to do to launch your company.
Look for your business's strengths, weaknesses, opportunities, and threats. For example, in a car detailing startup, you will want to address:
- What type of business are you starting?
- How will you structure your business?
- Will you operate an on-site location or a mobile detailing business?
- Who is your potential customer or customer base?
- What is your market area? Who is your competition?
- Who will run the business? Do you need employees?
- What services will you offer?
- Will you offer package pricing or provide additional services?
- What equipment and supplies do you need?
- What are your projected sales and revenue?
- How will you fund your business?
- How will you acquire customers?
- Do you have a marketing plan?
Choose a Name for Your Business
Choosing the right business name is crucial because it is your brand. Your name might incorporate services you offer or the area you service, for example, “Springfield Car Detailing."
Make your name easy to spell and remember. You may use your name or have a catchy title, for example, “Dave's Divine Detailing."
There are things you shouldn't do when naming your business. First, be sure your name isn't potentially confused with another company.
There are two ways to check for prior registered names. First, conduct a name search through your local secretary of state. Most have an online research tool for all registered businesses where you can check the name's availability.
Second, search the name to see if it's already trademarked. Businesses trademark their name with the United States Patent and Trademark Office (USPTO). Use the online Trademark Electronic Search System (TESS) to find prior name registrations.
Choose and Register Your Business Structure
Selecting the proper business structure is a critical decision. It affects your personal liability and tax responsibilities.
You can operate as a sole proprietorship, corporation, or limited liability company (LLC). But when choosing your business structure, consider protecting yourself from lawsuits and avoiding double taxation.
Double taxation means you pay corporate taxes for your company. Then, you pay taxes on the revenue you receive from the business on your personal income tax return.
The most common business structure is a sole proprietorship. This is a one-person business. You record all profits and losses of your business on your personal income tax return. The advantage is that there is no double taxation.
A sole proprietor is personally liable for any business debts or lawsuits against the company.
So, you want to separate your business operations from your personal assets. You can do this by forming a corporation or LLC.
A corporation is a separate business entity. So, if someone sues your corporation, they can only go after your company's assets. This way, you protect your personal assets from the liabilities of your business operation.
But there is a drawback to a corporation. A corporation subjects you to“double taxation. Profits are taxed on the owners' personal income taxes and the business's tax filing.
There is a way to avoid double taxation. You can file IRS Form 2553 for an S corporation status. This election will let you record the income and losses of your business operation on your individual tax return.
Limited Liability Company (LLC)
One-person small business owners frequently form a limited liability company (LLC). An LLC provides the personal liability protection of a corporation and offers the tax advantages of a sole proprietorship.
A one-person business is a single-member limited liability company. When you have the LLC behind your business name and have formed it with the secretary of state, you show your customers your legitimacy.
Because you want the best structure for your business, it's a good idea to consult a local business attorney and accountant.
Register Your Business Structure With the State
Register your business structure with the secretary of state's office in your state and pay a filing fee. This registration also secures your business name in the state.
Open a Business Bank Account
You will need a business account to manage your funds. It's important to keep your business money separate from your personal finances. Co-mingling the funds between your personal and business accounts can open you to personal liability. You will also likely need a business credit card to help with purchasing and supplies.
Apply for an Employment Identification Number (EIN)
After registration, you can apply for an Employment Identification Number (EIN) with the IRS. This number is an identification number for your business. Also called a taxpayer identification number, you use it to open bank accounts and apply for business licenses. You also file all employment and business taxes using your EIN.
Apply for Licenses and Permits
You must apply for business licenses and permits to operate your car detailing business. Check your local zoning laws. You will likely need the licenses below.
General Business License
Whether you operate a mobile car detailing business or have a physical business location, you need a business license. Check with your state, local county, or town business license office for the application.
Car Detailing License
Not all states require a separate car detailing license. But check your state laws. For example, suppose you have a car detailing business in California. In that case, you must register your business with the California Department of Industrial Relations.
There are additional permits if you plan to operate your car detailing business in a physical location.
Certificate of Use and Occupancy
A certificate of use and certificate of occupancy let your car detailing business operate at a fixed location. Whether you own or lease a space open to the public, you need a use and occupancy permit.
If you sell car wash products, like sponges and soap, or automotive accessories as part of your business, you may need a seller's permit before you begin.
Keep Up to Date on EPA and OSHA Regulations
Any car detailing operation should know their business's environmental concerns and occupational hazards.
Environmental Protection Agency (EPA)
The EPA's Clean Water Act prohibits car detailers from discharging pollutants into storm drains. Your county also has rules regarding water reclamation. Know the federal, state, county, and city regulations to avoid fines.
Occupational Safety and Health Administration (OSHA)
OSHA protects employees from workplace hazards by promoting workplace safety. For example, chemical exposure and injuries from equipment in the car cleaning industry are dangerous. Understand the risks of your business and take steps to minimize threats.
Know Your Costs and Secure Financing
You may not need much money to start your business as a one-person mobile car detailing operation. But know all your costs first.
Purchasing a pressure washer, buffer, wet/dry vacuum, air compressors, water extractor, etc., can add up quickly. The cost of equipment alone could range from $3,000-10,000. Be sure to include the expenses of tools and supplies such as cleaning and polishing products.
If you plan to operate from a business location, leased space and water reclamation systems have additional costs. As a result, you may need a bank loan or business financing.
Get Insurance Coverage
A car detailing business has many potential hazards, such as chemical exposure, slips and falls, and injuries on equipment. Be sure you have adequate liability and business insurance to protect your business and yourself.
General Liability Insurance
This insurance protects you from negligence and third-party claims. For example, an employee damages the finish of a car. Or a passerby slips and falls on soap residue from your cleaning operations.
Garage Keeper's Liability Insurance
This insurance covers any damage or liability to your customer's car while it is in your care. So, for example, if you damage the vehicle by moving it from one location to another.
Commercial Property Insurance
If you have an on-site location, consider commercial property insurance. This insurance covers your building from damage due to fire and vandalism. It will also cover the theft of tools and equipment.
If you have a mobile auto detailing business, commercial property insurance does not apply. But you can get inland marine property insurance to protect your tools and equipment from theft.
Worker's Compensation Insurance
If you have employees, you provide worker's compensation insurance if an employee has a job injury.
Talk to experienced insurance agents about what insurance is right for your business. Then, compare quotes and coverage for the best deal.
You may or may not need employees in your business. If you need staff to help with your business, decide if they will be employees or independent contractors. If you have employees, you provide employee benefits, deduct employment taxes, and provide worker's compensation.
If you hire independent contractors, you don't have to provide benefits. But there are tests on whether you have an employee or an independent contractor.
Advertising and Marketing Strategy
Getting the word out about your automotive detailing business is critical for a successful business. First, know the laws when advertising and marketing your business. For example, you can't make false or misleading claims.
Think of creative ways to reach new customers and keep your customers coming back. A few ideas:
- Set up a website and create an online presence
- Detail your services and fees and allow customers to book appointments
- Get Google My Business and Yelp listings
- Ask customers to leave positive reviews on your services and recommend you to others
- Show “before and after" photos of cars on social media
- Use email or text to remind past clients to book another appointment or offer deals
- Partner with auto dealerships, parking garages, or hotels to provide car cleaning services for customers
- Provide discounts for word-of-mouth referrals
We Can Help You Form Your Car Detailing Business
Opening a car detailing business is a great way to make money and enjoy your love of cars. Although it is easy to start your business, you need to know specific business and legal considerations to protect yourself and your business. Consider speaking with a small business attorney who can expand your knowledge and offer guidance where necessary.
Then, use our simple DIY business formation process to ensure you meet all the legal requirements in your state.
Get a Lawyer's Help for Your Auto Detailing Business
Meeting with a lawyer can help you understand your options and how to protect your rights best. Visit our attorney directory to find a lawyer near you who can help.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.