How to Start an Emission Testing

Start an emission testing by following these 10 steps:

1. Plan your Emission Testing
2. Form your Emission Testing into a Legal Entity
3. Register your Emission Testing for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Emission Testing
6. Get the Necessary Permits & Licenses for your Emission Testing
7. Get Emission Testing Insurance
8. Define your Emission Testing Brand
9. Create your Emission Testing Website
10. Set up your Business Phone System

We have put together this simple guide to starting your emission testing. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening an emission testing?

One of the initial costs has to be the testing equipment itself. Equipment costs can range quite a bit, depending on the volume of business you anticipate. Testing machines can start around a few thousand and can go upwards to five figures. Additionally, you’ll need a garage to conduct the tests.

Certification for yourself and employees, licensing with the state, plus business and liability insurance will round out most of your higher startup costs.

What are the ongoing expenses for an emission testing?

Rent or mortgage for your garage, utility costs, and maintenance for your testing machine are some of the essential ongoing costs. Additionally, business licensing and insurance will incur moderate costs.

Who is the target market?

All vehicle owners and drivers, per state rules, must undergo regular emission testing. In some locations, commercial vehicles are subject to different testing procedures.

How does an emission testing make money?

Customers pay emissions testing businesses to check the emissions of their vehicles.

How much can you charge customers?

Emission testing costs for customers are relatively low, anywhere between $20-30. This means the volume of tests performed will be an important factor for your business.

How much profit can an emission testing make?

An average salary for an emission testing business owner is approximately $35,000 annually.

How can you make your business more profitable?

Combining an emission testing service with a larger mechanic-based business is a smart and profitable move. Presenting the public with more options can generate greater revenue and more repeat customers.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your emission testing is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate an Emission Testing business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Ideally, an emission testing business owner should understand the inner workings of the vehicles they are testing. Understanding the science behind auto emissions is also important. A background which offers insight into these areas, such as an auto mechanic, can be helpful, but not always necessary for success.

What happens during a typical day at an emission testing?

Depending on the state, emission testing businesses would be scheduling and performing tests for customers. State requirements vary, so some businesses may have customers come to them, whereas others may travel to businesses or other locations to perform tests. Once the testing is complete, and data is submitted, customers are informed of compliance or necessary next steps. 

Additional activities may include ensuring equipment, facilities, and staff are certified and regularly maintained.

What are some skills and experiences that will help you build a successful emission testing?

Understanding the ins and outs of exhaust systems can give an emission business owner an advantage. Helping customers to understand their options beyond the initial testing helps to build customer loyalty and confidence. General business and advertising knowledge is also beneficial for a relatively niche business, such as this.

What is the growth potential for an emission testing?

Depending on the state you’re set up in, emissions testing is a reliable business, although the overall earning potential is modest. Many emissions testing businesses combine with other related businesses, such as mechanic shops, which we will discuss later.