How to Start a Driving School in Michigan: A Step-by-Step Guide

Here you’ll learn everything you need to start your Driving School in Michigan

Michigan’s process for starting a driving school in the state. It’s clear spelled out in a variety of documents on the Secretary of State’s website.

Both the school and instructors have to be licensed through the Secretary of State. Much of the work can be completed online, include school and instructor license renewals.

Your Michigan driving school may offer both classroom and behind-the-wheel instruction.

How to open your driving school in Michigan

• Michigan’s process for starting a driving school are straightforward.
• Driver education providers may provide classroom instruction and behind-the-wheel education for teens and adults, and CDL training—but each program must be approved.
• Driving instructors must be licensed by the state, including taking a series of four courses before licensing.
• You may operate your school out of your home but may not provide classroom instruction there—you may rent space in a public or private school, or a church or other location.
• You must maintain records for all students for four years at your main office, and must provide written contracts which contain specified items.
• The classroom curriculum is divided into Segment 1 (24 hours in class, 6 hours behind-the-wheel, and 4 hours observation) and Segment 2 (taken after the student has 30 hours of supervised driving).
• Michigan does not require training before obtaining a CDL, but recommends it.

Driving School Licensing and Requirements

General requirements

To operate a driving school in Michigan, you will need to be licensed by the state. Licenses are valid for two years from the date of issue. The state will send renewal applications around 60 days before expiration–and you can renew online. In addition to a completed application form, your application packet should include the following:

• The application includes background information for all owners, partners, directors, and designated representatives.
• Completed surety bonds for each program you offer. Regular driver education schools must provide bonds of $20,000 when you have 999 or fewer students in the previous calendar year, and $40,000 when you have 1,000 or more students.
• Certificates of Insurance for all vehicles used in your school; as you might expect, you also need to provide a list of all vehicles used in your courses.
• Your classroom facility must be approved by the state Fire Marshal.
• If you operate a multiple vehicle driving range, the state also needs to approve it.

The current regulations for Driver Education Providers are straightforward and clear. Driving school instructors and owners should know and comply with them, and the state recommends putting a shortcut to the manual on your desktop.

Michigan requires the following minimum liability insurance coverage:

• $100,000 bodily injury to one person
• $300,000 bodily injury to more than one person
• $50,000 personal injury protection–medical expenses, primarily
• $5,000 property damage

If you have employees, you must carry workers’ compensation insurance covering them–and potentially you–in the event of injury while on the job. You should, of course, consider higher coverages and/or an umbrella policy to cover your operations.

Driving School Owner’s License

Michigan places few personal requirements on owners of driving schools. The main bar would be conviction for a number of crimes involving fraudulent behavior or moral turpitude. Everyone directly involved with program administration must have a criminal background check using LiveScan. You may use a number of private LiveScan providers.

Driver education provider’s licenses can also be denied/revoked if your driving record is marked by suspensions, revocations, DUIs, or 6 ore more points.

You may not operate without a license for your program, and it is expected that your program of instruction will meet or exceed the requirements set by the Secretary of State.

In determining your surety bond amount, count all students–whether they passed or failed.

Driving Instructor’s License

While few specific requirements are set for driving school owners, instructors must demonstrate qualification before they receive a license from Michigan.

Submit the application form and the $45 fee. Instructors must meet the following qualifications.

• Be at least 21 years old. and have at least a high school diploma (or the equivalent).
• Have at least 5 years driving experience in the license class you will be teaching.
• Not have a suspended or revoked license.
• Pass the criminal background check.
• Submit a Medical Examination report.

Driver Education Instructors in Michigan must also take a driver instruction program from an approved entity. This program involves 4 courses, covering (1) Driver task analysis, (2) Developing classroom and program knowledge, (3) Developing vehicle operation skills, and (4) Practicum. Each course must carry at least 2 semester hours and last at least 3 weeks. Some driving schools are able to teach these courses.

Instructor licenses must be renewed every two years.

Unlike many states, Michigan driver education instructors may provide instruction for multiple driver education providers on a single license.

Renewal requires professional development during the two year life of the license.

Location

You are generally free to establish your business anywhere you see fit–meeting the requirements outlined below. You can choose to have classroom space, or you may conduct classroom driver education at off-site locations, including local public or private schools, or churches. Your contract with the school or other location should be included in your license application.

Your office space must meet local and state building requirements. If you use your residence for your office, you must comply with all local zoning requirements.

You may NOT provide classroom instruction in your residence.

If you maintain a separate classroom location, you may not keep records there (you probably wouldn’t want to keep records at a public school classroom anyhow, even if the school gave you permission).

Records must be maintained at your main business office.

Classroom facilities must be in a building suitable for instruction. Compliance with local and state sanitation requirements is expected. The classroom must be equipped with suitable desks, tables, chairs and other items appropriate to the setting.

No classroom instruction segment may have more than 36 students, although the local fire marshal may limit the class size below that, depending on the location. You may be able to get permission for a Segment 2 class of larger than 36 students.

Your school name cannot be substantially similar to that of another driving school, and you may not use the words “State”, “Government”, “Municipal”, “City”, or “County” in the school name, and you must use your school’s name only in advertising and publicity.

Don’t ever give a student or parent the impression that your instruction guarantees receiving a driver’s license–you may mention your pass rate.

Vehicles

Your vehicles need to have dual controls for the brakes. They must have passed the most recent Michigan safety and emissions inspections.

Signage must both identify the school and mark the vehicle as driven by a “STUDENT DRIVER”. The latter must be in letters at least 2” high, written in black on a school-bus yellow background. The signage may be on the car top, or on the sides and rear.

Records and Contracts

Before you can begin a course, you must submit a Program Request Form to the Secretary of State at least 10 days in advance. Your courses must have a distinct Program Number, which must be recorded on the contract for each student, as well as the Request Form and Program Completion Data form (for teen courses only).

Information on the Program Number is available on page 101 of the Manual. You may use your own system (and use a system–you will be able to keep track better!).

You must notify the Driver Education Section if a course is cancelled or postponed. The easiest way to do that is to submit a copy of the Program Request form with “Cancelled” or “Postponed” written across the top (in red, thick Sharpie, we’d suggest).

By January 31 of each year, you also need to submit a Year-End Report to the Driver Education Section.

The State requires you to maintain certain records at your “established place of business”–your main office. The recordkeeping requirements begin on page 110 of the Manual. Records must be kept for four years.

For each student, you must include the following:

• Signed contracts, enrollment and/or registration forms.
• Classroom record-keeping, including attendance, state knowledge test scores (including answer sheets for all attempts at the Segments 1 and 2 tests for teen drivers), and other test/assessment scores–maybe a gradebook or spreadsheet.
• Behind-the-Wheel/Observation forms.
• For teen behind-the-wheel instruction, a signed agreement between the provider and parent that either requires at least 2 students be in the car for BTW education, or a waiver, allowing the instructor to be alone in the vehicle with the student.
• Copies of instruction permits for students 18 years old and up.

The records must be available in a manner which allows the type and amount of instruction for each student is easily ascertainable.

For teen students, you must make sure your records include full information on the following:

• Dates and hours of classroom, BTW instruction, and observation.
• Registration and achievement records
• Full payment information for all aspects of your course.
• Contract copies
• Program Request and Completion Data forms.

The recordkeeping requirements for adult students are a bit streamlined, but it may be easier for your system to keep identical records for them.

The state provides a number of forms which might help with recordkeeping, although you are free to create your own. If you choose to keep records electronically, make sure you can scan to your hard drive. Many 3-in-1 printers are inexpensive and will be invaluable for your business.

You must have written contracts with each student. You must keep a copy, and you must give the student and parent before any instruction begins.

Information on the contracts begins on page 116 of the Manual. The state also provides a checklist for Michigan driving schools to develop their own contracts, as well as a sample contract you can use.

Contracts must include certain required language regarding certification and Segment 2 instruction. The language is found on page 117 of the Manual, and is found in the sample contracts.

Driving School Curriculum in Michigan

Driving schools in Michigan may offer classroom instruction, behind-the-wheel training, or both.

Segment 1 courses include both classroom and BTW instruction. The two must be integrated with each other. A Segment 1 course must include at least 24 hours of classroom instruction, 6 hours of behind-the-wheel instruction, and 4 hours of observation time. Segment 1 courses are subject to the following restrictions:

• Classroom instruction may last no more than 2 hours per day, and the course must least for at least 3 weeks.
• No student may get behind the wheel until receiving at least 4 hours of classroom instruction.
• At the end of Segment 1, each student must take a knowledge test.

Behind-the-wheel instruction is subject to the following rules:

• A student may receive no more than 1 hour of BTW instruction per day.
• At least 3 hours of BTW must take place before the Segment 1 Classroom Instruction finishes.
• No more than 4 students may be in the vehicle.
• All BTW must be finished within 3 weeks of the end of classroom instruction.
• Range instruction may be substituted hour-for-hour up to 2 hours total; 4 hours of true BTW education must be provided.

There’s no limit on the amount of observation time a student may receive in a day. All observation must be completed with 3 weeks of the end of classroom instruction.

Segment 2 instruction is available to students who have (a) completed Segment 1, (b) have had their level 1 graduated license for at least 3 months, and (c) have at least 30 hours of supervised driving (at least 2 at night) with a parent, guardian, or licensed driver at least 21 years old.

Segment 2 courses include

• 6 hours of classroom instruction, no more than 2 hours per day.
• A state approved knowledge test.

The state recommends but does not require a parental meeting during either Segment 1 or Segment 2.

Michigan expects that you will follow the state Driver Education Curriculum. While you may create your own, it will require approval from the state.

The modules you must teach during the 24 hour Segment 1 are:

• Introduction to Driving
• Getting Acquainted with the Vehicle
• Understanding Starting, Steering, and Stopping
• Traffic Control Devices
• Vision/Space Management
• Basic, Low-risk Maneuvers
• Risk Reduction
• Sharing the Road with Others
• Adverse Driving Conditions
• Factors Affecting the Driver

Segment 2 must cover the following topics during the 6 hours allotted for it, based on the 30 hours of supervised driving students must have before starting Segment 2:

• Risk Awareness
• Distracted Driving
• Effects of Drugs and Alcohol
• Effects of Fatigue and Emotion
• Organ Donation

Commercial Driver’s License Instruction

Providing instruction for students pursuing a CDL in Michigan generally follow those for the regular driver’s license. In this section, we’ll note the key differences.

You must file a surety bond of $50,000.

On April 15 and October 15 of each year, you must file a Student Training Report with the Secretary of State.

You need to keep records of the following information for all students.

• Dates and hours of classroom, range, and on-road instruction, signed by the instructor and initialed by the student.
• Student payments for all aspects of the course,
• Copies of signed student contracts.
• A copy of the student’s valid CDL instruction permit.

Records must be kept for four years.

Starting a Small Business in Michigan

Your driving school is not just subject to the requirements for driver’s education in Michigan. You also need to establish your Driving School as a small business, and have to consider a number of factors. The form of business you take up, as well as the procedures, are appropriate topics of conversation with your lawyer and accountant. The considerations we offer here are not legal advice, but should provide you with things to think about as you set up your business.

Michigan provides a guide for starting a small business in the state.

Business Registration

All businesses need to register in Michigan, especially the business name—the “doing business as” certificate. Banks may not be willing to set up your account until you have that DBA form. We’ll include where to register in the business structures below.

You will also need to obtain a Federal Employer Identification Number. Banks may need it for your business accounts, and you may be wanting to employ people. To obtain an EIN, go to the IRS website and complete the application form you find linked there.

You should also register with the Michigan Department of Revenue.

Business name

Before you get going, you’ll want to check to see if the business name you want is in fact available in Michigan. You can search the Michigan database, as well as visit the office of the county recorder.

Once you know your business name is available, you can reserve it with the Secretary of the Commonwealth’s office.

Sole Proprietorship

Owning your own business is the easiest one to set up, but also may open you to liability concerns. As a sole proprietor, your business is simply part of your life. You keep a separate set of books, and complete a Schedule C for your 1040 form every April.

Sole proprietorships can expose the proprietor for full liability, even with insurance. That may mean that if you are sued, you may lose your home and property, as well as your personal bank accounts and other assets. This risk may not be worth the ease and independence.

In Michigan, the big step you have to take is to register your Assumed Business Name with the county clerk where you have your established place of business.

Corporations and LLCs

You may set up a full corporation (“Inc.”) as your business structure. Corporations limit your liability for loss to your investment in it, as a general rule (although banks may require you to be obligated personally if you take out a loan to get your business going). This form of business keeps your personal assets safe.

As an owner of a corporation, you’ll have to set up your driving school consistently with the rules for corporations in Michigan. You’ll also have to decide whether to be an S Corporation or a C Corporation. Generally, the S Corporation form is set up for small businesses. It allows income and taxes to pass through to the owners. You will want to discuss these forms with your attorney and accountant.

You may be able to set your driving school up as an LLC in Michigan. The LLC form provides the same limited liability as a Corporation, but do not have to comply with the corporate formalities most states require, including items like bylaws, required stockholder meetings, and minutes (although minutes of meetings are probably a good idea).

You’ll have to discuss the advantages and disadvantages for the LLC with your attorney and accountant.

Both Corporations and LLCs file with the Secretary of State. In addition to name reservation, you’ll need to submit the following forms

• Corporations submit Articles of Incorporation.
• LLCs submit Articles of Organization.

Now What Do I Do?

Once you’ve complied with all the legal requirements to be both a driving school and a small business in Michigan, you need to get students.

Getting students requires marketing—largely on the internet. You will need the following systems set up to obtain students:

• A website—focused on the types of students you want to attract, and aimed at your locality.
• The website should also include a blog, which allows you write about a variety topics and engage in Search Engine Optimization—which will drive traffic to your site.
• A Facebook page, linked to your website, to become noticed and drive traffic.
• Getting testimonials from successful students.

Marketing is something you will have to devote time to. DrivingSchool.Marketing can help you get the best bang for your marketing buck.

Conclusion

Michigan makes it easy to get your school up and running. While you’ll have to have everything ready, including your curriculum and lesson plans, ready to go before you start, once you’ve filed you’ll be ready to go.

Disclaimer: This page is part of DrivingSchool.Marketing’s series of state and provincial pages designed to help entrepreneurs like you start driving schools. States change their regulations, or the web pages they host their forms. While we believe these rules are accurate as of the date of publication, we cannot guarantee full accuracy. Please let us know if you spot any problems.

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Josh Meah

Josh is the CEO of DrivingSchool.Marketing. His goal is to be the marketing and business development partner of driving schools around the world, helping them become thriving businesses while also expanding general awareness for the importance of traffic safety standards and education.

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