How to Start a Racetrack

Start a Racetrack by following these 10 steps:

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

We have put together this simple guide to starting your Racetrack. 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 very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a Racetrack?

If you are building your own racetrack, paving costs for a four lane track will be approximately $200,000 per mile. Other costs include gravel runoffs, tire walls, banking curves, landscaping, and any elevation changes. Other costs include land, construction costs, mechanical and electrical work, equipment, amenities, and legal fees

What are the ongoing expenses for a Racetrack?

Maintaining the pavement will be your largest concern. Pavement has a limited life cycle, and no one wants to hit a pothole at 125 miles per hour, so you will have to hire a road crew and build facilities for their equipment. You will also need insurance.

Who is the target market?

The target market for a stand alone racetrack will be mostly males between 18 and 60. Should you choose to run an entertainment complex, this audience would expand to families with children and the general public.

How does a Racetrack make money?

Racetrack owners can enjoy several sources of revenue ranging from track fees, car rentals, concessions, and safety equipment rental. Memberships of $60,000 per year are possible. You may find yourself renting out the entire track for a substantial fee as well.

How much can you charge customers?

Rates vary depending on the popularity and quality of your racetrack. The per day rental rate can range from $5,000 to $50,000.  Most racetracks offer open days with driver education schools that instruct your customers on how to race safely. Some tracks charge over $200 for a day of racing (with an extra charge for instruction).

How much profit can a Racetrack make?

Depending on the size and scope of your operation, profit can vary. It’s important to remember you will be making significant amounts of money from the crowd and peripheral services offered at your racetrack. 

How can you make your business more profitable?

Since customers are key to your success, providing excellent customer service will be vital. To implement excellent customer service, you need to know what you are selling inside and out. Be aware of the most frequent questions customers ask and how to answer them in satisfying ways.

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 Racetrack 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 a Racetrack 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?

Owning a racetrack can be a profitable business for anyone with a background in auto sales, auto repair, retail auto parts, hospitality, or anyone with a love for racing and a passion for business and people.

What happens during a typical day at a Racetrack?

What happens on a typical day at a racetrack?
A typical day owning a racetrack involves reaching out to potential clients and sponsors to help fund your expensive entrepreneurial endeavor. You will be creating budgets, scheduling your calendar full of events, checking in with technicians, and generally overseeing the day-to-day maintenance of a racetrack.

On days when you have events, you may find yourself running around from spot to spot putting out fires. If you are an established brand or have a large competent team under you, you may find yourself enjoying your day observing the fruits of your labor and watching a race.

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

Owning a racetrack would be great business for anyone with knowledge of the auto industry (parts, service, and labor) and a solid retail background. Managerial experience can be beneficial as your business experiences growth.

What is the growth potential for a Racetrack?

Racetracks have an excellent potential for growth. With several support businesses being necessary (fuel, racing fuel, auto parts and service) you will have many options to expand to better serve your customers' individual needs. Your racetrack can also become an event destination.