How to Start a Locksmith Business in 14 Steps (In-Depth Guide)

Updated: February 13, 2024 is reader-supported. When you buy through links on my site, we may earn an affiliate commission. Learn more

The locksmith service market earned $2.7 billion in 2022. The industry saw a decline of 10% in 2022. Despite seeing a loss in profit, the locksmith industry remains an integral part of the U.S. economy and is necessary for the residential and commercial property sectors.


Modern locksmiths must have expertise in access control systems, home and business security consultations, safe maintenance, key duplication methods, and more. They combine mechanical skills with an understanding of electronics and software.

This guide offers insight into how to start a locksmith business. Topics include market research, customer focus, registering your EIN, obtaining business insurance, forming an LLC, competitive analysis, sourcing equipment, and more.

1. Conduct Locksmith Market Research

Market research is required to form a successful locksmith business. It provides details on pricing, local market saturation, trends in services and products, and other details critical to your business plan. To open your own locksmith business, invest in primary and secondary market research.


Some details you’ll learn through research on a home or car locksmith business include:

  • With more households and businesses needing security, demand for lock upgrades, installations, key duplications, and emergency services will continue rising.
  • The industry remains highly fragmented with most companies being small, local businesses. This allows ample room for expansion in most regions.
  • When researching your local locksmith market, analyze demographics to identify areas with high homeownership rates, growing populations, and new construction.
  • Affluent neighborhoods and commercial districts are also ideal target markets.
  • Compile a database of existing competitors in your planned coverage zone and compare their offerings, prices, and customer feedback.
  • Evaluate trends in access control systems, smart locks, and security integrations to forecast where consumer demand is heading.
  • Ongoing innovations in biometrics, mobile credentials, IoT integration, and cryptographic locks are reshaping what modern locksmiths need to know.
  • Understanding regional crime and vandalism rates can reveal untapped markets needing upgraded security. Track when peak seasons occur for locksmith services in your area.
  • Seasonal needs often emerge with students leaving for college, cold weather increasing break-in attempts, or summer travel vacations raising security installations.
  • Evaluate opportunities to provide consultations, system recommendations, safe maintenance, master key systems, and access control alongside traditional offerings.
  • With appropriate licensing, talented locksmiths can also get steady business from insurance companies, police departments, property management firms, automotive dealers, and government agencies.
  • By specializing in access control, safes, or auto locks once established, a locksmith business can boost revenue by targeting key institutional clients.

By leveraging market research data, trends, and partnerships, a new locksmith company can identify profitable niches to pursue while avoiding oversaturated markets. Specializing services and targeting underserved demographics and clients are keys to thriving in this steadily growing industry long-term.

2. Analyze the Competition

Thoroughly researching other locksmiths is crucial when launching a new locksmith company. Start by identifying established locksmiths, security companies, hardware stores, and even mobile auto lockout services operating in your intended territory.

Some ways to get to know other locksmith businesses include:

  • Compile a database indexing each competitor’s offerings, pricing, years in business, online presence, customer reviews, and any specialties.
  • Drive around the area and note the location of brick-and-mortar locksmith shops, availability for emergency calls, vehicle signage, and any advertising visible.
  • Evaluating rivals helps you identify service gaps you can fill and avoid copying what’s already saturated.
  • If numerous competitors offer mobile service but no 24/7 emergency lockout calls, you have an opportunity.
  • If commercial access control is lacking in the region, you can specialize your skills there.
  • Check each locksmith’s website domain authority, backlinks, visibility on maps/GPS, and search engine rankings.
  • Install analytics software to track website visitors, conversions, and online interactions over time.
  • Search online review sites and social media to analyze customer sentiment, complaints about competitors, and what consumers wish locksmiths offered.
  • Ongoing social listening helps you respond to negative reviews and guide your reputation management.

While market research provides top-down data on Macro industry trends, competitor analysis gives bottom-up insights on winning local customers. Marrying external market data with observational data on rivals operating in your territory yields key insights no dataset alone can reveal.

3. Costs to Start a Locksmith Business

Creating a business with a focus on security systems means spending a little money. From the startup costs of registering your business to the ongoing business expenses of obtaining automotive lock picking tools, here are some of the common expenses you’ll encounter.

Start-up Costs

When starting a locksmith company, your initial costs largely depend on whether you operate mobile-only or lease a storefront. Typical startup expenses fall between $10,000-$30,000 before factoring in inventory and work vehicles.

  • Administrative & Licensing Fees – $300-$1000: The bare minimum admin fees include registering your business name ($100), obtaining a tax ID ($100), and acquiring any required state or municipal licenses ($100-$250+).
  • Professional Services – $1000-$5000: Hiring attorneys for lease review, contracts, and liability advising averages $100-$250 per hour. Accountants cost $200-$500 to establish payroll, tax compliance, and bookkeeping.
  • Commercial Insurance – $1200-$5000 per year: General liability coverage is essential covering slip-and-falls, employee injuries, and accidental property damage. Typical locksmith general liability insurance costs $1000-$2500 per year.
  • Tools & Equipment – $3000-$25,000: A fully outfitted service van runs $20,000-$30,000. However, used vans can be sourced for $3K and custom retrofitted.
  • Inventory Costs – $1500: From blank keys to locks to access control components, maintaining ample inventory gets expensive for handymen locksmiths. Focus inventory on best-selling items and apps, ordering niche products as needed. Factor at least $1000-$3000 for initial wholesale key and product orders.
  • Marketing Costs – $300-$5000: The basic logo design starts at around $300. A professional website built specifically for locksmith lead generation can cost $2000-$3500.

Ongoing Costs

Assuming you operate a small shop or office with 1-3 employees, monthly costs often include:

  • Rent & Utilities: $1500+
  • Vehicle Fuel & Maintenance: $500
  • Staff Payroll Including Taxes: $4000
  • Insurance: $100-$350
  • Inventory Restocking: $500
  • Advertising: $300
  • Software, Office Supplies, Professional Fees: $250

Therefore, expect to spend approximately $7,000 or more per month on overhead after accounting for all utilities, payroll, approvals, and advertising agreements made during startup.

Carefully projecting both the initial investment needed and ongoing costs helps locksmiths set profitable pricing to cover overheads. Building emergency funds for big-ticket purchases like adding vans or technicians is also wise once established.

4. Form a Legal Business Entity

When starting a locksmith business, properly structuring and registering your company protects your assets if sued. The four main entity options each have pros and cons to weigh.

Sole Proprietorship

A sole proprietorship is the simplest and cheapest way to form a business. You operate under your name taxed only once on business income. However, you have unlimited personal liability for debts and legal issues arising from the locksmith company. Any lawsuit or bankruptcy can put personal assets like your home at risk.


Forming a general partnership divides ownership and liability risks amongst partners through a partnership agreement. However, partners are still jointly responsible for each other’s business actions and debts. The partnership itself pays no income taxes, all profits and losses pass through to partners to report on personal tax returns.

Limited Liability Company (LLC)

For most locksmiths, forming an LLC offers the best protection with the least administrative hassle. LLC owners (called members) get legal and financial liability protection similar to shareholders in a corporation. The LLC shields personal assets if the business is sued or goes into debt.


Establishing a business or S-corporation creates the strongest separation between business and personal assets. Shareholders aren’t typically responsible for corporate debts and legal issues.

Stricter record-keeping and reporting requirements add to accounting costs. Income is also taxed once at the corporate rate then dividend payments are taxed again personally for shareholders. For small locksmith companies, the double taxation and paperwork make LLCs a better initial choice.

5. Register Your Business For Taxes

All locksmith companies must obtain an Employer Identification Number (EIN) from the IRS to handle payroll, open business bank accounts, and file taxes properly.

An EIN acts like a social security number for your business. Apply online for free via the IRS website in just minutes.

To complete the application, have your LLC paperwork, address, and Social Security Number handy. You’ll need to share basic information about your company structure and ownership.

Once submitted, you will receive an EIN confirmation letter containing your new tax ID number immediately. This letter is your proof of EIN registration to show banks or clients.

With an EIN established, contact your state revenue or taxation department to register for sales tax collection. They will determine if you need to charge sales tax on locksmith services and hardware sales based on your location and structure.

Some states may require additional local business or occupational licensing beyond your national tax ID. Check municipal websites for license costs and applications for the city/county your shop resides in.

Keeping up with quarterly estimated income taxes, payroll withholding, 1099 independent contractor payments, and sales tax data requires working closely with an accountant. Factor their regular fees into your operating budget.

Accurately charging, collecting, reporting, and remitting all applicable sales taxes and withheld payroll taxes keeps your company compliant. Staying on top of notices from federal, state, and city revenue departments also prevents penalties for late filings or underpayments down the road.

6. Setup Your Accounting

Properly managing your finances is crucial for any service-based small business like locksmiths. Accurately tracking deductible expenses and staying current with quarterly estimated taxes helps optimize cash flow for growth. This is where leveraging accounting software and professionals pay dividends.

Accounting Software

Apps like QuickBooks provide an easy way for locksmith businesses to categorize income and expenses, generate invoices, manage payroll, reconcile bank accounts, and simplify taxes. The software can connect directly to your business bank and credit card accounts to automatically import the latest transactions.

Hire an Accountant

While DIY accounting software helps, most small business owners utilize accounting firms for setup guidance, ongoing bookkeeping, and taxes. A bookkeeper handles collecting documentation, entering data, categorizing transactions, and regular financial report generation monthly for around $200.

Open a Business Bank Account

Remember to always separate personal and business transactions. Insist clients remit payments to your dedicated business account tied to accounting software.

Apply for a Business Credit Card

Business credit cards also help segment expenses for reporting, get one using your EIN and expected annual revenue to request an appropriate balance. Keeping clean financial records makes tax prep and growth funding simpler as your locksmith service takes off!

7. Obtain Licenses and Permits

Proper licensing ensures locksmiths operate legally and protects customers from unqualified technicians. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.

Some areas mandate all locksmiths register for occupational or business licenses costing $50-$500 renewed every 1-3 years. Common licensing criteria encompass proof of training, passing a criminal background check, and insurance compliance.

For example, licensed master locksmiths in Texas must document three years of apprenticeship experience including opening safes and lockout services. Violating state locksmith statutes brings fines up to $10,000 in certain regions. Stay compliant with all practice acts and license mandates governing your profession locally.

If hiring employees down the road, your company must obtain an Employer Identification Number (EIN) from the IRS to handle payroll taxes properly. Some counties also require posting bonds to take effect if payroll obligations go unmet.

Review municipal codes to determine if you need special venue licenses should you decide to operate a brick-and-mortar storefront. For example, some cities issue mercantile licenses costing $50+ depending on your office size and staff count.

Ensure all company vehicles receive proper registration with the DMV including any lettering or branding. If parking cube vans, trucks, or trailers overnight, secure commercial parking permits where required. Neighborhood street parking restrictions also typically prohibit oversized vehicles.

Some regions mandate locksmiths carry surety bonds worth $25,000+ protecting customers if your business closes abruptly. These consumer protection bonds supply refunds for any unfinished jobs should your company shut down unexpectedly.

In rare cases, city-issued licenses may limit the maximum rates locksmiths can charge for after-hours jobs. Keep pricing modest on emergency openings to avoid scrutiny. Routinely review ordinances for changes.

8. Get Business Insurance

Operating a locksmith company carries numerous risks that make business insurance essential. Not only can it prevent financial ruin from accidents or lawsuits, but many large clients mandate insurance certificates to solicit bids.

Imagine bidding on a hotel master key system project worth $250,000 before a clumsy apprentice damages a historic entryway carving while onsite measuring. Or an in-house safe tech accidentally scratches a client’s priceless painting hanging nearby.

Other scenarios like lockpick tools damaging electronic access ports, security flaws after installations leading to robberies, or even simple slips from ladders could lead to massive liability claims without policies protecting the company.

General liability insurance covers legal judgments, attorney fees, medical payments, and settlement costs if sued by a third party. Locksmith general liability runs approximately $650-$2500 annually depending on location and years of experience.

Separate commercial auto policies help handle collisions, injuries, or equipment damage involving your company vehicles for about $900-$2300 per van depending on coverage levels and deductibles.

Loss of income stemming from property damage, equipment failure, or even pandemic slowdowns also threaten profits without proper business interruption riders.

Bundled business owner’s policies simplify insurance with protection spanning property damage, liability claims, loss of income, worker injuries, and more. But expect costs ranging from $1500-$4500+ yearly for robust small business coverage.

Obtaining Coverage

  1. Set up an EIN through the IRS first to establish your formal business structure
  2. Gather equipment inventories, profit/loss estimates, payroll figures, liability scenarios, and policyholder details insurers will request
  3. Comparison shop brokers and direct insurers like Hiscox, and ask for locksmith-specific recommendations to find the best premiums for your particular risks.
  4. Review proposed coverage including limits, exclusions, deductibles, and out-of-pocket impacts to customize the policy protecting assets most important for your locksmithing business.

While added paperwork and monthly premiums seem needless for stretched startups, this small upfront investment could save your livelihood later on.

9. Create an Office Space

Having a professional centralized office provides locksmiths room for consultations, equipment storage, training, and access control configuration away from home distractions. While a dedicated commercial location runs $1500 monthly, alternatives suit mobile-first operations’ needs and budgets.

Home Office

Working from a spare bedroom or basement keeps costs minimal at first. Expect to invest around $2000 in outfitting the home office with a desk, file cabinets, phone line, fast internet, security DVR, and storage solutions for duplicate keys and inventory. This allows meeting walk-in customers or discussing installations privately without leaving the house.

Coworking Space

Shared offices like WeWork offer convenient drop-in workspace for $300 monthly. Gain a business mailing address, secured WIFI, conference rooms, front desk reception, and reliability without facilities headaches. Storage limitations hinder large-scale hardware or in-progress jobs. However, the flexible terms and networking perks provide transitional quarters before signing longer-term leases.


High foot traffic areas expect base rents of $2500+ monthly for 1500 square foot units. However, store visibility enables steady walk-in traffic, room for retail key duplications, and central equipment access for technicians. Keep displays, access control demo units, and design centers to entice sales beyond service calls from passersby.

Commercial Space

For established locksmiths, signing a standard commercial lease for at least 5 years secures office customization flexibility starting at around $4 per square foot monthly. Build out raw shells with shatterproof windows, monitored access points, dedicated training facilities, and secure inventory rooms sized for future scaling.

10. Source Your Equipment

Outfitting a new locksmith operation requires specialized tools spanning electronic key coders, transponder cloning gear, key duplicators, lock picks, code cutters, and more. While buying equipment new ensures reliability, alternatives help minimize steep initial investments.

Buying New

Direct manufacturers like HPC offer equipment bundles for $2000. Common starter packs include key machines, code cutters, extractor toolkits, Honda car opening tools, and more. Larger suppliers also provide financing 0% financing to help new locksmiths scale gradually. Expect to spend $ 5,000 for robust inventories suiting most residential and automotive jobs.

Buying Used

Facebook Marketplace and Craigslist routinely list quality used commercial locksmith gear at 40-60% discounts. Search for key duplicators, transponder cloning tools, code cutters, key programmers, decoding scopes, and more. Meet local sellers to inspect conditions before purchasing secondhand.


Tool rental houses like Herc Rentals carry basic extraction toolkits, door closers, code cutters, and tubular lock picks for daily rates of around $45. This avoids large outlays when only needing specialty tools occasionally. However limited selection and usage terms make long-term rentals impractical.


Most major equipment distributors offer 18-24-month leasing options to keep payments manageable. This allows upgrading tools as needs evolve while preserving capital for other startup costs like office leases and vans. Expect administration fees upfront and restrictions on modifying leased equipment. Maintenance and damage waivers add 10-20% to monthly costs as well.

11. Establish Your Brand Assets

Crafting a recognizable brand identity helps locksmiths stand out from competitors and appear more established to customers. Your logo, style, website, and marketing materials should all coordinate to reflect the expertise people come to rely on.

Getting a Business Phone Number

Acquire a dedicated business phone line through providers like RingCentral to accept calls and voicemails professionally. Cloud-based virtual phone services offer vanity numbers, extensions, integrated contacts, and voicemail transcription for $30+ monthly per user.

Creating a Logo and Brand Assets

A custom logo like those created using Looka visually encapsulates your locksmith brand for under $50. Scalable vector files allow brandmark consistency on signs, shirts, websites, business cards, and advertising. Restrict fonts, colors, and graphic treatments to specific hex codes and RGB values so all assets align.

Business Cards and Signage

Well-designed Vistaprint business cards make memorable first impressions when meeting homeowners on service calls, networking events, and cold sales meetings. Expect to hand out 20+ cards weekly as one of the most powerful yet inexpensive marketing options.

Purchasing a Domain Name

Secure a domain like YourLocksmith [dot] com using registrars like Namecheap for under $15 annually. Short, simple domains are best. Hyphens and hard-to-spell words hurt retention. Benchmark availability across TLDs like .com vs .net to prevent confusion. Redirect earlier registered domains to your primary URL as the business grows.

Building a Website

Well-designed websites like those built via Wix provide 24/7 sales touchpoints and credibility. However, custom web development from freelancers found on Fiverr offers more advanced lead generation and security functionality. Use drag-and-drop templates for basics like hours, services, and photo galleries at first. Consider custom-coded sites later to allow quoting, scheduling, e-commerce, and responding to reviews.

12. Join Associations and Groups

Expanding your professional network with industry peers helps locksmiths stay atop trends, cement supplier relationships, and boost credibility. Local groups, national associations, online forums, and events give various networking opportunities.

Local Associations

Regions often have dedicated locksmithing guilds you can join like the The Society of Professional Locksmiths. Expect nominal annual membership fees of up to $150 to access referral networks, training events, newsletters, and mentorships aiding startups.

Local Meetups

Use event sites like Meetup to find free gatherings to join other local service business owners for open networking events with sponsored food and drinks. These help expand referral alliances into related fields like access control technicians or security consultants.

Facebook Groups

National locksmithing Facebook Groups like Locksmith Network reach 2.6K members sharing news, techniques, job postings, and industry gossip relevant way beyond your territory. Participate to gain insights from pest control pros nationwide handling similar issues.

13. How to Market a Locksmith Business

Implementing an ongoing marketing strategy is crucial for gaining new locksmith customers while cementing your brand locally. As word-of-mouth referrals spread, focus your efforts on heightening visibility and conveying expertise to stand out from existing providers.


Leveraging Your Network

Initially ask colleagues, friends, and family to recommend your services to anyone needing lock work. Installing smart locks or safes for allies at cost generates goodwill. Request reviews on Google and Facebook that highlight great service for first customers.

Send thank you cards offering 10% off their next service call. This incentivizes sharing your name within their condos or neighborhoods where concentric referrals quickly compound new customers.

Digital Marketing Approaches

  • Run Google Ads campaigns focused on high-intent keywords like “locksmith near me” within 10 miles of your territory for qualified leads. Expect to pay $2 to $7 per click.
  • Facebook and Instagram ads target homeowners and influence impressions based on realistic objectives like phone calls, form fills, or location visits for under $100 monthly
  • Create engaging YouTube videos like “How to install a smart lock” to organically rank for traffic.
  • Blog about trending security threats in your region to attract concerned parties ready for upgrades.
  • Ensure your website appears on page one organically for services like “your city lock rekeying”.

Traditional Marketing Ideas

  • Print full-color flyers and mailers to households announcing new shop openings or seasonal service deals. Expect 2-5% response rates if targeted by location and home value via lists.
  • Attend home shows and security conferences to demonstrate lock capabilities in person, collect business cards, and supply branded giveaways.
  • Propose expert columns in local newspapers guiding readers on access control best practices. This spotlights your authority.
  • Arrange preferred vendor partnerships with real estate agencies, property managers, and insurance providers feeding recurring revenue.

Consistency compounds marketing results over 12-24 months. As your reputation grows, referrals accelerate while retaining customers through memberships and maintenance agreements prove more cost-effective than chasing new sales alone. Set realistic objectives and refine approaches quarterly.

14. Focus on the Customer

Providing exemplary customer service is crucial for locksmiths to spur word-of-mouth referrals and repeat business. Never underestimate the value of a highly satisfied customer.


For example, being stranded outside a home or business during inclement weather puts people in stressful, vulnerable positions. Responding rapidly with reassuring expertise quickly puts them at ease while solving the immediate crisis.

Taking extra time to explain to a flustered car owner exactly how you finessed their lock open earns immense appreciation for saving them hundreds of towing to a dealer. That gratitude gets shared repeatedly across their networks.

Following installations, walk homeowners through basics like rekeying procedures or programming access codes themselves to establish familiarity. Gifting new clients with branded refrigerator magnets with your contact info demonstrates reliable accessibility for future needs.

Even unsuccessful jobs that can’t resolve keys broken off in ignitions become opportunities to waive service fees and build goodwill.

Providing the utmost compassion and urgency during emergencies coupled with in-depth technical guidance in relaxed scenarios breeds customer loyalty spanning years and countless referrals.

With intimate access to clients’ most valued possessions, their trust becomes an invaluable business asset over time. Consistently prioritize service over sales. Putting people first ultimately drives prosperity.

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