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How to Start a Towing Business

What it takes to legally start a towing business in the US — licensing, structure, EIN, taxes, insurance, and your first customers. The steps are the same everywhere; the forms and fees depend on your state, so pick yours below for the exact links.

Typical startup cost
$25,000–$100,000+ (truck is the big cost)
Licensing
state + local — varies
Best structure
LLC for most
First customers
referrals + local search

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  1. Check the licensing for towing work

    Towing is heavily regulated — state carrier authority, USDOT number, specific insurance types, and often local permits and rate caps for non-consensual tows. This is the part that varies most by state — some require a state license or registration before you can advertise, others leave it to the city or county. Confirm both your state board and your local government before you take a job.

  2. Decide what the business needs to open

    Roadside assistance and vehicle towing for consumers, police rotations, and motor clubs. The setup areas that usually matter for a towing business: State tow operator/carrier authority + USDOT, Commercial auto + on-hook + garage-keepers insurance, Tow truck, Motor club and PD rotation contracts, Storage lot. Typical cost to get operational: $25,000–$100,000+ (truck is the big cost).

  3. Pick a structure — sole proprietor or LLC

    You can start as a sole proprietor with no filing, or form an LLC (usually $50–$300 depending on your state) for liability protection. For hands-on trade work where something can go wrong on a customer's property, most owners choose the LLC.

    LLC filing fee and steps by state ↗

    Already know enough? Get your towing numbers now.See my plan ↑

  4. Get a free EIN from the IRS

    An Employer Identification Number is free and takes a few minutes online. You need it to open a business bank account and to hire.

    IRS — Apply for an EIN ↗

  5. Register for state taxes and get insurance

    Register with your state's tax agency if you'll collect sales tax, then line up general liability insurance — most contracts and license boards require proof of coverage.

  6. What towing businesses charge

    Hook fee ($75–$150) plus per-mile ($3–$7), storage per day ($35–$75), plus after-hours, winch-out, and heavy-duty surcharges. Motor-club and PD-rotation rates are set by contract and lower per call. 24/7 and weather-driven — snow, ice, and heat waves cause call surges. Motor-club vendor spots (AAA, Agero) and police rotation lists provide the steady baseline; repair-shop partnerships add private-pay work.

  7. Get your first towing customers

    Motor-club vendor applications, police rotation lists, and repair-shop partnerships. Motor-club contracts (AAA, Agero) and police rotation lists provide steady dispatch volume once you qualify.

    Getting customers for a towing business ↗

  8. The mistake most first-year towing owners make

    Buying the truck before securing dispatch volume. A tow truck payment with no motor-club contract or rotation-list spot is a fast way to lose money — line up the accounts, then buy the iron.

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Frequently asked

How do I start a towing business?

Check the licenses for towing work in your state, pick a structure (sole proprietor or LLC), get a free EIN from the IRS, register for state taxes, open a business bank account, get general liability insurance, then set up a Google Business Profile and line up your first jobs. The order and the exact forms depend on your state.

Do I need a license to start a towing business?

Towing is heavily regulated — state carrier authority, USDOT number, specific insurance types, and often local permits and rate caps for non-consensual tows.

How much does it cost to start a towing business?

Plan for $25,000–$100,000+ (truck is the big cost) to get operational, plus $50–$300 if you form an LLC (varies by state). An EIN is free, and general liability insurance runs a few hundred dollars a year for most solo operators.

What should I charge for towing?

Hook fee ($75–$150) plus per-mile ($3–$7), storage per day ($35–$75), plus after-hours, winch-out, and heavy-duty surcharges. Motor-club and PD-rotation rates are set by contract and lower per call.

How much do towing businesses make?

It depends on your rates, your utilization, and your area. See the income and pricing breakdown for a towing business for typical owner take-home and what to charge.

How much does a towing business license cost?

It depends on your state and exactly which license applies — a state professional license commonly runs $50–$300 plus any exam or renewal fee, and a local city/county business license is often another $25–$100. That's separate from the $50–$300 LLC filing fee if you form one. Use the License Finder tool with your state for the exact fee for towing work.

How much does towing business insurance cost?

General liability insurance for a solo towing operator typically runs $300–$800 a year, more with commercial auto coverage or a higher liability limit. Most contracts, landlords, and license boards require proof of coverage before you can start.

Where do the first towing customers come from?

Motor-club vendor applications, police rotation lists, and repair-shop partnerships.

Official sources

Fees and timelines are commonly-cited figures last reviewed September 2026 and can change — always confirm on the official site. This is educational information, not legal or tax advice.

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AI-generated guidance is for educational purposes only and is not legal, tax, or investment advice. Disclosures · Trust center