Becoming a private taxi driver requires having the proper credentials, licenses, insurance and a dependable car. Driving a taxi in the bigger cities makes it hard to compete with corporations, but driving a private taxi in smaller cities that only have one or two corporations can be quite profitable. You do need to have the right frame of mind to run a private taxi, and good customer service skills are essential.

Buy a car that will be dependable and will only be used for taxi service. The car should be free of rust, and the interior should be in good condition. Look for a car that is large enough to accommodate baggage or groceries, yet affordable enough to run if the gas prices are high.

Apply for private taxi insurance. Be prepared to pay upfront for the cost of a year's insurance. Every state is different, but you might need as much as a million dollars in coverage. This depends on the area you will drive in with the private taxi.

Apply for the taxi license after you have acquired insurance. You need to show proof of insurance when applying for a private taxi license. This license will be for a business and different from an operational license that drivers carry.

Set your prices and adjust them as you go. Do not start your prices high, but make sure they will cover your time, gas and insurance costs.