Last Updated: January 02, 2023
Taxi Business Requirements
Published On: November 29, 2022

The taxi business is a profitable venture but requires a significant amount of capital to get started. However, it has the potential to generate profits quickly to cover the investment within a short period when run properly. There are multiple aspects related to opening and running a taxi business.

Laws and regulations of a specific country or region determine the basic requirements to start and operate a taxi business. However, many universal requirements remain the same as per the location. Let’s look at some of the major taxi business requirements.

Taxi Business Requirements | The Core Things To Consider


A valid license is required to operate a taxi business. The license can be issued by a regulatory board overseeing the licensing of the taxis in the region under its purview or by a government body. Many cities have medallion systems under which a specific number of medallions are given to taxi business owners permitting them to operate their taxis in the city.

The permit system is also in force in many states of the USA. The permit must be renewed yearly and is only good for one year. The taxi cabs are required to display the permit for the benefit of the passengers. The permits are issued to operate taxis in specific municipalities or counties.

Take the example of licensing requirements for the taxi business in phoenix az. General business licenses are given to taxi businesses in Phoenix operating as sole proprietorships, partnerships, corporations, or LLCs.

Fleet Of Vehicles

The basic requirement to start a taxi business is to own at least one car and deploy it for service. Depending on your resources, you can also start with multiple cars. More cars can be purchased to increase the fleet as your profits increase.

Many makes and models of cars are highly suited for use as taxis. The cars must have enough luggage space and be equipped with top lights, metering equipment, and communication equipment to enable contact with the driver whenever required. A logo of your company must also be displayed prominently on the taxi.

The cars must be registered for commercial transportation. The registration papers and other documents must be carried in the respective taxis at all times because the police can seek them during operations in any region. Permits and other documents may also be required depending on where the taxi company operates.

Depending on the country or state, tax insurance may or may not be compulsory. However, it is advisable to get the taxis insured to avoid financial losses in the event of a mishap.

Hiring Drivers

Recruiting drivers as full-time or part-time employees to drive taxis is a major requirement of starting a taxi business. A systematic process must be followed to hire drivers.

A commercial license is a basic requirement to drive a taxi. Thus, it is necessary to verify that the driver is considered to have a valid commercial license. For instance, one of the basic requirements for the taxi business in Maryland is to employ drivers possessing valid commercial driving licenses issued by the Maryland Department of Transportation, Motor Vehicle Administration.

A background check of each candidate should be conducted to ascertain past driving records, general conduct with passengers, personal habits, and more. A record of receiving fines for traffic rule violations or misbehavior with passengers, or alcoholism are common red flags.

Even though possessing a commercial driving license proves that the candidate has passed the necessary driving test, the candidate’s driving skills can be tested to assess his level of expertise.

Develop The Business Model

Complete details of the region where your taxi service would operate need to be assessed in detail. This is necessary to establish your taxi’s route plans and pinpoint your taxi service’s regional limits. Multiple regions need to be analyzed if your taxi service also intends to provide interstate transportation.

The tariff plan based on the number of kilometers covered, the distance between locations, or any other factor must be drawn up. Flexible tariffs varying between day and night or different parts of a region can be chosen. Extra remuneration for drivers working late at night or during peak hours can be included in the business model to ensure round-the-clock service without frustrating the drivers.

An office space to control the day-to-day operations of the taxi service is required. The office space should also have enough parking space to accommodate the taxis not in use at any time. The best approach is to rent a space.

Financial responsibility may be required by law to operate a taxi business. For instance, providing financial responsibility by liability insurance covering the death of the employees or bodily injury to the employees during duty and property damage comes among taxi business minimum requirements in north Carolina.

Tax Compliance

Tax returns must be filled on the revenues earned through the taxi business. The nature of taxation depends upon the tax regime in the country where your taxi business operates.

For example, the taxi business requirement in India vis-a-vis tax has been simplified with the advent of the GST regime. 5% GST is applicable on passenger fares charged by taxi companies in India. There is no GST on metered taxis.

Check out the following documentation required for the Taxi Business. 

Documents Required for the Cab Business Drive Authority Documentation Requirements for Getting a Driver’s License
Vehicle Registration Certificate Proof of identity Minimum education up to 8 Class
Vehicle insurance Proof of address At least 18 years of age
Clearance documents issued by the government Confirmation of address Must take a driving test
India-wide travel visa cost for registrations should have a certification in medical fitness

Mobile App

App-based taxi cab services have a major market share, especially because of the large number of smartphone users worldwide and the highly convenient way of booking taxis provided by mobile apps. Thus, developing a dedicated mobile app for your taxi service is beneficial.

Payment gateway integration provides a digital payment facility to passengers. The mobile app lets customers pinpoint their pickup and drop-off locations on a digital map. The driver gets the entire ride information and the route. The app automatically calculates the tariff.

The cost of developing a taxi booking app depends upon its complexity, features, third-party integrations, developer location, and more. On average, the cost of developing a simple taxi booking app with basic features ranges between $40,000 and $50,000. Let’s connect with MoonTechnolabs to know more about the same.

Also Read : Will Mobile Apps Increase the income of taxi business?


Marketing is important to get visibility and attract customers, especially because the competition in this sector is intense.

Ads on social media platforms such as Facebook, LinkedIn, YouTube, and others provide access to these sites’ huge user bases. Search engine advertising, such as Google Ads and email marketing, can also be used to improve your brand visibility.

Promotional marketing such as e-coupons, loyalty rewards, discounts on repeat trips, lucky dips, and more also help in influencing customers to use your taxi service.


So, this is all about the taxi business requirements that you are looking for, Moreover, Completing the basic requirements of a taxi or transportation business, followed by efficient operations and constant improvements, gives huge returns, and your company grows in size and brand value quickly. 


A business license along with a permit are the main requirements

Vehicle permits are required for taxis, while the drivers must possess valid public driver’s licenses or PVDLs.

Make a business plan and structure, get the necessary permits/licenses, acquire a fleet and drivers, purchase the necessary equipment and market your business.

Yes. It is a capital-intensive venture but has the potential to generate huge profits.

Commercial license along with necessary permits as per the local laws.

Yes. A taxi license can be obtained in Florida after getting a General Business License.
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Jayanti Katariya

Jayanti Katariya is the CEO of Moon Technolabs, a fast-growing IT solutions provider, with 18+ years of experience in the industry. Passionate about developing creative apps from a young age, he pursued an engineering degree to further this interest. Under his leadership, Moon Technolabs has helped numerous brands establish their online presence and he has also launched an invoicing software that assists businesses to streamline their financial operations.

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