The core business of pawn shop requirements revolves around providing short-term loans using personal property as collateral. But there are many state and local regulations that pawnbrokers must adhere to when operating their businesses. This includes licensing requirements, interest rate caps, record-keeping and reporting. Failure to comply with these regulations can result in fines, license suspension or revocation and even legal issues. It is important that new pawnshop owners understand the complexities of these regulations so that they can establish systems and procedures that guarantee compliance.

Apply for a sales tax permit and set up a system to collect and report sales tax for items that you sell or buy from customers. Also, obtain a business license from your local government and register with FinCEN to ensure compliance with anti-money laundering laws. You will also need to purchase insurance policies for general liability and fire insurance.

The Pawn Loan Process: Everything You Need to Know

Establish a business plan and develop strategies to attract clients to your shop. Determine your target audience and use traditional and digital marketing methods to reach them. You will also need to determine the amount of capital needed to start the business and purchase supplies like storage shelving, safes and security cameras. Be sure to include enough funds for your initial inventory and loan balances, as well as a sufficient amount of additional capital to cover unexpected expenses or growth.

Once you have your financials in order, you should be able to calculate your first-year income projections. Make sure to over-estimate your expected revenue and costs to avoid under funding your business.