In the United States, you will need a state business license as well as some other licenses to operate a car wash business. You will also need other local authorizations including taxes, zoning, public safety, and social impact.
It is often recommended that you take your time to visit your local City Hall County Clerk, or Small Business Administration (SBA) to find out the exact requirements that come with opening and operating your business in that jurisdiction.
Even though the processes that come with obtaining the right licenses and authorizations can be quite daunting, it is very important you carry them out appropriately to ensure you are on the right side of the law.
If it is becoming too challenging for you, it is recommended you work with an accountant or CPA who has requisite experience with car wash business setups.
Licenses Needed to Start a Car Wash Business in the United States
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General Business License or Permit
Although this will most often depend on your location in the United States, note that you might be required to obtain a general business license to start and operate a car wash business in the United States.
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Federal Employer Identification Number
The Federal Employer Identification Number (also known as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) remains a unique nine-digit number that is used to identify a business with the Internal Revenue Service (IRS). Depending on how you choose to structure your business, obtaining an EIN is very important.
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Sales Tax Permit or Business Number
If you intend to have a merchandise store on your property or even sell products and/or offer certain services, you will be expected to obtain a state sales tax permit (also referred to as a business tax registration or business tax ID number).
This permit establishes an account number with the state’s Department of Revenue (or similarly named state taxing agency) to collect and remit sales tax. In the United States, there are states that do not mandate businesses to collect sales tax on services; as such, it is recommended you verify prior to starting the business.
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Certificate of Occupancy
A car wash business needs to secure a Certificate of Occupancy (CO) before offering necessary services from a physical location.
The essence of this certificate is to prove that you are eligible to operate from a particular building. This certificate is obtained from the city and/or the county.
Before this certificate is issued, the building will be inspected to ensure that it aligns with all necessary building codes, zoning regulations, as well as any other local requirements.
If you intend to start a mobile car wash, then you should check with your local government to see if you need a home occupation permit especially if your equipment is stored there.
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Environmental Regulations
Keep in mind that the Environmental Protection Agency (EPA) is tasked with handling all environmental concerns, but a good number of states or even municipalities possess their own regulations as well.
However, it is quite daunting to get the right environmental-related licensing for car washes at the local level, and this can be attributed to the wastewater discharge and water usage concerns.
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Entity Formation
In the United States, a legal entity is used to describe how a business is organized to operate. There are four primary types of entities; sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).
Don’t forget that every type of entity comes with its own pros and cons, including liability protection, costs, and administrative requirements.
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Business Name Registration
Although not a license, keep in mind that the name you intend to use for your car wash business will need to be registered and authorized by the requisite government authority.
However, the process and requirements that come with registering your business name vary from one state to another and can be quite complicated.