10 Steps to Starting a Towing Business

Vehicles can break down more often than you think. In this case, they require a tow truck to take their vehicle to a repair shop or the owner’s location depending on the case. The towing business is a growing industry, considering it has a market size of $8 billion. So, if you wish to start a towing business, you need to create the right plan and follow these steps.

10 Steps to Starting a Towing Business

The following are some of the most essential steps you need to follow to start a towing business.


A successful towing business starts with a clear plan in mind. Business owners need to keep a clear view of the kind of services they wish to offer. In addition, selecting the target market and business name are all important factors. Spending time on planning will give your business a strong foundation.

Form a Legal Entity

Partnerships, sole proprietorships, corporations, and limited liability companies are the basic business structure types you can choose from. Creating a legal business entity will protect you from being held liable if someone were to sue your business.

Register for State and Federal Taxes

Registering for state and federal taxes is an important part of starting a towing business. You need to apply for an EIN first, which is easy and free! Depending on which legal entity you choose, your business will be taxed accordingly.

Open Up Your Business’s Bank Account

Setting up your business’s bank account and credit card will protect your business’s assets. This step is crucial! If you fail to do this, you can risk losing your personal assets such as your house, cars, and money in the event of a lawsuit. It’s never a good idea to mix your business and personal bank accounts.

Get Your Books Ready

Making note of your income and expenses is the easiest way to manage your finances and keep things simple and streamlined. It can also help keep things transparent while you’re filing your taxes.

Get Your Permits and Licenses

Typically, licensing is needed to run a towing business. Also, the majority of states will require businesses to have 3 different permits: consent tows, private property, and indictment management.

You’ll want to check with your county’s clerk’s office to see what local licenses or permits you’ll need.

Get the Necessary Insurance

Business insurance protects your financial wellbeing in case of an incident. You can choose from various insurance types and payment plans.

If you’re unsure what coverage you need, talk with an experienced agent who can assist you.

Define Your Brand

Setting your brand apart from the rest of the industry requires you to make a unique identity. Ensure adding a standout style and logo to your business, as it will become your identity later on.

Launch Your Website

Most customers look for quick online solutions and having a website increases your chances of performing well in the market. Thus, create a website for your towing company as it will help you reach a wider audience.

Set Up Your Phone System

Having a dedicated phone system for your business will make it easy for customers to reach you. In addition, it will make your business look legitimate and more automated.

Bottom Line

Setting up your towing business shouldn’t be a problem with our simple steps. Just make sure that you come up with a good company name, get business insurance, a website, and set up a business phone system for your customers.



We can help you save on your tow truck insurance.