North Carolina pawnbrokers can't operate if they don't have a license. Although you apply to your local city or county government for the license, the regulations are set at the state level. If you accept firearms as pawnable items, you also have to comply with federal firearm regulations.
Requirements for Pawnshop Ownership
The state spells out the licensing rules for pawnshops in Article 45 of the North Carolina legal code. According to Article 45, North Carolina pawnbrokers and related businesses are a vital part of the state economy, so the state has an interest in regulating pawnshop ownership.
To be eligible for a license, you have to be of "good moral character", something Article 45 doesn't define explicitly. But one measure of your character is your rap sheet: If you were convicted of a felony in the past 10 years, you can't get a license. You have to provide an affidavit swearing to a felony-free decade as part of your application, along with a certificate from local or state law enforcement saying the same thing.
Applying for a License
If your business is within city limits, you apply to the municipal government for your pawnshop ownership license. If your location is outside a city or town, you apply to the county. You can stop by the local government offices for information or look up requirements online.
For example, the state capital Raleigh requires:
- The address of the business, the company name, your name and that of any co-owners
- Hours of operation
- Number of employees
- The reason you want to open a pawnshop
- A statement from your accountant verifying your business's capital or net assets
- Your employment history since high school
- Your high school and college education history
- Every address where you lived since high school
- Five character references
After the city receives a completed application, it puts the application on the agenda for the next Raleigh City Council meeting.
Taking Out a Surety Bond
When the Raleigh City Council approves your license, you have to pay a $275 business license tax and take out a $5,000 surety bond payable to the city.
Taking out a bond is a North Carolina pawnshop ownership requirement to guarantee you honor the terms of your license. If you're caught doing something illegal, the local government can sue and collect on the bond. If a customer sues you for cheating — you sold an item they pawned before the due date, for example — they can be paid from the surety bond too.
North Carolina Pawnbrokers and Guns
One tripwire North Carolina pawnbrokers and pawnshops anywhere have to watch for is pawned guns. Gun sales are regulated by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and you have to comply with the bureau's regulations:
- If a customer pawns a gun and then wants to redeem it, you have to treat it as a gun sale, including conducting a background check. This also applies to someone other than the original customer who holds the pawn ticket.
- You can't return a firearm to someone who can't legally own one (because they're too young, for example).
- You aren't required to conduct a background check when a customer comes in with a gun. If you do, and they're not legally allowed to own a gun, you must notify local law enforcement within 48 hours.
- If you only occasionally sell guns that were pawned and never redeemed, you may not need a gun dealer's license. Whether you're "engaged in the business of dealing in firearms" depends on circumstances. The ATF has details on its website to help you figure it out.
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com