This will definitely depend on the scrap metal services you offer, your business size, and your business location. Have it in mind that the scrap metal industry involves the processing of scrap metal from industrial operations and consumer castoffs. Businesses in this industry vary in size and business approaches. Owing to that, the requirements for licensing tend to vary depending on the different segments of the industry.

Note that people and businesses that sell scrap metal to local recycling centers may be expected to have a business license. As the industry evolves and grows, a good number of communities, counties, and states are striving for better ways to guarantee that businesses involved in the trade are doing so legally and not selling stolen metals, such as copper.

Also note that some places in the country like Los Angeles mandate scrap, salvage, or junk dealers to have a business license to sell scrap. Just like it was stated above, all these will vary depending on where you find yourself in the United States.

However, it is very necessary to contact your county auditor’s office, city hall, or the revenue department to know if you are expected to obtain a license. Scrap metal recycling centers that serve as dealers by buying scrap metal from individuals and corporations and selling it to bigger entities may also need business licenses.

Meanwhile, an individual may choose to collect and sell scrap metal in a limited capacity. This may not necessarily require a business license, but retail stores may require a license, depending on local, county, and state regulations.

7 Basic Licenses You Need to Scrap Metal in 2023

Starting and managing a successful scrap metal business will require more than the knowledge and appraisal of metals. One very crucial aspect of successfully starting and managing a business is to understand the necessary licenses and permits that are required to operate legally. To operate a scrap metal business in the United States, here are basic licenses to consider.

  1. State Licensing

In the United States, almost every state is known to regulate scrap metal dealers within its boundaries, and it can be very daunting to find these. However, owing to frequent thefts of valuable metals, a good number of States mandate tracking these sales and reporting them to local law enforcement.

For instance, the Oklahoma Department of Agriculture, Food, and Forestry mandates the submission of a Scrap Metal Dealer License Application, coupled with operating under certain detailed regulations. In Tennessee, scrap metal dealers are expected to register for the Scrap Metal Registration Program with the Tennessee Department of Commerce and Insurance. Meanwhile, Scrap metal dealers in Kansas will register the Scrap Metal Dealer Application with the Kansas Attorney General.

  1. Local Licensing

Coupled with the necessary state licensing, there may be other local business licensing expected of scrap dealers. For instance, In Tempe, Arizona, a Tempe Scrap Dealer License, Transaction Privilege Tax (TPT) license Tempe Use Permit, and fingerprints and background checks are all mandatory for every scrap metal dealer doing business within City limits.

Additionally, a Junk Dealer License is needed for any business in Milwaukee in the business of buying, selling, gathering, delivering, or storing junk and runs a yard or building, most especially as a primary place of Business. The City of Tacoma, Washington requires a Scrap Metal or Recyclable Material Dealer license for anyone or business that buys, sells, handles, or collects recyclable materials, scrap metal, or scrap metal products in the City.

  1. General Business License or Permit

Although it depends on where you intend to start and run your business, however, a general business license or permit may be necessary. Have it in mind that a few states in the United States mandate a business license; however, they are most often found at the city level.

  1. Sales Tax Permit or Number

In the United States, to legally sell products and/or offer specific services, a state sales tax permit (or tax ID number) may be required. Have it in mind that this permit establishes an account number with the state’s Department of Revenue or a similarly named state taxing agency. In addition, note that hiring employees will also warrant a state tax number.

  1. Federal Employer Identification Number

The Federal Employer Identification Number (sometimes also called a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that establishes a business with the Internal Revenue Service (IRS). Note that any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, the business will be expected to obtain an EIN.

  1. Business Name Registration or DBA

Even though this is really not a business license, but it is very imperative to note that to use a name for a business, a good number of states expect the registration of that name. To further complicate issues, the processes of name registration tend to vary exponentially by state and the type of business entity.

For example, sole proprietorships and partnerships will be required to register a business name (also referred to as a Doing Business As, DBA, fictitious name, or assumed name). Corporations and LLCs tend to be easier as their name is registered when forming the entity.

  1. Certificate of Occupancy

In most places in the United States, a retail business of any sort is expected to secure a Certificate of Occupancy (CO) before opening any physical storefront. Have it in mind that this certificate is typically obtained from the city, but sometimes from the county, and this gives a business the permission to occupy and operate from a building as long the building complies with zoning regulations, building codes, and any other local requirements.

Agreeably, in this line of business getting a suitable location can be very challenging. However, just endeavor to check with the local zoning department to verify the business can legally operate out of the chosen location.

Conclusion

Many states require a business to obtain a license to handle certain operations, and just like most businesses in the United States, scrap metal businesses are not exempted. You may also be expected to observe zoning restrictions which may limit where you can operate your business. As with any business, you will also have to make available a safe environment for your employees and pay all applicable taxes.