This post is part 2 of a 6 part series explaining steps to take when starting a flea market business, selling merchandise sourced from the liquidation industry. If you missed the first post, fear not! Here is Part 1
Once you have decided on the right flea market, it’s time to complete a few “behind the scenes” tasks critical to any any business. Every business must obtain a business license along with a resellers permit (sales tax license). Prior to obtaining the two licenses, you might want to think about naming the new business. If you use a name other than your legal name you will need to take one more step filling what’s called a fictitious name statement.
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Lets talk about the two licenses mentioned above in greater detail:
Business license – This often overlooked license is required by the city (or county) for which you will be operating your business. Obtaining the license is simply a matter of filling out an application and paying an annual fee to the local governing city/county office. Most of the time fees will be based on your annual estimated gross sales. Most business licenses will run between $50-$150 per year depending on the population of the specific area. In this series, our budget is set back $75 for this license, leaving a total of $1,425.00 left to spend on our new venture.
Resell license or Seller’s Permit – Most of the time when shopping at a flea market, sellers do not charge sales tax…have you noticed that? As long as that seller pays the sales tax portion of your purchase, he’s keeping it legal. This is, of course, if your State requires the collection of sales tax! For those resellers who collect sales tax (or chose to pay behind the scenes), a resell or sellers permit is a required step when starting a retail business. No fear, a simple trip down to your local Franchise Board office is all that is needed to complete this process. There is no fee involved and after filling out an application, you will walk out with the permit. Impact on our series budget..zero!
I would also like to mention that a resell permit may be required by the flea market you have chosen to set up shop. In addition, most of the wholesale suppliers a flea market vendor will buy from require proof that you have obtained a resell permit. Without showing this permit, you may be charged sales tax on your wholesale purchase.
The two steps above will keep a new business legal, but there is also one other area a lot of new entrepreneurs skip over due to cost, which is commercial liability insurance. A million dollar liability policy will cost the small reseller approximately $750 a year. In our series budget, I’m spending $189 for a new policy. Most of the time insurance premiums can be paid quarterly, hence the small outlay. The impact on the series budget brings us down to $1,237.00 left for inventory and equipment.
In our next post I will talk specifically about the equipment you will need to get a flea market business up and running….Stay Tuned!