How to Open a Pawn Shop in Virginia

Pawn shops can be very profitable businesses.

Operating a pawn shop can potentially be a lucrative business. Pawn shops operate by offering short-term loans and holding certain property as collateral. Pawn shops can also purchase items outright and resell them for a higher value. Each state regulates pawnbrokers differently. In Virginia, pawnbrokers are regulated under Title 54 of the state legislative code. If you're considering opening a pawn shop in Virginia, it's important to understand what the process involves.

Things You'll Need

• Startup capital
• Licenses and permits
• Inventory
• Business location

Instructions

1. Choose a location for your business. Determine the amount and type of traffic the area receives, as well as the surrounding competition. Whether you choose to purchase a building or lease commercial space, you will need to ensure that the zoning laws in the area permit the operation of a pawn shop.

2. Build an inventory. You can find items for resale through yard sales, estate sales, thrift shops, online auctions, auction houses, online classifieds, consignment shops and flea markets. When choosing items for your store, carefully consider their potential resale value to ensure that you maximize profit.

3. Obtain pawnbroker's insurance with an insurance company licensed to do business in Virginia. You will need a policy that covers your building or space and its interior and exterior features, your physical inventory and your employees. Depending on the company you choose, your policy may include coverage against theft, loss and damage, workers' compensation coverage and liability coverage for yourself and your employees.

4. Register your business name with the Virginia State Corporation Commission. If you plan to register as a limited liability company or corporation, you may register online. Sole proprietorships, partnerships and other business structures should contact the Virginia State Corporation Commission to obtain the necessary forms for registration.

5. Apply for state and federal tax identification numbers. You may apply for a federal tax ID with the Internal Revenue Service. The Virginia State Department of Taxation processes requests for state tax identification numbers, and is also responsible for providing sales and use tax information.

6. Apply for a pawnbroker's license from the county or city in which you plan to do business. To obtain a pawnbroker's license, you will need to undergo a complete criminal background check, submit fingerprints to the county or city business office, and provide evidence of collateral. For example, pawnbroker license applicants in the city of Falls Church must provide evidence of surety in the amount of $50,000 or more.

7. Develop a strategy for marketing your business. Consider the different media outlets for advertising, including radio, television, print and social media, and how you can use them to reach your target audience.

Tips & Warnings

• An online site is a great way to advertise your business and increase sales.

• Consider joining a professional pawnbrokers association to stay up-to-date on industry news and trends.

• Read and complete all licensing documents carefully. Omitted or incorrect information could result in a delay in processing of your application.

• Avoid buying or selling merchandise which you suspect to be stolen.

References

• Virginia State Legislature: Title 54 Pawnbroker License
• Union Life and Casualty Insurance: Pawnbrokers Insurance Program
• Bureau of Alcohol, Tobacco and Firearms: How to Become a Federal Firearms Licensee
• City of Falls Church: Pawnbroker License Information
• Virginia Business One Stop: Steps to Launching a Business