How to Start a Business Selling Cars

Selling cars is a great way to be around vehicles you love.

If you have a passion for cars, selling them may be the job of your dreams. Automobiles are a big part of consumers' lives today and, other than a home, cars are one of the most expensive purchases an individual will make. When you want to have a business selling cars, you need to decide if you will be doing so as an automobile retailer or wholesaler. Retailers only sell cars to the public, while wholesale dealers sell cars to dealerships.

Instructions

1. Research and plan your car-selling business. Learn about the laws surrounding the car-selling industry and starting your own business. This research will help you make a decision about becoming a car retailer or wholesaler as each has different laws pertaining to zoning, advertising and licensing. The Small Business Administration states you need to become familiar with consumer rights and safety laws, particularly the Federal Used Car Rule, if you plan to sell used cars. This rule states you must post a disclosure on all used vehicles which says you are selling the vehicle "as is," the consumer should have the car inspected by an independent mechanic, information about warranties and the consumer should keep the Buyer's Guide after the sale. Those wishing to start a business selling cars should also become familiar with the state's lemon laws and "cooling off rules," which vary by state.

2. Find a location for your business. Contact your local zoning office to find out how a property you are interested in is zoned. A good place to have a car-selling business if you are a retailer is in a location that has high visibility and is close to other commercial locations, such by a shopping center or along a highway that gets heavy traffic. Keep in mind that there may be different zoning laws and space requirements in your area for auto retailers and wholesalers.

3. Get financed. Unless you have the cash to pay for all the startup costs associated with your business, you will need to get a loan. You can get financing for your car-selling business by applying for business loans through banks or a government loan program.

4. Register your business with the Internal Revenue Service to get a tax identification number, as all businesses are required to pay state and federal taxes. If you plan to have employees work for you or have a business partnership, you will also need a federal tax identification number called an EIN (Employer Tax ID). Once you have your tax identification number and EIN, register your business with local secretary of state.

5. Obtain business permits and licenses. In addition to obtaining general business licenses, such as local permits, you will also need to get a dealer's license. Most states allow you to apply for a dealer's license through the local department of motor vehicles (DMV) office, where you will need to pass an exam that shows you are knowledgeable about the industry's rules and regulations.

6. Get insured and bonded. In addition to general liability and commercial insurance, you will need coverage for your lot, employees driving the cars and the vehicles themselves. If you plan to sell used cars, the Small Business Administration states you will also need a surety bond to prevent the loss of a vendor or protect against a supplier who breaches a contract, and to help give your customers peace of mind by letting them know you will follow through with the delivery of the transaction.

7. Obtain inventory to sell. The Small Business Administration suggests obtaining inventory for your business before its grand opening so this day is not delayed due to a lack of cars to sell. You can purchase cars for your inventory through personal sales, auto auctions and trade-ins. If you decide to be an auto retailer, you can also purchase cars from a wholesale company.

References

• Small Business Administration: How to Start a Used Car Dealership
• AOL Autos: How Car Dealers Are Run