Starting a Taxi Service

Taxi Service Start Up

The following steps to starting a taxi service will guide you through the process of start up process for your own taxi business, but first we'll take a look at what it costs to get started.

Taxi Service Start Up Costs

The first thing to consider when starting a taxi service is what it costs to get set up for business. While income potential is good for a taxi company, start up costs also run high for a number of reasons. Consider the following items as you put together your taxi service business plan.


For a taxi service business, insurance is the highest cost factor and can be difficult to get. When figuring your start up costs, plan for between $60.00 and $100.00 per week for insurance. Along with this, you'll have to come up with the premium down payment, which usually runs about 20 percent of the total annual policy.


If the taxi or taxis in your fleet are painted and equipped for inspection, licensing should not be a problem. The cost is roughly $3000.00 per year.

Office Costs

Office costs for starting a taxi business should be negligible, because taxi clientèle don't come to the office. The most important thing is to look for office space that offers enough parking to hold your taxis. Prices for this kind of space will vary depending on where your business is located, but you should be able to find something for around $1000 per month.


Radios keep taxi drivers in touch with the dispatcher. Most of the time the cost for radios are picked up by a broker and should be nominal.


Meters will be installed by a servicing company and should not cost you upon start up. They will be paid for by the brokers and set at a rate determined by the city.


Take the time to research taxi services in other locations in view of learning all you can about business operations. Not only will this help remind you of all you need to know about the taxi business, but it will also help you see if you have overlooked any essentials. Carry a notebook or recorder with you to take notes and keep a list of things you may need to buy in order to get your business started.

Steps for Starting a Taxi Service

Obtain a License to Drive a Taxi

The first thing you need to do when starting your taxi business is to get a license that allows you to drive a taxi. Check with your local Department of Motor Vehicles (DMV) to learn what type of license in needed in your state.

Learn What Regulations Apply

Not every town has regulations that apply to taxi services, but check with your local government or city hall and check to see what regulations apply in your area.

Obtain License to Operate a Taxi Service

Once you know what regulations apply, you'll know whether or not you need to obtain a license to operate a taxi service. In most cases, individual states regulate and license taxi companies, and in some cities taxi companies are required not only to buy the license but to also display it in their vehicle. Check with the Department of Transportation to learn what you need to do.

Figure Your Start Up Costs

Using the information in the above section, figure the costs for starting your business. In order to do this, you will have to have a location for your company in mind and at least one car or van to be used for the taxi service. Once you have the start-up figures in hand, you'll want to secure a small business loan or other financing to start your business. With a well-researched business plan, most banks will consider offering financing for such a business venture.

Disadvantages of Operating a Taxi Service

Once you've followed these steps, you are ready to start your business, but before you do it is also important to look at the disadvantages to operating a taxi service in order to see the complete picture. Operating a taxi service:

  • Requires driving long periods of time
  • Is physically demanding
  • Exposes you to the risk of unprovoked attacks
  • Deals with intoxicated passengers
  • Costs of operating a vehicle can be substantial especially with rising gas prices
  • If your car needs to go in for repairs, you are out of business until you get it back

As you go through the process of setting up your taxi service, remember that like any new venture, it will require time to learn all the ins and outs of the business. With experience, you'll learn all the ways to maximize earning potential.

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Starting a Taxi Service