Starting a motor car trading business in Victoria is an exciting venture — but before you can legally open your doors, you need to secure an LMCT (Licensed Motor Car Trader) licence. One of the most common questions aspiring dealers ask is: how much money do I actually need to get started?
The answer isn’t just about the licence fees. There are several layers of financial readiness that the Business Licensing Authority (BLA) will scrutinise as part of your application. Getting this right from the start is critical — especially since a failed application means you can’t reapply for two years and lose your application fee. If you’re unsure where to begin, explore our LMCT licence application service to understand how we help you get it right the first time.
Understanding the Core Costs of an LMCT Licence
Government Fees
The first cost you’ll encounter is the government application fee. At the time of writing, the LMCT application fee is approximately $991.30, and the first year of licensing costs around $1,489.80. These are fixed government charges and are non-negotiable regardless of the size of your dealership.
It’s important to note that if your application is refused, you forfeit the $991.30 application fee and are barred from reapplying for two years. This makes professional preparation essential. Learn more about common mistakes to avoid when applying for an LMCT licence so your application goes smoothly.
Professional Preparation Fees
Beyond government fees, you’ll need to budget for professional help — particularly if you’re applying through a registered tax agent or accountant who specialises in LMCT applications. These costs vary depending on your business structure (individual, company, or trust), the complexity of your finances, and whether you need additional services like company registration or trust deeds.
Our fees at Apply LMCT Licence depend on your specific circumstances. Contact us for a tailored quote based on your situation.
Working Capital: What the BLA Actually Looks At
The licensing authority doesn’t just want to see that you can pay the fees. They want evidence that you have sufficient working capital to actually run a motor trading business. This typically includes your ability to:
- Purchase vehicles for resale
- Meet day-to-day operating expenses (rent, staff, insurance)
- Handle unexpected costs during the initial trading period
- Maintain a trading premises that meets legal requirements
As part of your application, you’ll need to submit a cash flow statement and business plan that demonstrates how your business will operate and remain financially viable. This is one of the most scrutinised parts of the application — and it’s where many applicants get tripped up.
How Much Working Capital Is Typically Expected?
While the BLA doesn’t publish a strict minimum figure, experienced applicants and consultants generally suggest having access to at least $30,000–$100,000 or more in demonstrable working capital, depending on the scale of your intended operation. A sole trader running a small used-car operation will need less than a company planning to trade in larger volumes or higher-value vehicles.
Your bank statements will be closely reviewed, so it’s important that your financial position is transparent, consistent, and clearly supports the projections in your business plan. Understand your obligations further by reading about why planning permits are now a critical step in your LMCT application.
Premises Costs: An Often Overlooked Expense
One major area new traders underestimate is the cost of securing an appropriate trading premises. The BLA requires that your premises meet specific physical requirements — it must be suitable for displaying vehicles, storing records, and conducting business professionally.
Depending on your location, you may need to factor in:
- Lease or rental bond and advance payments
- Council approval or a planning permit
- Fit-out costs (signage, security, fencing, lighting)
- Ongoing monthly rent — which must be covered during your application wait period
The application process can take anywhere from a few weeks to several months, during which time you’re paying rent but not yet trading. This is a real cost that needs to be included in your financial plan.
Make sure your site ticks every box before applying by reviewing the dealership premises checklist for LMCT approval.
Business Structure and Setup Costs
The legal structure of your business — whether you trade as a sole trader, company, or trust — has a direct impact on your setup costs and the complexity of your application.
- Sole trader: Lowest setup costs, but personal liability. May still require an ABN, business name registration, and potentially a separate bank account.
- Company (Pty Ltd): ASIC registration fees apply (~$538 for a new company), plus any legal or accounting costs for setting up the structure.
- Trust: More complex setup requiring a trust deed, trustee appointment, and sometimes a corporate trustee. Costs can range from $500 to $2,000+ depending on the type of trust.
Each structure has its own licensing implications. For example, if you’re applying as a company, all directors must satisfy the ‘fit and proper person’ test. If you’re unsure which structure suits you best, this is something we help you navigate as part of our car dealer licence services in Victoria.
Ongoing Costs to Factor Into Your Capital Planning
Getting the licence is just the beginning. Your capital needs to stretch beyond the application stage. Here are the ongoing costs you should plan for:
- Annual licence renewal: Your LMCT licence must be renewed each year. Make sure you budget for this from day one. Find out more about renewing your LMCT licence.
- Insurance: Dealer liability insurance, vehicle stock insurance, and public liability cover are all standard requirements.
- Record keeping and compliance: There are mandatory records you must maintain as a licensed trader. Non-compliance can lead to penalties or licence suspension. See the 5 mandatory records every LMCT licence holder must maintain.
- Staff wages: If you plan to employ salespeople or admin staff, these costs need to be in your projections.
- Vehicle float: The capital needed to purchase and hold stock is the largest ongoing expense for most dealers.
Is There a Minimum Capital Requirement?
Unlike some other business licences, the LMCT application doesn’t state a hard minimum capital figure. However, the BLA will assess your financial viability based on your business plan and supporting documents. If your finances don’t convincingly show that your business can operate sustainably, your application is at risk of refusal.
This is why it pays to work with professionals who understand exactly what the BLA is looking for. A well-prepared cash flow statement and realistic business plan go a long way toward demonstrating your readiness — and maximising your chances of approval.
You might also want to understand the differences between an LMCT licence and private car selling before committing to the full application process.
Ready to Start Your LMCT Application?
At Apply LMCT Licence, we guide you through every step of the process — from assessing your capital position to preparing your business plan and submitting your application. As qualified tax agents and public accountants based in Dandenong, we know exactly what the BLA expects.
Don’t leave your licence application to chance. Contact us today and let’s get your LMCT business off the ground.
Frequently Asked Questions
The government application fee is approximately $991.30, and the first year of licensing costs around $1,489.80. Professional preparation fees vary depending on your business structure and circumstances.
If your application is refused, you will forfeit your $991.30 application fee and cannot reapply for two years unless you receive special permission from the BLA. This makes professional support during the application stage extremely important.
Yes. The Business Licensing Authority will review your bank statements, cash flow projections, and business plan to assess whether your business is financially viable. While there is no published minimum, most applicants need to demonstrate access to substantial working capital — often $30,000 or more depending on the scale of their operation.
Yes, you can apply as a sole trader, company, or trust. Each structure has different requirements and cost implications. Our team can help you choose the right structure for your situation.
After all documents are submitted, the process typically takes a few weeks to a few months, depending on how accurately the forms were completed and whether the BLA requires further information.
For many small operators, the licence is absolutely worth it — it gives you legal authority to trade, access to auction houses, and credibility with customers.
