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9 Licenses You Need to Open a Thrift Store in 2023

Without doubts, venturing into this business can allow you to put your reselling talents to work. If you’re resourceful, can appraise and price merchandise, and are ready for the huge task that comes with owning and managing a retail store, then it might be ideal to consider opening a thrift store.

These businesses are known to resell items like clothing, furniture, and home goods. They provide a vast range of inventory that is always changing as new items come in, and they are known for keeping their prices affordable.

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A greater percentage of the inventory found at a normal thrift store are second-hand goods, though some stores carry closeout and clearance items that they’ve sourced from other businesses or bought from storage unit auctions, estate sales, and garage sales.

Shoppers are drawn to these stores due to the low and affordable prices they offer. Some just appreciate the platform that lets them browse and discover new items. These sorts of businesses also support the up-cycling movement, giving room for shoppers to find new ways to use old items with an eco-friendly benefit.

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According to industry reports, thrift shop income averages $100 to $200 a day once the stores are well established. Thrift shops in their first year of business can expect to generate something closer to $50 per day. Note that these figures will vary depending on certain factors like location, clientele, marketing, quality of merchandise, and more.

Starting and managing a successful thrift store takes more than understanding how to appraise used goods and get them at affordable prices. Starting a new business requires attending to numerous legal steps too, and acquiring licensing is a very crucial one as it may impact your ability to operate legally.

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Basic Licenses Needed to Start a Thrift Store

In the United States, there are licensing requirements for starting a thrift store at the federal, state, and local levels. Although these licensing requirements will vary by location, below are basic licenses and permits you will need to start a thrift store.

  1. Federal Licensing

In the United States, the U.S. Consumer Product Safety Commission (CPSC) oversees regulations and information concerning thrift stores. They keep a list of items such as recalled products, items with lead paint, and cribs of a certain age, and some infant and toddler products that thrift stores are not permitted to sell.

  1. Local Licensing

In the United States, thrift stores are not regulated at the state level, but some cities require licenses when starting a thrift store. For instance, The New York City Department of Consumer and Worker Protection mandates a Secondhand Dealer General License for any business venture that purchases or sells second-hand, used, and/or vintage clothing.

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In Council Bluffs, Iowa, a Secondhand Dealer Permit is needed for most businesses that buy, sell, or deal in second-hand clothing, jewelry, goods, or merchandise.

  1. Business Entity

When starting a thrift store, your business is expected to be registered and also have a business entity. A legal entity explains how a business is organized to operate.

In the United States, there are four main types of entities; sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Note that these business entities have their pros and cons, such as liability protection, costs, and administrative requirements.

  1. General Business License or Permit

Although it will surely depend on where your thrift store is situated, a general business license or permit should be considered. A few states mandate business licenses as they are more commonly found at the city level.

  1. Sales Tax Permit or Business Number

Have it in mind that to sell products in a retail setting and/or offer certain services, a state sales tax permit (also known as a business tax number or tax ID number) may be necessary. This permit is what creates an account number with the state’s Department of Revenue (or the state taxing agency) to collect and remit sales tax.

  1. Business Name Registration

Although not a business license, but if you use a name for your business, a good number of states expect you to register that name. The process of name registration varies from state to state according to the business entity in question.

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For example, sole proprietorships and partnerships are expected to register a business name, while, Corporations and LLCs are quite easier because their name is registered when the entity is formed with the state.

  1. Federal Employer Identification Number

The Federal Employer Identification Number (also known as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).

Have it in mind that any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, are expected to obtain an EIN. Sole proprietors and single-owner LLCs without employees can choose to use the owner’s social security number instead.

  1. Resale Certificate

If you intend to purchase items that are resold to customers, then you can purchase these items tax-free as long as you have this certificate. A resale certificate lets a business source inventory, and instead of paying the sales tax to their vendor, they bill the sales tax on the end-user of the product. This permit also allows a business to not pay sales tax for items being resold.

  1. Certificate of Occupancy

In most places in the United States, a thrift store may need to secure a Certificate of Occupancy before starting the store in a commercial building.

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Have it in mind that this certificate is acquired from the city and/or the county and gives a business the right to occupy and operate from a building. However, before the certificate is issued, the building will be expected to ensure it complies with zoning regulations, building codes, and any other local requirements.

Owing to that, before you purchase or lease a location for your thrift store, endeavor to consult the local zoning department first to ensure the business can legally operate out of the desired location.