Legal issues for thrift stores include the safety of the inventory. Ryan McVay/Photodisc/Getty Images When preparing to open a thrift store you must first find a location, move in the inventory and announce your opening. As you search for clothing racks and display shelving, the realities of legal issues require your attention. Thrift store owners have to handle the legal concerns and responsibilities all businesses face. Thrift stores also have legal concerns that are common to stores that sell second-hand items. Constructing the legal supports for your thrift store before your opening prepares you to operate a business that meets legal, fiscal and community responsibilities. Business Structure The business structure you choose is the legal structure of your thrift store. Your legal structure determines the taxes you pay, the extent of your personal liability and the governing arm of the thrift store. As a sole proprietor you own the business and its assets and liabilities. Other options include a partnership, which uses a partnership agreement to define roles, and limited liability corporations, or LLC.
The LLC structure is organized under state laws and limits the personal liability of business owners, who are called members, and provides some tax advantages. The IRS requires LLCs to file returns as sole proprietorships, partnerships or corporations. You might choose to incorporate the thrift store as a for-profit or nonprofit organization. Only thrift stores with 501(c)(3) tax-exempt status may provide donors of goods with receipts for charitable tax deductions. Register Your Business Once you choose a business structure, your local secretary of state’s office, or the office responsible for business registrations in your state, can help you with the legal creation of your thrift store. Incorporation usually requires the filing of articles of incorporation with the appropriate state agency. You will need to apply for an employee identification number, or EIN, with the Internal Revenue Service. Your city, county or state will have requirements for business licensing, permits and local taxes.
For instance, California’s state laws regulate for-profit and nonprofit thrift stores and require both to file annual reports with the state’s office of the attorney general. Liability Liability insurance protects you and the thrift store if accidents or other causes for litigation occur. Your thrift store will need insurance coverage for the store's location and vehicles. You can limit your liability exposure by ensuring that your physical location is safe and meets all safety codes, performing background checks on employees and volunteers and carefully inspecting all items to be sold. Inventory You will need information about your state’s laws concerning the sale of used items, such as bedding. The U.S. Consumer Product Safety Commission enforces federal laws that prohibit the sale of used items that have been recalled and child items that contain lead. The agency’s thrift store section provides many resources, such as email alerts and a list of state consumer safety contacts, to help you stay abreast of these issues.
You will need to decide which items your thrift store will not sell, even if it is legal to sell the items. Some thrift stores will not sell electrical items, health care equipment or used child car seats. References U.S. Small Business Administration: Choose a Business StructureCalifornia Attorney General: Attorney General’s Summary of Charitable Solicitations by Commercial Fundraisers, 2003Federal Trade Commission: More Than Once Upon a Mattress - Used Bedding Labeling RulesU.S. Consumer Product Safety Commission: Resellers and Resale/Thrift Stores Information CenterThe Salvation Army Northern Division: Thrift StoresIRS.gov: Limited Liability Corporation (LLC) Photo Credits Ryan McVay/Photodisc/Getty Images Suggest an Article CorrectionLegal Obligations for Mattress Industry Obligations vary depending on what role a company plays in the manufacturing, distribution, sale or renovation of mattresses and box springs. Businesses not complying with the law can be prohibited from selling their products in California and face financial penalties.
MRC Launches Illegal Mattress Dumping Compensation Program MRC will compensate California agencies (including California local governments, certain permitted solid waste facilities, and authorized solid waste operations) that collect illegally dumped mattresses from public rights-of-way. Mattress Producers, Retailers and Renovators Must Register will be unable to sell their products in California and could face other financial penalties. The following notices describe how the law affects different segments of the mattress industry. Participant obligations vary depending on what role the company plays in the manufacturing, renovation, distribution and sale of mattresses and box springs. California Determined Sales Tax Is Not Applicable The recycling fee is not subject to sales tax. See CA State Board of Equalization Sales Tax Determination for full details. CalRecycle Approved the Plan, Recycling Fee and Budget On Oct. 1, 2015 CalRecycle approved the $11 recycling fee and MRC’s budget.
Fee collection began on Dec. 30, 2015. Plan approval followed on Jan. 29, 2016. To view MRC’s complete implementation plan, go here. Interested in Becoming a Collection Site or Event Host? MRC is recruiting solid waste facilities (transfer stations, landfills, MRF’s, public works yards) in California interested in collecting discarded mattresses and box springs for recycling or hosting special one-day collection events. MRC will provide storage containers/trailers, transport the collected mattresses and box springs to the recycler and recycle those units at no cost to the collection site or event host. MRC will also provide reasonable compensation. If your facility is interested in participating, please fill out the form below. Large Volume Pick-Up Request MRC offers a Large Volume Pick Up Service to retailers, hotels, and educational institutions with at least 100 units to discard. All units must have been used and discarded in California. See the Large Volume Pick Up Service details for further eligibility requirements and contact us if interested.