Auto detailing is a great business, especially if you love the work that it entails. It’s not the toughest work, but it’s very satisfying to turn a filthy family sedan into spotless vehicle. It’s not for everyone, but if you enjoy cleaning cars, then it might just be the right business for you to start.
So, what does it take to start an auto detailing business? A lot less than you’re probably thinking if you haven’t already started one!
Even though it’s boring, we will cover the legal stuff. You probably have questions about how to form your business and how to get clients. We’ve got you covered with everything you can possibly want to know. Let’s get to it!
Understand Your Local Market
If you live in a rural area, then it may be challenging to get those high-paying customers you hear YouTubers talk about. Before you even start your business, you should investigate the local area.
What do we mean by this? Well, for starters, you need to identify potential competitors and see what services they provide. Find out what they charge and how they are able to stay in business. Consider the population density of your service area and try to get a feel for the demand. Do a lot of people in your area have nice cars? Do they have new cars? Are they interested in detailing services?
Many times, even in rural areas, there will be a shop or local car wash that people go to. However, there is still demand for a mobile detailer that can get the job done while they’re working or simply doing something else. Not everyone cares to wash their car or spend time going to a car wash. Convenience is a big factor for a lot of people.
Remember, thorough market research will guide your business decisions and set the foundation for a successful auto detailing venture!
Create a Business Plan (Optional)
Not everyone believes in writing business plans, and some entrepreneurs argue against it. Some believe in a single-page business plan and others like to plan out every little detail they can imagine. Do what works for you!
However, we recommend writing a business plan while researching the market. You can knock out the business plan by the time you’re researching your local area.
What’s in a business plan?
When writing your business plan, make sure to cover your target market, services offered, startup costs, marketing strategy, expenses, and financial projections based on your pricing strategy. Not sure how to write a business plan? Here’s a guide and free auto detailing business templates to get you started.
Register Your Business
Here’s the boring part! Registering and deciding the legal structure of your business. By now, you should have a name for the business. If not, then come up with one now so you can register the name at your local registry. You may even be able to register the business name online.
Every state is different, and some local jurisdictions have online portals that allow you to handle much of the business registration.
You will want to decide on a legal structure at this point. For example, sole proprietorship, LLC, and corporation. With that said, both LLC and S Corp are common options for small business owners due to the tax benefits.
Tax Benefits Explained
S Corporation (S Corp):
- The S Corp structure allows business profits to “pass through” to the owner’s personal tax return, avoiding the double taxation of corporate income.
- Owners can take a reasonable salary and the remaining profits can be taken as distributions, which are not subject to self-employment tax. This can result in substantial tax savings compared to being taxed as a sole proprietorship.
Limited Liability Company (LLC):
- LLCs are also pass-through entities, so business income and losses are reported on the owner’s personal tax return rather than being subject to corporate income tax.
- LLCs have the flexibility to elect to be taxed as a sole proprietorship, partnership, S Corp, or even a C Corp. This allows the owner to choose the most tax-advantageous structure.
- By electing S Corp status, an LLC owner can take advantage of the same tax savings as an S Corp by taking a reasonable salary and distributing the remaining profits.
Sole Proprietorship:
- The sole proprietorship is the simplest tax structure, with all business income and losses reported directly on the owner’s personal tax return. No separate business tax return is required.
- However, the owner is subject to self-employment tax on all business profits, which can be higher than the payroll taxes paid by an S Corp owner.
License and Permits Explained
You will want to check with your state’s website regarding the licensing requirements, but most of them require a car detailing license. It’s easy to obtain, so don’t let this hold you back. If you plan on selling car care products you may also need a sales permit. Check with your local jurisdiction for more information on licenses and permits required for starting an auto detailing business.
Business Insurance
Customers accuse detailers of breaking things, and the number one way to prevent paying out of pocket for an expensive fix or replacement is to have insurance! General liability insurance is ridiculously cheap, and some mobile detailers get it for less than $200 a year. That’s not much of a cost and it will prevent you from paying a fortune to fix something you may or may not have broken.
However, if you work in a shop and bring vehicles to your garage, then you will need Garage Keepers insurance, and that can be a bit more expensive. The average cost runs about $1200-$1500/year.
Get a Tax ID!
You have a social security number, and your business needs an Employer Identification Number (EIN). This is something you can register online. The government makes a lot of things difficult, but when it comes to getting their money, they make it easy. Getting a tax ID is super easy, and you will need it for the next step…
Open a Business Bank Account
So you want to start collecting money? Well, make sure you have a good place to put your earnings! Open a business bank account, preferably with a reputable bank you can trust. Lots of guys prefer to use a local bank, and that’s fine.
However, you may want to go with a larger bank like Chase, Fifth Third, or Bank of America. Why? Read about the collapse of Silicone Valley Bank and understand that smaller banks fail all the time. Avoid the headache, and just stick with a big one you can trust.
Invest in Detailing Equipment
Most of you will already have a bunch of equipment prepared for your detailing business, but now it’s time to start buying in bulk. That means buying gallons of chemicals that can be diluted. Chemicals are going to be one of the biggest expenses, so try to keep the cost down without sacrificing quality.
Other expenses include a pressure washer, vacuum, steam cleaner, carpet extractor, and hoses.
Develop a Marketing Strategy
How are you going to get customers? If someone in your service area is looking for an auto detailer, how will they find you?
It’s time to develop a marketing strategy and execute! Don’t just talk about it, be about it! Everyone says, “oh yeah, I’ll print business cards and get a website”, but they wait… and they wait… and by the time they do it a competitor has detailed 100 cars.
Don’t be that guy! Instead, put your plan to the test and start marketing ASAP!
We’ve got you covered on the digital front, and we automate the entire process for you, from online bookings to local directory listings. We ensure you show up when customers are looking for a detailer in the area.
With that said, you do need a website ASAP! We recommend securing your domain and web hosting through NameCheap, they have the most affordable plans and provide reliable service!
However, you can also consider installing decals on your vehicle and handing out business cards.
Hire Auto Detailers
Auto detailing is an easy business to scale if you work hard, keep your customers happy, and re-invest your earnings. To truly grow your business, hire more auto detailers to keep up with the work. Want to stand out from the competition?
Put in a strong effort to train these guys! Show them your way, and make sure they know how to treat your customers right. A good team is unstoppable! Fortunately, auto detailing can be learned rather quickly if someone is truly interested and willing to work hard.