Pawnshops allow customers to obtain short-term, interest-bearing loans by using their personal property as collateral. Many pawnshops also purchase property outright, which they resell for a profit. Every state sets laws for owning and operating a pawnshop. If you're considering becoming a pawnbroker in Georgia, several things are required to get your business off the ground.
Tax Identification Numbers
To do business in the state of Georgia, you must apply for state and federal tax identification numbers. You obtain a federal tax identification number from the Internal Revenue Service. State tax identification numbers and sales tax ID numbers are issued by the Georgia Department of Revenue.
Georgia law requires all business owners to register their businesses with the Secretary of State's Office, if applicable, and obtain the proper licenses. If you plan to do business as a sole proprietorship or partnership, state registration is not required. You must apply for a business tax certificate from the municipality in which you plan to operate. A separate pawnshop license must also be filed with the sheriff's office or police department that covers the area in which the shop is located. You must submit to a criminal background check and provide a surety bond to obtain a pawnbroker's license. If a customer repays their loan but you fail to return their pledged property, they can file a claim against the bond. The amount of surety required varies according to the city or county in which you obtain your pawnshop license. If you plan to buy or sell firearms, you also need a Federal Firearms License from the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Unemployment and Workers' Compensation Insurance
If you plan to hire employees to work in your pawnshop, you must register for unemployment insurance and workers' compensation benefits. Applications for unemployment insurance tax are filed with the Georgia Department of Labor. The amount of unemployment taxes is determined by the total amount of your payroll each fiscal quarter. The state Board of Workers' Compensation requires Georgia business to provide adequate coverage for employees. You may obtain coverage by contacting an agency licensed to sell workers' compensation insurance in the state. Failure to provide adequate workers' compensation insurance for employees can result in up to a $10,000 fine and/or imprisonment.
You also should purchase insurance to cover your business and inventory. Typically, the amount of your policy is determined by the value of the property as well as your expected yearly profit. Ideally, you also should secure a policy that provides protection against theft, fire damage, wind or flood damage or other natural events. You should also include liability coverage for yourself and your employees to protect your business from consumer lawsuits.
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