How Much Money Do You Need To Invest In Opening A Tire Shop?

Start a used tire business by following these 10 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your used tire business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What are the startup and ongoing costs?
Who is your target market?
How much can you charge customers?
What will you name your business?

Luckily we have done a lot of this research for you.

What are the costs involved in opening a used tire business?

The startup costs for a used tire business go to three primary areas. Business owners need:

A retail location
Equipment for installing tires
Used tires

A good location will have a storage space for inventory, a small retail area and a garage for working on cars. It'll also be in a low-rent district so that overhead can be kept minimal. Good locations include old auto shops and warehouses that are no longer in use.

Business owners that want to reduce equipment costs can look for used equipment that's in good condition. Purchasing used, high-quality equipment is preferable to getting new, lower-quality tools because high-quality equipment is often more efficient to use. It'll save time and reduce labor costs associated with installing purchased tires.

When purchasing tires, business owners should get a large, varied selection. The inventory gathered should include many sizes of car, truck, low-profile and high-performance tires. Good places to purchase tires include junkyards, tire shops and retreading centers.

It's also a good idea to forge a relationship with a wholesale supplier of rims, but rims can be purchased on an as-needed basis.

In total, these expenses may range from a few thousand dollars to tens of thousands. The range depends on how much a space costs, what type of equipment is purchased and how large an inventory a business opens with.

What are the ongoing expenses for a used tire business?

The ongoing expenses for a used tire business are manageable. They include lease payments, utilities, employees' salaries and inventory expenses.

Who is the target market?

The target market of a used tire business is anyone who owns a vehicle and wants to save money. All vehicles need tires, and many drivers are willing to consider used tires because they provide an excellent value.

How does a used tire business make money?

A used tire business makes money by selling used tires to customers. Most tires are sold individually, in pairs of two or in sets of four. Tire Business reports that the average sale at one business, Drakes Tire's, is a pair. Sales at another business, Rob's Used Tires, are evenly split between individuals, pairs and sets.

How much can you charge customers?

Used tires cost much less than new ones. Gently used tires sell for up to half their initial cost, while more worn tires sell for much less.

Despite these low prices, businesses can still earn a handsome profit. Used tires can be purchased wholesale for very little because other businesses must pay a fee to dispose of old tires if they don't sell them to a used tire business.

For each tire sold, many businesses charge an additional $15 to $45 to mount and balance the tire.

How much profit can a used tire business make?

Because there is such demand for tires, a used tire business can bring a significant profit. For instance, S & S Distributors, LLC moves 10,000 tires each week. Even at a fraction of the cost of new tires, that amounts to a sizable weekly revenue.

How can you make your business more profitable?

A used tire business can increase its profitability by also selling rims and new tires, and by offering tire repair service. Some businesses may get into more significant automotive repairs.

What will you name your business?

Choosing the right name is important and challenging. If you don't already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Used Tire Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

Your state's business records
Federal and state trademark records
Social media platforms
Web domain availability.

It's very important to secure your domain name before someone else does.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your used tire business is sued.

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

LLC Taxes
Sole Proprietorship vs LLC
LLC vs Corporation
LLC vs S Corp
How to Start an S Corp

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

This separates your personal assets from your company's assets, which is necessary for personal asset protection.
It also makes accounting and tax filing easier.

The Truic Flame Logo

Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Open net-30 accounts

When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.

Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

Get a business credit card

This helps you separate personal and business expenses by putting your business' expenses all in one place.
It also builds your company's credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

All businesses involved in automotive vehicle maintenance must comply with federal and state-level environmental regulations. A checklist for compliance with federal environmental regulations can be found here.

In most states, it is necessary to obtain an appropriate business license. Learn more about licensing requirements in your state by visiting SBA's reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Used tires businesses may also wish to look into applying for a resale certificate, which allows retailers to purchase goods intended for resale without paying sales tax.

For more information about local licenses and permits:

Check with your town, city or county clerk's office
Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources

Certificate of Occupancy

A used tires shop business is generally run out of a "garage," a retail location uniquely equipped to store and repair cars. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease a garage:
- It is generally the landlord's responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an Car Repair business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommendedto include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business' location to ensure your used tires business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company's financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you're unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it's a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers' Compensation Insurance. If your business will have employees, it's a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

How to promote & market a used tire business

A used tire business is best marketed through inexpensive marketing tactics that don't increase how much a business must charge. Radio and online ads work well, as do Craigslist postings.

How to keep customers coming back

One of the challenges of getting customers is convincing drivers that used tires are a safe alternative to new ones. Businesses can do this by telling customers about their pre-sale tire inspections and offering a warranty. Rob's Used Tires offers two-, four- and eight-week warranties based on tire grade.

The Truic Flame Logo

Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it's out of their reach because they don't have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn't delay building your website:

All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don't need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn't take you any longer than 2-3 hours to complete.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That's not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We've reviewed the top companies and rated them based on price, features, and ease of use.