What Is Required to Start a Mechanic Shop?

What Is Required to Start a Mechanic Shop?

To start a mechanic's shop, an individual needs a business license, a state retail sales certificate, business tax registration, an employer identification number and business liability insurance. The business owner should also have a specific business structure and a list of services and products for paperwork.

When obtaining a business license, the business owner also needs local planning and zoning approval and possibly licenses, inspections and permits from the town, city or county clerk. A separate document might be required for specific aspects of the mechanic's shop. Such permits and inspections may also be required at the state level. The business license more than likely has to be periodically renewed.

Mechanic's shops that sell certain auto parts might require additional tax certificates in addition to a business tax registration and state retail sales certificate. Additional tax concerns include whether the business is structured as a sole proprietorship, limited liability company, corporation or partnership. Each business structure has its own unique tax advantages and disadvantages.

The shop needs an employer identification number from the Internal Revenue Service if employees are hired. This separate identification number typically is not necessary for a one-person business operating as a sole proprietorship.

Depending on the state, the shop owner may be legally required to have business liability insurance to operate the shop. Liability insurance may also be required to quality for state licenses and permits.