Do I need a license to buy gold or scrap gold?
Starting a Gold Buying Business - What Licenses do I need?
If you buy scrap gold and you buy it from individuals like people that sell it to a pawn shop, yes but that is not a "license to buy gold" only. It is more like a license to buy precious metals and used merchandise. That license is a license like a pawn shop license and you have to be cleared with the police by being fingerprinted etc. That is the case with any business that buys or sells used merchandise as well.
One the other hand, you don't need a license if you buy gold from a wholesaler and sell it retail. For that you only need a business license like all businesses and a seller's permit to buy wholesale. In addition, you will have to register your trade name.
In addition, to a license like that if you need one, you still need the other BUSINESS licenses like all businesses.
Starting a business means going from the top to the bottom. You start at the federal government with the IRS, if you incorporate or form an LLC because you need a federal tax ID -- same goes if you are an employer. Then go to the state government with the State Internal Revenue Service to register a corporation or form an LLC and get a seller's permit to buy wholesale, and then depending on your next step, stay at the state level or go to the county before heading down to the city and local level.
1. At the federal level your are required to obtain tax ids to identify your business for a fairly simple purpose. The IRS identifies things for tax returns based on numbers. Without those numbers, you will be unable to file the necessary tax returns, nor file them correctly.
2. At the state leve you are required to file for your ids not only for identification, but to open the accounts into which you will pay your taxes, as well as to gain the id numbers necessary to establish business relationships with other business, as well as legally employing your employees.
3. At the local level, you are required to register your business for three reasons. The payment of taxes, the certification that your business as you wish to establish it is legal, and the actual factual registration of your business for police and emergency service needs.
In most states, a license is not required to make purchases from a wholesaler and/or retailer for the purpose of resale. However, purchases made from a personal owner, such as one that wants to sell his personal jewelry, requires a license. This pertains to laws for Purchasers of Precious Metals and Stones General Statutes governs licensing.
Normally most statutes for buyers of gold and other precious metals reads like this: (a) No person may engage in or carry on the business of purchasing gold or gold-plated ware, silver or silver-plated ware, platinum ware, watches, jewelry, precious stones or coins unless such person is licensed by the chief of police ( that means that you need to be fingerprinted and a background check is performed on you even for selling used merchandise) . This does not apply to the purchase of such items from a wholesaler by a manufacturer or retail seller whose primary place of business is located in this state.
After you get a license for buying gold from individuals, i.e., used gold, you need to abide by rules similar to the following:
(b) Each such licensed person shall keep a record in which he shall note at the time of each transaction a description of the goods purchased and the price paid for them, the name and address of the person selling the goods and the date and hour any such goods were received. Each such licensed person shall demand positive identification from the person selling the article and the type or form of identification received shall be noted in the record. Any state police officer or municipal police officer shall have access to the record required to be kept under this section and may inspect the place where the business is carried on as well as any goods purchased or received.
(c) No such licensed person may purchase any goods from a minor unless such minor is accompanied by a parent or guardian. Each such licensed person may only pay for goods received by check, draft or money order and no cash shall be transferred to either party in the course of a transaction subject to the provisions of this section.
(d) At the time of making any purchase each licensed person shall deliver to the person selling goods a receipt containing the information required to be recorded in subsection (b) of this section, the amount paid for any goods sold and the name and address of the purchaser.
(e) Upon request of the licensing authority each such licensed person shall make a weekly sworn statement, describing the goods received and setting forth the name and address of each person from whom goods were purchased, to the chief of police or first selectman of each municipality in which he transacted business that week. Such sworn statement shall not be deemed public records for the purposes of the Freedom of Information Act.
(f) Any person who violates any provision of this section shall be fined not more than one thousand dollars.
The IRS
1. The federal tax ID is nothing less than a social security number for your business especially if your business is a corporate entity or a partnership, allowing you to file tax returns for your business seperately from those you file for yourself.
2. The Federal Employer Identification Number is an ID number that establishes with the federal government that you can have empoyees so you can pay employement and unemployment taxes. This allows you to claim some losses as wages paid to employees, and therefore pay your employees without being taxed on that money as if you never lost it in the first place.
The State
3. The State Tax ID serves the same purpose as your Federal Tax ID, but with your states departement of employment.
4. The Sellers Permit allows for two things. The absolutely necessary charging of sales and use tax and then payment of said tax to the government, but also the very beneficial wholesale, meaning tax free purchase of goods from wholesalers for your business. So in this case you definitely need this to buy gold wholesale and sell it retail.
5. The State Employer Identification Number does two things. It makes it legal for you to employ other people, which is somewhat important, and it establishes the structures you need to withhold witholding taxes, as well as make payments on them.
A business does not just exist aside from beeng regulated by local, state and federal government. It must be made to exist by government registration. To do so, you must do one of three things. File for a dba, form an LLC agreement, or file articles of incorporation. The first is with the county and just the county, and the second two are with the state.
9. A business license certifies that your business is legal, preventing you from being shut down arbitrarily without legal recourse, helps you to keep current in your taxes, and ensure you will be elligible and aware of local business incentive and subsidies, which are of no small importance.
most small business advisors recommend using a federal tax id instead of a social security number to open a business bank account as well as perform a nationwide business name check before your register your dba or corporation.
You can obtain all these permits and more online at www.businessnameusa.com
Simply go online and answer our online questionaire to determine your needs, then fill out our business information form in complete, leaving blank only those fields for which you do not posess the information, finally, complete our payment information form and we will begin processing your order imediately.
www.businessnameusa.com
310-455-6675
1. The two largest concerns of failing to obtain the tax ids and permits listed is not just audits, fines and penalties, but the very real possiblity of jail time. The IRS is not know for being lenient in these matters when the business concerned has no possibility of repaying the debt, and you likely will not.
2. The largest issues with not obtaining a DBA, LLC, or Corporation are twofold, one relevant to all three, and the othrer just to the second two. The first is the protection of the name and the right to advertise. The second, offered only by the second two, is the legal, financial, and tax liability protection the two filings offer.
3. Without a business license you are vulnerable to a wide variety of misdemeanor charges, fines, penalties, police action, and the posibility of not being able to re-open your business after clearing up everything with the law despite wishing to pursue a license.
Go to this link to determine you fees on a state by state basis:
http://www.businessnameusa.com/services/fees.htm
We have just recently reduced our already bargain basement fees!