How to Start a Medical Taxi Business

Medical taxis or non-emergency medical transportation services provide rides to those who are physically unable to drive themselves. Medical taxis are most often used by older people in nursing homes or under home care. All vehicles need to have wheelchair accessibility, and drivers will need to understand the basics of First Aid (including CPR.)

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Learn how to start your own Medical Taxi Business and whether it is the right fit for you.


Start a medical taxi 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 medical taxi 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:

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

What are the costs involved in opening a medical taxi business?

Owners will need a van, bus, or truck to carry both the people and their necessary equipment. This can cost anywhere from $10,000 to $20,000 or more. You’ll also need commercial vehicle insurance and a business license. These costs vary based on where you live, and the clients you have. Generally though, you can expect to pay under $1,000 to register the business and a few thousand to cover your licensing and legal obligations. When you work with a high-risk population, you can expect to pay more for commercial insurance for both the business and the vehicles you work with. Owners should also account for the costs of business equipment and marketing materials, which can be kept low if the budget is tight at the beginning.

Most owners of a medical taxi service can do much of their office work from home. You should consider opening your own offices or buying your own fleet of vehicles only when you're sure the demand is strong enough in the area you service.

What are the ongoing expenses for a medical taxi business?

Medical taxi owners may have the following expenses for their business:

  • Vehicle/equipment maintenance
  • Driver salaries
  • Commercial insurance
  • Vehicle purchases/payments
  • Vehicle insurance
  • Rent costs (optional)
  • Fleet/parking lot costs (optional)

Who is the target market?

The best clients are those with steady and constant needs. Most successful medical taxi companies partner with established places like nursing homes to provide reliable service and transportation to their many residents.

How does a medical taxi business make money?

Medical taxis make money by pricing rides at a comfortable profit margin. Owners need to take into account their everyday expenses as well as the demand for their services in the area.

How much can you charge customers?

Owners need to work out their fee structure, which can be done a number of ways. If you’re serving people on an individual basis, you may want to charge by the mile. Many nursing homes may only need you to drive their residents to and from the home to a nearby hospital, in which case, you could charge a flat fee per ride or per hour.

Medical taxi drivers make anywhere between $20 and $60 an hour. As with most businesses, it helps to give your major clients a break on pricing if they're offering consistent work to your business.

How much profit can a medical taxi business make?

If you have a steady influx of work, you can expect to make your investment back fairly quickly. However, each state has their own commercial insurance requirements, so you may have more overhead depending on the state you live in.

The good news is that these services are needed on every day of the year, meaning you have a lot of opportunities to strike it big. If you give 40 rides a day at $20 a ride, then you'll net almost $300,000. Even considering additional vehicle and driver salary costs, the profit you make can be substantial.

How can you make your business more profitable?

Medical taxis can become more profitable when they expand their services. Eventually, you can aim for a fleet of vehicles that are on-call 24/7. Offer rides to anyone, everywhere, at any time, and you’ll start to see both your profits and your clientele grow.

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 Medical Taxi 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.

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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 medical taxi business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

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

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!

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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?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

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.
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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.

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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

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

For more information about local licenses and permits:

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:

Vehicles

Registration

Businesses are required to register vehicles which will travel across state lines for commercial purposes. Check here for a list of state requirements.

Class B Driver Licensing Requirements

In most states, licences are issued by classes, operating according to the weight of the vehicle being driven. Drivers of standard cars and trucks require a class A commercial driver’s license (CDL), while operators of heavier vehicles, including most tow trucks, require a Class B CDL to operate. More information can be found here.

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.

Recommended: Learn what business insurance for your Medical Taxi Business will cost.

Business Insurance for
Medical Taxi Business

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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Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

How to promote & market a medical taxi business

The best way to promote yourself is to start networking with the people who need your services. There may be a heavy demand for medical taxis, but the demand is still a niche market. The more you know the key players and decision makers, the more likely it is you’ll start getting repeat work. It’s also an excellent opportunity for caregivers to see the quality of your equipment and vehicles.

Build up your email lists, and ensure everyone is updated about the major news. If you add more vehicles or services, those in the healthcare fields will want to know. Start and maintain a professional website, and consider offering modern perks like online scheduling and appointment setting.

How to keep customers coming back

Safety and experience is the name of the game when it comes to retaining customers. Let potential clients know how you handle the unexpected, and how you take the utmost care to ensure all of your riders make it to their final destination in one piece. Reliability, punctuality, and accuracy are all going to be defining characteristics that can take your business to the next level.

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Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

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.

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Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

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.

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Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.

Start A Medical Taxi Business In Your State

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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?

Those who have experience in both the medical and transportation industry will do well. Owners should have experience in providing fast and efficient pick-ups and drop-offs, regardless of the community of people they serve

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Want to know if you are cut out to be an entrepreneur?

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What happens during a typical day at a medical taxi business?

Medical taxi owners may perform the following jobs on a daily basis:

  • Developing relationships with nursing homes/hospices/doctors' offices
  • Coordinating driver’s schedules
  • Driving between medical facilities
  • Vehicle maintenance
  • Solving transportation logistics

What are some skills and experiences that will help you build a successful medical taxi business?

The exact requirements differ by state, but drivers should be CPR certified and have a general understanding of First Aid. No one will expect drivers to perform complex medical procedures, but there may be a number of incidents that occur on drives that require assistance.

The health conditions and medical equipment you’ll be working with be is both serious and unpredictable, so an owner needs to be smart and resourceful about getting people from Point A to Point B.

What is the growth potential for a medical taxi business?

Anything related to health care typically has a huge potential for growth, but this is particularly true for services related to the elderly. As the population ages, the demand grows for non-emergency medical transportation.

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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.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

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:

  • Funding
  • Events
  • Guides
  • Support

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 medical taxi business?

The best advice is to create a detailed business plan before you start offering services. There are a variety of people you can service, so it helps to have an understanding of who you want to transport and how. If you’re planning a wide-scale launch, then you’ll need to ensure you have the resources available should business pick up right away. Considering the costs of these vehicles can be high both to buy and maintain, you may want to start with just one vehicle. You can either be the sole driver, or you can share the van and the hours with a partner or employee. From there, you can build the business slowly.

How and when to build a team

Building a team can be tricky. Unless you can guarantee a strong client base at the very beginning, it may be risky to invest in hiring additional people. However, if you can’t meet the demand in your area, then your customer base may be less likely to trust you down the line. Gauge the interest level in your area before you buy your vehicles, so you have an idea of how many people will need your services before you start.

Next Steps

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