A automobile rental company leases cars at reasonable daily and weekly rates. Car rentals are of interest to a wide range of people. Customers who often use this service include business and pleasure travellers, people whose automobiles are out of action, and companies.
Follow these ten steps to start a vehicle rental business:
Plan your Car Rental Company
Make your car rental company a legal entity.
Register your car rental company for taxes.
Create a Business Bank Account and a Credit Card
Create Accounting for Your Car Rental Company
Get the Permits and Licenses You Need for Your Car Rental Business
Purchase Car Rental Business Insurance
Define your car rental company’s brand.
Make a website for your car rental company.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. This basic guide to beginning a vehicle rental company has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a vehicle rental business?
A fleet of cars, an office, computers, printers, high-speed Internet, incorporation costs, insurance for the company and autos, vehicle maintenance equipment, a closed circuit video system, staff wages/salaries, and marketing activities will be required.
What are the recurring costs of a vehicle rental company?
Employee wages/salaries, utilities, insurance, the addition of new cars to the fleet, fleet service, office/parking lot leasing, high-speed Internet, marketing, and website upkeep are all ongoing expenditures. Employees at the lowest levels will earn between $8 and $12 per hour. An on-site mechanic will earn between $35,000 and $70,000 per year. Bring on a marketing specialist, and his yearly pay will vary from $30,000 to $65,000. An accountant and a web designer both get the same wage. Insurance is required to safeguard both your company and your vehicles. This is an expenditure that should be budgeted for at least $500 to $1,000 every month.
Monthly utilities, including high-speed Internet, will cost several hundred dollars. Vehicles that will be added to the fleet may be purchased or leased. Expect to add a new car every few months, so have at least $20,000 to $30,000 on hand for such a purchase. If this cost is extrapolated over the whole year, additional additions to the fleet will most certainly cost $100,000 per year if acquired outright. Depending on how many clients you have, servicing your fleet of cars would most likely cost $500 to $1,000 or more each month. Your office/lot rent will most likely range from $700 to several thousand dollars each month. Set aside at least $500 to $1,000 every year for website enhancements. Marketing should cost roughly $500 per month.
Who is the intended audience?
The ideal client is a company that needs a large number of automobile rentals for its staff. Another desirable client profile is a group of business travellers who are prepared to spend a significant amount of money on automobile rentals while on the road.
How does a vehicle rental company earn money?
A car rental company generates money by renting vehicles to people who require mobility when they are away from home, on a vacation, or as a replacement for a vehicle that is being repaired.
How much money may you charge your customers?
Car rental rates vary depending on the vehicle’s quality and location. In average, low-cost automobile rentals, such as a Nissan Versa, cost between $35 and $50 per day. Upscale automobile rentals, such as a Mercedes-Benz or Lexus, will cost $100 to $200 or more each day.
How much money can a vehicle rental company make?
If you have an ideal location, a broad fleet of cars, and competitive prices, your car rental company can make money. In the first several years, you may earn $50,000 to $100,000. Continue to expand your company and you will ultimately hit the six-figure threshold. Expand your automobile rental company throughout the area and/or country, and you might earn millions of dollars every year.
How can you increase the profitability of your company?
Consider selling your fleet’s outdated vehicles. If particular automobiles are no longer fashionable, sell or trade them in. You may charge a premium for different levels of vehicle insurance. It is a good idea to build ties with local auto dealerships so that they may direct clients your way when their cars are being serviced or repaired.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
Establishing a formal business organisation, such as an LLC or corporation, shields you from personal liability if your automobile rental company is sued.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. A net 30 account allows firms to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
To run a vehicle rental company, certain state permissions and licences may be required. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A automobile rental company is often conducted from a parking lot. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can receive a valid CO for a vehicle rental company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building rules and zoning standards for your business’s location to verify compliance and the ability to acquire a CO.
Contract for Services
Before beginning a rental, car rental companies should ask consumers to sign a services agreement. By defining payment terms and conditions, service level expectations, and intellectual property ownership, this agreement should clarify client expectations and reduce the likelihood of legal problems. Here’s an example of a service agreement.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Promote and Market a Car Rental Company
Advertise via a variety of channels. Brochures, flyers, introduction letters, magazine advertisements, newspaper ads, search engine optimization pushes, local directory listings, and internet directory listings are all effective marketing tools. Establishing ties with decision-makers at local firms is sensible. Contracts from the aviation industry, government organisations, and enterprises are available for bidding.
How to Keep Customers Returning
The quality of your website and mobile app is really important. Make the automobile reservation procedure as simple as possible to attract and retain consumers. Investigate local rivals’ prices and equal or beat them. Provide a diverse range of automobiles that appeal to drivers with various preferences. Your fleet should include luxury vehicles, economic vehicles, SUVs, sports cars, tiny cars, intermediate cars, and so on. Maintain the cleanliness and condition of your cars at all times.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.