Wondering how to start a towing business in Texas? Becoming a tow truck operator is a big undertaking, even for a seasoned entrepreneur. But with strong planning and the right help, a tenacious Texan can make it happen.
In this blog post, the business law team at the Curley Law Firm will help you understand how to start a towing company in Texas. We will walk you through what you need to know to navigate necessary start-up steps like business formation, equipment purchase, and tow operator licensing that can stand between you and a successful Texas towing business.
If you have any questions, don’t hesitate to Contact us today.
Steps to Starting a Towing Company
Create Your Texas Towing Company Business Plan
Business planning is the first step in how to start a towing company in Texas. A business plan will help you outline your goals and objectives and let you map out ways to achieve them—both strategically and economically. When creating your business plan, your forecast for start-up and ongoing expenses should include:
- The cost of purchasing a tow truck or vehicle fleet;
- Maintenance and repair costs;
- Costs related to the purchase or lease of property to store towed or impounded vehicles;
- License and permit fees;
- Insurance;
- Marketing costs; and
- Salaries of employees and contract workers.
You should also plan for how you will price your towing services. This can be tricky, especially for a new business. You need to charge enough to cover your costs and make a profit. But you don’t want to price yourself out of the market. You can call around and see check prices for different tow services in your area. With that information in hand, you can decide whether to price yourself at, above, or below the average price.
Choose a Name For Your Business
Your business name is your company’s identity, so be sure to make it memorable. A few important things to remember when naming your Texas towing company include:
- Make sure you understand Texas rules about naming a business entity and select a name accordingly;
- Check federal and state trademark records before falling in love with a name you might be unable to use; and
- Ensure you can obtain your business’s domain name and appropriate social media handles.
When you are thinking about how to start a towing company in Texas, an experienced business lawyer can help you navigate Texas business naming rules. Working with a lawyer can make the naming process smooth from start to finish.
Register Your Texas Towing Company as a Legal Entity
After deciding on your new towing company’s name, the next step is to register your company as a legal entity. There are four main types of business entities in the state of Texas. These business types include:
- Sole proprietorship,
- Partnership,
- Limited liability company (LLC), and
- Corporation.
Each has its own advantages and disadvantages, depending on your business type. It is important to evaluate your needs and speak with experienced counsel and financial or tax professionals when selecting a business structure.
Buy a Tow Truck and Obtain Insurance
Buy a truck
While setting up your business is extremely important, you cannot have a texas towing company without a tow truck. Evaluate trucks based on cost and the weight and types of vehicles you may need to tow. You will likely need a license for each truck you purchase, and you will need to learn to drive and operate the different types of trucks you buy, e.g., flatbed versus hook-and-chain tow trucks. The Curley Law Firm can help you set up your business entity quickly and efficiently. And while a good lawyer is always happy to provide you with an opinion, we make no guarantees about our advice on tow trucks!
Obtain insurance
The Texas towing statute requires most towers to obtain $500,000 in liability insurance and $50,000 in cargo insurance. Additionally, towers that hold or seek private property or consent towing permits must obtain $300,000 in liability insurance. If you own or lease property to store towed or impounded vehicles, you will also need insurance for that.
Apply for a Texas Tow Operator License
Once you have a business entity, a truck, and insurance, you must obtain a Texas tow truck operator license. The Texas Department of Licensing and Regulation (TDLR) has several forms you will need to fill out to obtain all the permits and licenses you need.
How Curley Law Can Help
Whether you need help getting started or you have legal questions about your existing business, the Curley Law Firm knows how to help. We have experience in a broad range of business matters and use a client-oriented approach. Contact us today so that we can help you with your business’s legal needs.