Pawnbroker Licensing Simplified
If you have watched the hit television show, Pawn Stars, you may be familiar with this routine: young, hopeful sellers enter the shop with obscure Elvis trinkets, World War II memorabilia, or even a potato. The owner then offers thousands of dollars for these items and seemingly both parties win. The program has boosted interest among prospective pawn shop owners, but how hard is it to make it in the pawnbroker industry? From a pawn shop licensing prospective, this industry is difficult to navigate but compliance with many regulations is mandatory.
Pawnshop Licensing Overview
Similar to most industries, pawn shops are often required to obtain a general business license and to register for appropriate state taxes. Most states require Second Hand Dealer licenses. In addition, cities heavily regulate the industry and, based on a pawnshop’s activities, 14 federal statues exist that may be applicable. The regulations are primarily aimed at protecting consumers and preventing criminal conduct. Needless to say, starting a business in this field requires time consuming research to become legally licensed.
What truly makes the pawnbroker industry a complicated area to navigate, however, is the unpredictability of the customer. Store owners cannot control the types of items that a customer may present to buy, sell, or to use for a loan. A single item can trigger a license that cost hundreds of dollars to obtain, weeks to apply for, and an even bigger burden to renew. For example, a customer who walks into the shop to sell both a gun and a diamond ring triggers a variety of licenses requirements. The buying and selling of firearms is regulated by the Bureau of Alcohol, Tobacco Firearms and Explosives and requires a Federal Firearms License. While pawnshops buying or selling of precious metal, gems, stones or jewelry must comply with jewelry industry regulations.
Renewal and Reporting Requirements
The majority of pawnbroker licenses nationwide require an annual renewal. This can be a cumbersome process, but staying on top of it is imperative to operating your business legally. Submitting the wrong paperwork or missing a deadline can result in hefty fines or even loss of the privilege of doing business. The Delaware Pawnbroker renewal process requires background checks, fees, and an application to be submitted each year. In Maryland, businesses that miss a renewal or submit inaccurate paper work are subject to fines and a hearing with the Maryland Attorney General’s office. LicenseLogix handles pawnbroker license renewals every year. Learn more about how we can help.
Along with annual renewals, many states and local governments require monthly or daily inventory reporting by pawnshops. In California, state law requires that monthly reports be submitted to the County where the pawnshop is located. Pawnshop owners in the City of Worcester must log each person from whom they buy items from with the New England State Police Information Network’s Database, and items must be held for 30 days before reselling. The state of Delaware requires an 18 day hold on items, immediate electronic reporting, and record keeping requirements. Hundreds of cities and counties throughout the U.S. have similar reporting requirements, and regulations are constantly being created and remastered.
Luckily for Pawnshop owners, and the average business owner, LicenseLogix can identify filing requirements, complete all application forms, and verify that the license or registration has been completed. LicenseLogix also has the capacity to handle your regular reporting requirements so that you can focus on the growth of your business.
Whether you are an aspiring pawn shop owner, or curious about business licensing requirements in other industries, LicenseLogix is here to navigate through and simplify all your business licensing needs. Give us a call at 800-292-0909 to get a free quote and to find out more about our services.