How do I start a resale business?

Start a resale business by following these 10 steps: Plan your Resale Business. Form your Resale Business into a Legal Entity. Register your Resale Business for Taxes. Open a Business Bank Account & Credit Card. Set up Accounting for your Resale Business. Get the Necessary Permits & Licenses for your Resale Business. More items... •

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Start a resale business by following these 10 steps:

Plan your Resale Business Form your Resale Business into a Legal Entity Register your Resale Business for Taxes Open a Business Bank Account & Credit Card Set up Accounting for your Resale Business Get the Necessary Permits & Licenses for your Resale Business Get Resale Business Insurance Define your Resale Business Brand Create your Resale Business Website Set up your Business Phone System There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your resale business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a resale business?

While opening a resale business costs less than many others due to the fact that some merchandise is donated, it does require some startup capital. The amount depends on whether your business is conducted online, at a flea market, or in a store. For a physical store, business licenses, liability insurance, space rent and merchandise are among the initial startup costs. Those costs can range from as little as $5,000 to as much as $30,000, depending on the type of items being sold and the percentage of your inventory that comes from donations. Start-up and operating costs can be reduced by utilizing software developed specifically for resale businesses. That software allows you to automate tasks such as maintaining customer databases, tracking sales and inventory, and creating sales promotions.

What are the ongoing expenses for a resale business?

Depending on the type of resale business, ongoing expenses may include space rent, website maintenance, a business phone, employee salaries and a company vehicle for picking up donations. For online businesses, your main costs will include managing a warehouse and preparing and shipping orders.

Who is the target market?

Preferred clients are those who purchase items for their own use, rather than for resale purposes.

How does a resale business make money?

A resale business makes money by selling used merchandise at a profit. Competitive pricing that factors in the cost of merchandise and operating expenses is crucial to the success of any retail business.

How much can you charge customers?

The amount you can charge customers is based partly on your chosen target market and the amount of competition for that market in your area. Pricing is based in part on ensuring that there is a profit after operating costs are subtracted from sales figures. Other factors that affect pricing include the quality of the items, their current market value, and the strength of the local economy. Some resale businesses specialize in selling large quantities of low-cost items, while others focus on selling high-cost items. High-end designer fashions, appliances, and furniture command a higher resale price than lesser-known brands even though the quality may be comparable. The ambiance of your store and the language used to describe your merchandise can also affect pricing.

How much profit can a resale business make?

The amount of profits a resale business can make depends on its resources. Those resources include merchandise and equipment as well as human resources. Knowledge, expertise and the development of company and community relationships all contribute to increasing profits. Annual earnings for small resale businesses average from between $30,000 and $60,000.

How can you make your business more profitable?

You can make your business more profitable by conducting regular market research, which includes visiting competitors to compare prices and find new ways to set yourself apart. Increasing your donations by offering convenient pick-up and purchasing items in bulk from wholesalers whenever possible can also increase your profit margin.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Resale Business Name Generator If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more. When registering a business name, we recommend researching your business name by checking:

Your state's business records

Federal and state trademark records

Social media platforms

Web domain availability.

It's very important to secure your domain name before someone else does.

Find a Domain Now Powered by GoDaddy.com

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation. Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your resale business is sued.

Form Your LLC

Northwest LegalZoom ($79 + State Fees)

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee. Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

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STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business. In order to register for taxes you will need to apply for an EIN. It's really easy and free! You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?. Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account: Separates your personal assets from your company's assets, which is necessary for personal asset protection.

Makes accounting and tax filing easier.

Open net 30 accounts

Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term. NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

Get a business credit card

Getting a business credit card helps you:

Separate personal and business expenses by putting your business' expenses all in one place. Build your company's credit history, which can be useful to raise money later on. Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a resale business business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits. In addition, certain local licensing or regulatory requirements may apply. For more information: Check with your town, city or county clerk’s office for information about local permits and licenses Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.

Certificate of Occupancy

A resale business is generally run out of a retail store. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease retail space:

It is generally the landlord’s responsibility to obtain a CO.

Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a resale business. After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If you plan to purchase retail space:

You will be responsible for obtaining a valid CO from a local government authority. Review all building codes and zoning requirements for you business’ location to ensure your resale business will be in compliance and able to obtain a CO. Certain resale products cannot be sold. These products are determined federally and include products that have been recalled, that don’t comply with the federal limit on lead, unsafe toddler and infant products, and anything in violation of CPSC’s safety standards, bans, rules or regulations.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss. There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

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Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage. Recommended: Learn what business insurance for your Resale Business will cost. Business Insurance for

Resale Business

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors. If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business. Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker. If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a resale business

Studies show that for resale businesses, experiential marketing that utilizes all the senses is more effective than traditional marketing techniques. Thrift store shoppers are seeking pleasurable visual, auditory, and tactile experiences as well as unique items at bargain prices. That’s why many successful resale business owners both attend and organize community events such as bake sales, local plays and art exhibitions. It’s also helpful to keep abreast of resale trends by reading articles that discuss recent studies and research within the industry.

How to keep customers coming back

Successful resale business owners know that one of the things that keeps their customers coming back is the constantly changing inventory. Prominently displaying the most popular brands and highest-quality items is a good way to attract attention to them. Offering specials such as buy one, get one free is also an effective marketing strategy. Discounts and markdowns using colored tags are also great incentives for budget conscious customers. Whatever strategies you use must include friendly, helpful customer service. Not even a free gift can replace a warm greeting or an offer to help a customer find exactly what they’re looking for. Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business. While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online. - full stop. The size or industry of your business does not matter when it comes to getting your business online. Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own. that you own. Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of. Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete. Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you. There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business. Recommended Business Phone Service: Phone.com Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.