How to Start a Home Auto Repair Business

For an entrepreneurial car enthusiast, a home garage auto shop can be a lucrative way to make money while enjoying a hobby. But operating a home auto repair shop isn’t just working on cars all day; it’s a business that can be challenging and, at times, frustrating for even the most diehard gearhead.

In many states, you're required to hold a mechanic license to be permitted to work on cars. Licensing requirements for mechanics vary from state to state, with some states — like Michigan — having multiple types of mechanic licenses. Other states, like New Jersey and Florida, have no such requirement.

Even if your state does not require you to be a licensed mechanic to work on vehicles, it’s still a good idea to complete an auto mechanic training program so you have quantifiable credentials. By having credentials to share with prospective customers, you can instill trust that you're qualified to work on their cars.

One of the first steps in creating any type of new business is writing a business plan. A business plan is a comprehensive document that outlines everything important to know about a business, such as:

• Where the business is headquartered.
• How many people the business employs.
• The business’s budgets.
• The business’s projected earnings and expenses.
• How the business is incorporated.
• Information about the market in which the business plans to operate.
• The business’s day-to-day operations.
• How the business will be marketed.
• How the business’s startup costs will be funded.
• Any licenses needed to operate the business.
• The business’s leadership team.

Writing a business plan pushes you to think about all the potential obstacles you could face with your business and solutions for them. While writing your business plan, you’ll need to do some research on the zoning and licensing requirements applicable to home garage auto shops in your city and state. You might not be permitted to operate this type of business on a residential property in your city, and if this is the case, there's no way for you to legally operate a home mechanic shop.

After creating a business plan, the next step is to incorporate your business with your state and the Internal Revenue Service (IRS). Taking these steps renders your business a taxable entity and enables you to take advantage of certain deductions. You can register with the IRS and your state’s business registry, which may be the Secretary of State’s office or the Department of Workforce Development, online.

When you developed your business plan, you created multiple budgets for your business, including an equipment budget. To determine how much you need to realistically spend to start a home mechanic shop, research the kinds of equipment you’ll need and what they cost. The types of repairs you perform and the kinds of vehicles you service will determine which types of equipment you need, such as:

• A hydraulic lift.
• Cutter tools.
• Tire pressure gauge.
• Wrench set.
• Clutch alignment tools.
• Electronic diagnostic tool.

Additionally, you’ll need to upgrade your garage to turn it into a functional home garage auto shop. Depending on how it's already set up, you might want (or need) to install additional lighting and an improved ventilation system.

Once you’ve registered your business and equipped your garage to make repairs possible, it’s time to market your home repair shop. Auto repair shops attract local customers because of the nature of their business, so advertise yours in places local people frequent. Flyers are an excellent way to advertise to your community and can be posted in places like:

• Auto parts shops
• Community bulletin boards
• Folded into local newspapers

Additionally, you can market your business via social media pages focused on your community.