Taxi rides are generally inexpensive when compared to other modes of transportation, so it’s no wonder that more people are thinking about starting their own taxi businesses. While there are many benefits to starting your own cab business, there are also plenty of costs involved with the process.
It’s important to know how much it costs to start a taxi business before you dive in headfirst. If you aren’t financially prepared and the costs overrun, it could be the end of your dream from day one. Here’s how much does it cost to start a taxi business? And what you should do next.
Taxi Business Market Research
The cost to start a taxi business can be extensive and can involve paying for the lease or purchase of a vehicle. The cost of this vehicle will depend on the type of car that you want to buy, as well as the vehicle’s age, and miles on the odometer. You will also need to put up enough capital to cover what it costs for insurance, registration fees, and gasoline for your new taxi business.
As with any other business venture, before you jump into becoming a taxi driver, there are costs involved in hiring a lawyer or an accountant to help you establish a legal entity and assist with filing initial tax paperwork such as an IRS Form SS-4 and local permits usually obtained through your city’s tax office.
Equipment And Insurance Costs
The costs to cost to start a taxi business can vary depending on the size of your fleet and the type of vehicle you use. The following table lists some of the costs you may need to consider when starting a taxi business.
These are estimates and will vary depending on your individual situation. Your local government may have more specific requirements than those listed in this table.
Vehicle purchase or lease: $60,000 – $120,000.
Business Marketing Expenses
Maintaining a taxi business requires many ongoing expenses, from acquiring a license and paying for the vehicle to advertising and marketing. The cost of running a taxi service is not covered in the initial price of purchasing and maintaining vehicles.
Getting your taxi license involves an application process with fees, an exam fee with more fees if you fail, and finally an annual renewal fee. In total, you should expect to pay about $400 for your initial license, $200 for each renewal assuming you do this annually, plus various other administrative costs depending on your state or country.
You’ll also need to spend money on insurance for both the car and the driver. Insurance will usually cost between $1-$2 per mile driven when combining personal auto insurance with commercial liability coverage.
Driving For Taxi Companies
Some of the things to consider when deciding how much it cost to start a taxi business are how much capital you have and what type of car you want. Purchasing your own taxi cab can cost as little as $8,000 for an older vehicle with regular maintenance costs, or up to $125,000+ for a newer model with low mileage.
You’ll also need commercial insurance coverage and will have ongoing costs such as fuel, rental cars, inspections, and maintenance. Then there are business expenses like phone lines, office equipment, and advertising. If you are leasing your car from a company that specializes in leasing cab services the payments can range from $150-$500 per month depending on the quality of the vehicle.
Driving Your Own Car
If you are driving your own car, the cost to start a taxi business is relatively low. You will need to get your commercial driver’s license and make sure that you have adequate insurance. You will also need to make sure you have enough gas in the tank at all times and that the car is in good condition.
In addition, a lot of cities require some kind of taxicab license or permit. Some cities require these permits to be renewed annually while others only require them every five years. The cost for these permits varies by city, so be sure to check with your local government if you’re unsure about what permits are required where you live or plan on starting a taxi business.
What are some other costs associated with starting a taxi business
Owning A Taxi Company
A taxi business is an excellent way to get started in the transportation industry. However, it does require some capital and ongoing investment for the upkeep and maintenance of the vehicles. There are several steps to starting a taxi company. Let’s take a look at them one by one:
1. Get a license from your state or country to operate as a taxi company.
2. Purchase the necessary equipment such as fuel cards and meters, signs, etc.
3. Purchase passenger vans or taxis or lease them. Make sure they have heated seats and good AC in order to provide comfort for passengers during the hot summer months!
4. Hire drivers who are insured and licensed by your state/country.
How To Keep Taxi Business Costs Under Control
Plan and Be Patient
Taxi business start-up costs can vary greatly depending on the type of taxi you want to start, the location, and your personal preferences. There are a few things that you can do to keep the cost of starting a taxi business under control. First, plan out what kind of vehicle you want to use for your business so that you know how much it will cost and how much room there will be for passengers.
Second, save up money before starting your new venture by working another job or making more cuts in your current budget. Third, be patient as it may take time to get things off the ground before revenue starts coming in so make sure to have enough savings to sustain yourself while waiting for your first customer.
Why Develop A Taxi App?
Taxi businesses can be expensive to start up and maintain. Thankfully, an app might be just the solution you need. With ride-sharing apps like Uber and Lyft in the market, more people are using taxis for convenience rather than necessity.
However, if you’re looking for a way to reduce costs in your business, developing an app might be worth your time. Apps are relatively inexpensive to create and provide a number of benefits that aren’t available with traditional taxi services.
The Benefits Of Developing An App
Are you looking for a business that does not need any major upfront investment and is easy to start up? You might want to consider app development.
The cost of app development is relatively low when compared to other businesses. Not only will the process be easy, but it will also help with marketing too. Here’s how much it costs to start a taxi business
Conclusion
If you have a car, the cost to start a taxi business will depend on your car and the taxi driver’s insurance. Though it varies depending on your state and needs, it is important to get business insurance as well as personal insurance for your vehicle.
If you don’t have a car, then you can rent one from an independent company or from the company that owns the cab. You’ll need to get a taxi driver permit, which will cost around $200 or more in some states. Lastly, if you want to work with a partner or hire employees there are other costs that may be incurred such as liability insurance for others in addition to your own vehicle insurance.
