Business Licensing for Towing

By Brian J Riker 

I am often asked what licensing or permits are required to open a towing company and my answer invariably is “It depends.” I am not trying to be deliberately obtuse or misleading but that is a loaded question because it varies depending on the type of towing you plan to do, where you will be performing those services and where your company is physically located. While I will try to be as specific as possible, this article is for general reference only and is not intended to be a complete licensing resource. Please check with your local and state officials to verify what is required to legally operate your specific company. 

Certificate of Occupancy – This is the permit from your city, county or other municipal government that says you can operate a commercial business on a specific piece of land or in a specific building. There may be special zoning, noise or other ordinances you must comply with to get the C.O. and it may need to be renewed if there is any change to your operation. Making sure you can get a C.O. is the first step in selecting a physical location once you have decided the general area you want to have your office and yard located in. 

Business or Occupational License – This is a common permit requirement in large cities and counties. Often tied into taxes or other revenue collection, this permit gives you the authority to operate a business within a specific geographic location. If you service multiple cities or towns, you may need a occupational license in multiple jurisdictions. These licenses usually renew annually. 

Sales or Use Tax – Many states require towers to collect sales tax on towing, storage, repair services performed or parts sold unless the customer is sales or use tax exempt. Some cities and counties also impose a local sales or use tax so be sure to check for all required licenses. While the tax collection license usually is valid for the life of the business, absent any ownership changes, returns must be filed quarterly in most states even when no tax was collected. 

Motor Carrier Authority – The Federal Motor Carrier Safety Administration requires for-hire companies that engage in regulated interstate commerce to obtain operating authority. This is evidenced by the issuance of a MC number and a certificate of authority. While emergency towing of wrecked or disabled motor vehicles from the place they first became disabled is exempt from this requirement, secondary tows and other services performed by typical towing companies are not exempt therefore your company may be required to have interstate for-hire operating authority if you cross state lines or otherwise engage in interstate commerce with vehicles in excess of 10,000 pounds gross vehicle weight rating. This authority is valid for the life of the business, absent any ownership changes or lapses in insurance coverage. 

Public Utility Commission - Several states also require their own intrastate operating authority. Like the Federal authority, most states have exemptions for emergency towing with some also only requiring authority for larger commercial trucks over 26,000 pounds gross vehicle weight rating. These vary and may be required to be renewed at different intervals. Typically issued by the Public Utility Commission or similar Agency, these requirements may be met for out of state based towers by complying with the Unified Carrier Registration. 

US DOT Number – In addition to the MC number above, the FMCSA and many states also require operators of commercial vehicles to obtain and display a motor carrier identification number known as a US DOT number. This number requires filing of a bi-annual update to remain active and valid. 

Unified Carrier Registration – Any motor carrier that operates vehicles with a gross weight rating in excess of 10,000 pounds that cross state lines is required to comply with UCR, even if you are based in a non-participating state. This registration renews annually. 

Tow Operator Certificate – Several jurisdictions and at least two states require towing operators to be licensed individually to perform non-consent towing. There may be initial training and continuing education requirements to obtain and renew these licenses. Please check with the agencies regulating towing in the areas you plan to operate within. 

Driver’s License – It goes without saying that the tow operator actually driving the truck must have a valid driver’s license for the class and type of vehicle being operated. A few states have specific requirements to drive non-CDL required vehicles in a for-hire environment such as requiring a chauffeur or for-hire license and at least one state, New York, requires a tow truck endorsement even on non-CDL licenses. Check with your state driver licensing agency for more information and expiration dates. 

While the above list is not exhaustive, it gives the tow boss a place to start evaluating if they have all the required licenses to operate a towing company. If I missed anything please let us know, I learn more from interacting with the readers and would be happy to pass on any additional information.