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.
Along with the mystery of clientele, you don’t want to buy stolen items from strangers walking into your place of business – this can lead to costly law suits and fines from local governments. In recent years, city and regional governments have created stringent pawnshop registration requirements for items sold at pawnshops. For example, pawnshop owners in the City of Worcester must log each person for 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. Hundreds of cities and counties throughout the U.S. have similar 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.
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.