Guides for auto repair shops

How to start an auto repair shop: steps, costs and the first 90 days

To start an auto repair shop you decide what kind of shop it is, write a plan with real numbers, form a business and get a tax ID, find a commercially zoned building, register with your state if it requires repair shops to register, get insurance, buy the lifts and scan tools, and set your labor rate before the first car comes in. One software vendor's estimate puts a small 1–2 bay shop at roughly $70,000 to $150,000 to open, depending mostly on whether you buy or lease equipment [1].

Below: the steps in order, a cost table you can fill with your own quotes, the rules that vary by state, the environmental basics every shop must follow, and a 90-day plan for after the doors open.

Step 1: Decide what kind of shop you're opening

The type of shop decides your tools, your building and your customers, so settle it first.

Many owners start mobile or in one rented bay, build a customer list, then move into a shop. It costs less up front and tests whether there are enough customers near you.

Step 2: Check the market around the building you want

• Count the competition. Search "auto repair" on Google Maps around the address. Note each shop's rating, review count, what they specialise in and their hours. A gap (no shop open Saturday, no European specialist, no one with good reviews) is your opening.
• Look at the cars. Drive the neighbourhood: older cars out of warranty need independent shops; a street full of new leases sends people to dealers.
• Ask the parts stores. Counter staff at nearby parts stores know which shops are busy and which are struggling.
• Check the job market. You'll need technicians. The U.S. Bureau of Labor Statistics puts median pay for automotive service technicians and mechanics at $50,620 a year ($24.34 an hour) in May 2025, and projects 5% job growth from 2025 to 2035 [2]. Pay near you can be higher; check local job ads.

Step 3: Write a plan with your own numbers

A plan doesn't need to be long. It needs to answer four questions honestly:

1. What will it cost to open? Use the table below with real quotes.
2. What will it cost each month? Rent, insurance, software, utilities, loan payment, your pay and wages.
3. How many billed hours a month cover that? Monthly costs ÷ your labor rate = hours you must bill before you earn anything. Our guide on how to charge for auto repair shows how to set that rate from your costs.
4. Where will the first 100 customers come from? Your existing customers if you're leaving a shop, friends and family, a fleet account, Google.

If you apply for a loan, lenders and the SBA expect this plan. The U.S. Small Business Administration's business guide has free plan templates and lists SBA-backed loan programs [3].

What it costs to start an auto repair shop

These are one vendor's published ranges, not quotes [1]. Use them to build your list, then replace each with prices from your area.

What these ranges leave out, and you shouldn't: wages until the bays are busy, your own pay, a first parts and fluids stock, the security deposit and first month's rent, build-out (electrical, air lines, lighting), and waste disposal contracts. A simple rule for working capital: enough to cover three to six months of fixed costs with almost no revenue, because a new shop's first months are slow.

Ways to open for less

• Lease lifts and scan tools rather than buying; many tool distributors offer financing.
• Buy used lifts from closing shops, and have them inspected before use.
• Take over an existing shop's lease with its lifts and compressor already installed.
• Start with the jobs your current tools cover and add equipment from revenue.

Step 4: Form the business and set up taxes

1. Pick a structure. Many small shops form an LLC to separate business debts from personal ones; an accountant can tell you whether an S corporation election makes sense once you have profit.
2. Register the name with your state, and file a fictitious business name (DBA) if you trade under a different name.
3. Get an EIN from the IRS. It's free and takes minutes online [4].
4. Register for sales tax with your state. Parts sold to customers are usually taxable; whether labor is taxed varies by state.
5. Open a business bank account and keep every shop dollar in it.

Step 5: Find a building that's allowed to be a repair shop

Not every commercial building can house a repair shop. Before you sign a lease:

• Ask the city or county planning office whether auto repair is allowed in that zone, and get it in writing.
• Check for a certificate of occupancy for the use, fire department requirements (paint, fuel, compressed air) and any rules on working outside the building.
• Check ceiling height for lifts, floor thickness for anchoring them, power supply, parking for customer cars, and room to store cars waiting for parts.
• Ask the landlord about the building's environmental history; past spills can become your problem.
• Negotiate a rent-free build-out period and an option to renew.

Step 6: Licenses and registration (they vary by state)

There is no single national license to open a repair shop. Some states require the shop itself to register; others regulate only certain work (emissions, inspections). Examples:

Everywhere, you'll also need your city or county business license, and inspection or emissions station licenses if you offer those. Call your state's consumer protection or motor vehicle office and ask, "What does an auto repair shop need to register here?" In California the full list is in our guide on how to open an auto repair shop in California.

Step 7: Environmental rules every shop follows from day one

• Refrigerant: anyone servicing vehicle AC systems for pay must be certified under EPA Section 609 and use approved recovery equipment [9].
• Used oil and filters: store in labeled, closed containers and send to a used oil collector or recycler; never down a drain [10].
• Hazardous waste: solvents, brake cleaner, antifreeze and batteries have handling rules; your state environmental agency explains your generator category.
• Floor drains: many areas restrict or ban floor drains connected to sewers or the ground. Ask your local water authority before you use one.

Step 8: Insurance

Talk to an agent who insures repair shops. Common coverage for a shop:

• General liability: injuries and damage at your premises.
• Garagekeepers: customers' cars while they're in your care (theft, fire, damage in the bay). General liability usually doesn't cover these.
• Workers' compensation: required in most states once you have employees.
• Property and equipment: the building contents, lifts and tools.
• Commercial auto: if you road test, tow or run a mobile van.

Step 9: Equipment, software and parts accounts

• Core equipment: lifts, a scan tool that covers the makes you'll see, a compressor and air lines, a tire machine and balancer if you'll do tires, AC recovery machine, fluid exchangers, jacks and stands.
• Repair information: a subscription to service procedures and wiring diagrams for the makes you work on.
• Shop management software: estimates, repair orders, invoices, inspections with photos, service reminders. Most charge monthly.
• Parts accounts: open accounts with two or three local suppliers for delivery and terms; dealer parts counters for make-specific parts.

Step 10: Hire, price and get found

• Technicians: employers often prefer ASE certification [2]. Ask candidates to diagnose a known fault on a car, not just talk.
• A service writer (or you, at first): the person who answers the phone, writes estimates and calls customers.
• Prices: set your labor rate, parts markup and diagnostic fee before you open: see how to charge for auto repair.
• Getting found: claim your Google Business Profile as soon as you have an address and a sign; put up a homepage with your services, makes, hours and a call button. The steps are in auto repair shop SEO, and choosing where to build the site is covered in best website builder for an auto repair shop.

The first 90 days after opening

1. Days 1–30: ask every customer "How did you find us?"; ask every happy customer for a Google review the same day; track missed calls; post real photos on your Google profile weekly.
2. Days 31–60: turn on service reminders in your software; call every declined estimate after 2–3 weeks; visit five local businesses that run vans and offer a fleet account.
3. Days 61–90: compare billed hours against the break-even number in your plan; adjust the labor rate if needed; add service pages for the jobs you want more of; decide whether any paid marketing is worth testing. The full list, in order, is in auto repair shop marketing ideas.

Mistakes new shop owners make

• Signing a lease before checking zoning.
• Pricing to beat the cheapest shop in town. You can't outlast them on price; compete on trust, specialty and speed.
• Spending all the capital on equipment and having nothing for the slow first months.
• Working on cars all day and never answering the phone. Every missed call is a car that went elsewhere.
• No written estimates. Many states require them; all customers trust them.

FAQ

Do you need to be a certified mechanic to own a repair shop?

In most states the owner doesn't need to be a mechanic, but some states require certified mechanics for certain work (Michigan, for example [8]), and AC work requires EPA Section 609 certification [9].

How much does it cost to open a small auto repair shop?

One vendor estimates about $70,000 to $150,000 for a small shop [1]. Your number depends on rent, whether you lease or buy equipment, and how many months of costs you hold in reserve.

Is owning an auto repair shop profitable?

It can be when billed hours cover fixed costs with room to spare. Profit comes down to your labor rate, parts margin, how many hours your techs bill versus work, and keeping the bays full.

Can I start a mechanic shop from home?

Most residential zoning doesn't allow a repair business with customer cars. Starting as a mobile mechanic, where allowed, is the usual low-cost alternative.

How long does it take to open an auto repair shop?

Commonly a few months: finding and approving a building and state registration usually take the longest.

What license do I need to open a mechanic shop?

A local business license everywhere, plus state shop registration in states that require it (California, Florida, New York, Michigan among them) and station licenses for smog or inspections.

When you're ready for customers to find you, start with a homepage that says what you fix and lets them call. Email us your shop's name and we'll send a free preview built from your details. More guides are on the auto repair guides page.

This guide is general information, not legal or tax advice. Rules vary by state and city; check with the agencies named here, and an accountant or attorney for your situation.

Sources

1. AutoLeap, "How to start an auto repair shop" (vendor estimates, seen 2026-11-04). https://autoleap.com/blog/how-to-start-an-auto-repair-shop/
2. U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, Automotive Service Technicians and Mechanics. https://www.bls.gov/ooh/installation-maintenance-and-repair/automotive-service-technicians-and-mechanics.htm
3. U.S. Small Business Administration, Business guide: write your business plan; fund your business. https://www.sba.gov/business-guide
4. IRS, Get an employer identification number. https://www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number
5. California Bureau of Automotive Repair. https://www.bar.ca.gov/
6. Florida Department of Agriculture and Consumer Services, Motor vehicle repair. https://www.fdacs.gov/Business-Services/Motor-Vehicle-Repair
7. New York State DMV, Open and operate a repair or body shop. https://dmv.ny.gov/business/open-repair-or-body-shop
8. Michigan Department of State, Repair facilities FAQ. https://www.michigan.gov/sos/faqs/industry-services/repair-facilities
9. U.S. EPA, Section 609 technician training and certification programs. https://www.epa.gov/mvac/section-609-technician-training-and-certification-programs
10. U.S. EPA, Managing used oil: answers to frequent questions for businesses. https://www.epa.gov/hw/managing-used-oil-answers-frequent-questions-businesses