FirstBearing

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

  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 ↗

  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. 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 ↗

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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.

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.

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