How to Start a Towing Business in California

October 29, 2026

Starting a towing business in California means working through several agencies, each with its own forms and fees. The good news is that the sequence is predictable once you know it. The state does not issue a general business license, so your towing authority comes from the federal carrier number, the California Highway Patrol (CHP) carrier ID, and the Department of Motor Vehicles (DMV) Motor Carrier Permit, plus the driver, insurance, and local requirements that apply to your operation.

This guide walks through those steps in the order you will usually need them. It is informational content, not legal or tax advice. Rules change, and some figures depend on your vehicles, cargo, and city. Confirm details with the named agency before you commit money, and talk to a qualified attorney or CPA about your entity, contracts, and lien practices.

What You Need Before You Start

Before you apply for any tow-specific authority, you need a legal business entity and the basic registrations every California business uses. Gather these items first:

• A business name that meets state rules and is available on the Secretary of State search
• A registered agent in California, either an individual who lives in the state or a corporation with the required certificate
• A California office address for the entity, which does not have to be a place of business activity
• Your vehicle list, including each truck's year, make, model, and weight rating
• An insurance broker who can quote commercial auto and liability coverage
• Personal identification and background information for every driver

For the entity itself, most towing owners choose a limited liability company (LLC) or a corporation. The core state costs look like this:

Item	State cost	Notes
LLC Articles of Organization (Form LLC-1)	$70	Filed through bizfile Online at the Secretary of State
LLC name reservation	$10	Lasts 60 days and cannot be renewed for consecutive periods
LLC Statement of Information (Form LLC-12)	$20	Due within 90 days of filing, then every two years
Corporation Articles of Incorporation	$100	A corporation name needs no designator
Corporation Statement of Information (Form SI-550)	$25	Due within 90 days of filing, then every year
LLC minimum franchise tax	$800	Owed from the first year for LLCs organized or registered in 2024 through 2026

For a 2027 to 2029 first taxable year, the first-year LLC amount may be $400 under RTC 17941(g)(2). Confirm that figure with the Franchise Tax Board (FTB) before you budget. The LLC fee is $900, $2,500, $6,000, or $11,790 once California-source total income reaches $250,000, $500,000, $1,000,000, or $5,000,000, respectively.

A California LLC cannot be a domestic series LLC, and an LLC cannot render a licensed professional service. Towing does not usually fall into that category, but ask your attorney if your structure is unusual.

Use the Secretary of State's Business Programs Division site for entity forms, and check name availability through the business search before you file.

The Carrier Chain: Steps 1 Through 3

Towing for pay means you are carrying other people's vehicles, and California regulates that through a chain of three identifiers. Work through them in this order, because each one depends on the one before it.

Step 1: Get a USDOT Number from the FMCSA

Your first step is a USDOT number issued by the Federal Motor Carrier Safety Administration (FMCSA). You will need it for every later application, so apply for it before you touch the CHP or DMV forms. Have your entity name, address, vehicle information, and ownership details ready. Confirm the current application process on the FMCSA website.

Step 2: Get a California Carrier ID From the CHP

Next, file the CHP 362 Motor Carrier Profile with the California Highway Patrol to obtain your carrier identification number, usually called the CA number. The form must include your USDOT number under Vehicle Code 34507.5(a)(1). Once issued, the CA number must be displayed on both sides of each vehicle under Vehicle Code 34507.5(b), so plan your truck lettering before the trucks go on the road.

Step 3: Obtain the DMV Motor Carrier Permit

The third identifier is the Motor Carrier Permit issued by the DMV under Vehicle Code 34620. Expect to show proof of insurance and enrollment in the biennial inspection of terminals and in the controlled substance and alcohol testing programs under Vehicle Code 34621(b) and 34630. The application is not complete without those pieces, so line up the insurance first (see Step 5 below) and treat the enrollment as part of the application, not an afterthought.

This guide does not print a permit fee because the DMV sets it by the number of commercial vehicles you operate. Check the DMV's current fee schedule before you apply. Confirm with the DMV whether each truck you plan to use is covered by the permit.

Common mistake: applying for the DMV permit with a CHP profile that is missing the USDOT number, or buying trucks before confirming the permit covers them. Both cause delays that can push back your first paid tow by weeks.

Step 4: Understand the Tow Truck Driver Certificate

The Tow Truck Driver Certificate is issued by the DMV, not the CHP. The CHP issues a temporary certificate in some cases. Under Vehicle Code 12520, a person employed as a tow truck driver, as defined in Vehicle Code 2430.1, may not operate a tow truck without:

• A valid driver's license of the right class for the vehicle being operated
• A tow truck driver certificate issued by the DMV, or a temporary certificate issued by the CHP

The permanent certificate requires Department of Justice or FBI clearance. It lasts up to five years and expires when the driver's license expires. The fee is set in Vehicle Code 2431, so check the current amount with the DMV.

Vehicle Code 2430.1 defines a tow truck driver by reference to towing or emergency road service in freeway service patrol operations under an agreement with a regional or local entity. The statute text does not settle whether every private tow driver needs this certificate. Do not assume that all of your drivers need it, and do not assume they are exempt. Ask the DMV and the CHP to confirm how the rule applies to your specific operation, including whether your work falls under a freeway service patrol agreement.

Your drivers are likely employees, which brings in workers' compensation coverage, the Employment Development Department (EDD) registration for payroll, and state wage rules. California's minimum wage is $16.90 in 2026 and $17.40 from January 1, 2027, according to a secondary source, so verify both figures with the state before you set pay.

Step 5: Buy the Right Insurance

Insurance is a state requirement for the permit, and the amount depends on what you tow. A motor carrier of property must carry at least $750,000 combined single limit. The lower $300,000 limit applies only when every vehicle is rated under 10,000 pounds gross and you do not carry hazardous materials. If you carry hazardous materials, you need more coverage, so confirm the figure with the DMV under Vehicle Code 34631.5.

Your insurer files proof of coverage with the DMV. If coverage lapses, the permit is suspended. Reinstatement after a suspension costs $150 under Vehicle Code 34623.5. Keeping coverage continuous is far cheaper than dealing with a suspension.

On-hook coverage and garage keepers coverage are not state requirements. They are business decisions based on the vehicles and property you handle. Talk to a licensed insurance broker about them, and compare quotes from more than one carrier. Get the exact figures in writing, because premiums vary widely by equipment, driving history, and the kinds of tows you take.

Common mistake: buying a policy that covers the wrong vehicle weight class. A policy written for light vehicles may not satisfy the permit requirements for a heavier truck, and you may not learn about the gap until the DMV reviews your filing.

Step 6: Follow the Permit Exchange Rule

California has a specific rule for picking up vehicles at another carrier's premises. Under Vehicle Code 34620(c), a motor carrier may not pick up a vehicle with a tow truck from another motor carrier's premises until it gives that carrier a copy of its Motor Carrier Permit. The releasing carrier must obtain that copy and keep it for two years.

This rule affects everyday operations. If you regularly collect vehicles from storage yards, body shops, or other towers, keep a current copy of your permit in every truck and make the exchange part of your pickup routine. Build a simple log so you can show when you gave the copy and to whom.

There is an exception for repossession companies licensed under the Collateral Recovery Act. If your business does repossessions, ask an attorney whether the exception applies to your licensing status.

Step 7: Handle the Local Requirements

The state process is only part of the picture. Most of your day-to-day rules come from local agencies and private agreements.

• City business tax: Most California cities charge a local business tax or require a registration certificate. Of 483 cities, 445 report revenue from one, and there is no common formula, so the amount depends on the city where you operate. Contact the city's business tax office before you open for work.
• County requirements: Counties license only regulated activities, so check whether your county requires a permit for your type of towing.
• Rotation lists: Many towers get calls through rotation lists kept by the CHP or local police departments. Ask your local CHP area office or police department how to get on a rotation and what the requirements are. This guide does not list fees or waiting times because they vary by agency.
• Storage lots: Storage lot rules and the rules for vehicle liens and sales are set by agreements and the Civil Code. Get legal advice before you sell any impounded vehicle, because the notice, timing, and procedure requirements are strict.

If you sell taxable goods, such as parts or accessories, you need to register with the California Department of Tax and Fee Administration (CDTFA). The sales tax rate is 7.25% statewide, and city rates run from 7.25% to 11.75% with district taxes. The seller's permit itself is free. Whether towing services are taxable is a question for the CDTFA or a tax professional, so check before you invoice. Learn more at the CDTFA website.

If you have an existing trucking or freight operation and want to understand general freight rules, the state's business guidance on related topics may help. Towing has its own permit and certificate chain, so do not rely on general freight rules alone.

Expected Results and Timeline

Your timeline depends on how quickly each agency processes your filings. Online Secretary of State filings are normally processed within about 5 business days or less, while paper filings can take 10 or more business days. The DMV, CHP, and FMCSA timelines vary, so plan for delays and avoid signing leases or buying trucks until your authority is in place.

If you complete the carrier chain, driver certificate, insurance, and local steps carefully, you may find that your first contracts and rotation calls come more smoothly. Owners who keep clean records, maintain continuous insurance, and follow the permit exchange rule may also face fewer compliance problems. These outcomes are not guaranteed, and results depend on your market, pricing, equipment, and management.

Common Mistakes to Avoid

• Skipping the order of steps. The USDOT number comes first, then the CHP carrier ID, then the DMV permit.
• Assuming the CHP issues the Tow Truck Driver Certificate. The DMV issues it. The CHP issues a temporary certificate.
• Assuming a single insurance amount fits every truck. Your coverage depends on vehicle weight and cargo, so confirm the limit with the DMV.
• Letting insurance lapse. A lapse suspends the permit, and reinstatement costs $150.
• Ignoring the city. A missing city business tax certificate can stop you from operating even when your state paperwork is complete.
• Mishandling impounded vehicles. Lien and sale rules are specific, and an error can create serious liability.

Ongoing Compliance

After you open, the paperwork continues. Keep the following on a calendar:

• Statement of Information (LLC-12) every two years, or SI-550 every year for a corporation, with the $250 penalty applying if the FTB assesses one after a Secretary of State notice
• The annual franchise tax, including the $800 minimum and any LLC fee that applies to your income
• Insurance renewal and proof filed with the DMV
• Driver certificate and driver's license renewals, since the certificate expires with the license
• City business tax renewals and any county or local permits
• Records of permit exchanges, kept for at least two years

Where to Get Help

Several free or low-cost resources can help you check your plan. The California Small Business Development Center network offers advising for small business owners across the state. The DMV website and the CHP website list their current forms and fees. For complex questions about liens, contracts, or your entity structure, consult a California attorney. For taxes, consult a CPA.

Next Steps

Start with the entity and the USDOT number, because everything else depends on them. Then file the CHP 362, apply for the DMV permit, and line up insurance before the application is due. Confirm the driver certificate rules for your drivers, set up your permit exchange log, and check your city's business tax requirements. Each step is manageable on its own. Working through them in order keeps the process from stalling.

This article is informational content only and is not legal or tax advice. Fees, thresholds, and requirements change, so verify every figure with the agency named before you rely on it.