Start a limo business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your limo business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a limo business?
The main cost of starting a limousine business is acquiring the cars that you need. The glamour of a limousine is predicated on it being newer, shiny, and fancy, so a single limousine may easily run you between $50,000 to almost $100,000. The cost of insuring those vehicles will vary by vehicle type and region, but can easily be between $600 and $1200 dollars. You will also need to market the new business, which may cost between $1,000 and $5,000 depending on how much you emphasize traditional advertisement versus advertising on venues like social media. If you have the space to store the limousines at your own home, then there is no further cost to open the business; if not, you will need to pay approximately $100 a month per vehicle to store it.
What are the ongoing expenses for a limo business?
Part of what is attractive about a limousine rental business is that the ongoing expenses are relatively low. If you are storing the vehicles in a unit you rent, you will be paying approximately $100 per month, per vehicle. You will probably be spending between $100 and $500 per month on traditional advertisements and advertising via social media. If you are not the driver as well, then you will be paying your drivers, though that should be an hourly amount, with an amount contingent on how many hours they actually drove that month. Finally, you will be paying for the maintenance and repair of any vehicles, though that is something that you do as the cars need it rather than every single month.
Who is the target market?
The preferred clients for most limousine businesses would be corporate customers. Corporate customers know exactly what they want and exactly what it should cost, making your job much easier. Though the preferred clients includes corporate customers, your business make see peaks in rentals during specific times of the high school year, as many students like to rent limos for special events such as homecoming dances and prom. Though these younger, inexperienced customers may not be ideal, it is important that you keep your doors open to them as they can provide a jump in profits during these special occasions.
How does a limo business make money?
Limousine rental services make money by charging fees to chauffeur clients for a fixed amount of time. Typically, such businesses charge clients by the hour. If your business has access to multiple kinds of limousines, you may consider charging different hourly amounts for the use of different kinds of vehicles.
How much can you charge customers?
Your exact rates will vary by region and by car type, but you would typically charge between $30 to $100 per hour for a standard limousine. You may consider enforcing a “minimum number of hours” rule on certain days and/or times. You may also consider offering additional services such as special VIP wedding packages or Prom packages for an additional cost.
How much profit can a limo business make?
A limousine rental business is potentially very profitable, and the industry as a whole has reached eleven billion dollars in annual revenue in recent years. While your business may start slow, a good advertising push can ensure that you are the go-to business for weddings, graduations, proms, and corporate events. Ultimately, the ceiling of your profit is determined by how often you want to work!
How can you make your business more profitable?
To be more profitable in this business, be flexible in your scheduling. Some customers arriving by plane in the predawn hours may want a limo pick-up, and you need to be ready for them. Make sure that the inside of your cars always looks as good as the outside, as a limo business prides itself on looking sleek and luxurious. Finally, never stop learning how to improve: use every month to examine customer feedback and business performance and determine how to make the following month even more profitable.
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 Limo Business Name Generator
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your limo business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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
Permits for Limousine Services differ by state. Typically the business must complete an Application for Certificate of Authority. Part of this application includes a form which indicates that each limousine has successfully passed inspection. Additionally, there typically exist statewide regulations on limos, limiting the amount of passengers that can be seated in each limo as well as mandating the presence of certain safety precautions which may include fire extinguishers or stretchers. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
All drivers will need a chauffeur's endorsement on their licenses’ and limos will need commercial license plates. These can be obtained locally from the Secretary of State’s office. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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.
Learn more about General Liability Insurance.
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.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a limo business
Some of the best ways to promote and market a business have already been mentioned. For instance, creating an online presence via social media is absolutely crucial. It is still vital to create a professional-looking website, though, as it makes it easier for customers to research your pertinent information before reaching out to you. Finally, don't neglect traditional print, radio, and television advertisement, as your older, corporate customers are likelier to respond to that.
How to keep customers coming back
Network with other businesses and create fun promotions. For instance, maybe you offer a discount to the first ten customers you get who also rented a tuxedo from another business for the upcoming Prom. Consider offering discounts on future services to anyone who refers your business to their friends. Be sure to honestly assess the feedback you get from customers so that you are always tailoring your business to the changing needs of your local clients.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Limo Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is good for a “people person,” for it involves dealing with a wide variety of clients and a wide variety of drivers for the limousines themselves. Those who already have skills and experience with repairing automobiles will also be able to save a lot of money over time when it comes to limousine upkeep and repair.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a limo business?
In no particular order, some of the day-to-day activities include taking reservations for future events, following up with clients on upcoming events, and coordinating with your drivers so everyone has access to relevant information. You may also network with similar or related businesses to plan for large upcoming events, work on marketing your businesses (especially around peak seasons), and either schedule necessary maintenance and repairs of limousines or conduct such activities yourself.
What are some skills and experiences that will help you build a successful limo business?
As with most jobs, any kind of previous experience in the limousine rental industry is helpful. Prior experience or education as a mechanic can help you maintain and repair your limousines for far cheaper than you otherwise could. Experience with social media will help you develop advertising techniques that help you stay relevant to a younger demographic.
What is the growth potential for a limo business?
The growth potential for a limousine rental business has been steady in past years, but has been somewhat threatened by the rising prominence of app-based services such as Uber and Lyft. By embracing ideas such clients want (such as advertising via social media, allowing people to contact you via an app, etc.), you can mitigate the negative impact of competing services in your area.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a limo business?
One way to start your business is to launch a social media blitzkrieg. Advertising via mediums such as Snapchat and Instagram and Facebook as well as developing a traditional webpage will really help you stand out to the younger market. Consider using limo software to help you with some of the administrative areas you may be weaker in. Finally, be sure to research the reviews customers of other businesses have left in order to figure out some things to do (and some things to avoid).
How and when to build a team
Unless you only have one limo and want to do everything yourself, you may have to build a team from the very beginning; the limousines won't drive themselves! Beyond that, limousine rental services typically grow as you get more businesses and more limousines. Otherwise, keeping a relatively small crew—say, yourself and your drivers—helps ensure more profit at the end of the day.