To start your brokering business you will need a solid infrastructure and you will need to be organized. Here are a list of basics that you’ll need to get you started and more
information about each:
• Computer: As with any business where you work from home, this business will require you to own a computer and have a relatively fast internet connection. Some people may prefer to use their tablets or smartphones instead of a desktop or laptop computer. The important piece of the puzzle is that you are using a device that only you have access to and do not have to share with anybody else. This will help keep you organized and will also be important when you need to jump right into business and can’t wait for somebody to finish Facebooking!
• Local Business License and Resale Permit: These permits and certificates are necessary to collect and forward sales tax from your business into your local state government as required by law.
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The author of this book is not a professional tax advisor or legal counsel. The following information relating to licensing should be verified with a license certified public accountant and/or attorney before you start your business.
Usually, the business license process is a brief, one page application that you complete at your local government offices. Typically, you can walk out with your license on the same day. The fees associated with obtaining a license will vary by area, but should cost anywhere between $25-$200.
A state resale license or a seller’s permit will also be required. Some states use one term over the other, and some states may combine the two documents together as a single document. Some states may have other names for this as well. For example, in North Carolina, the Seller’s Permit is called a State Sales Tax Certificate and the Resale Permit is called a Tax Resale Certificate.
This permit is necessary for you to be legally permitted to sell taxable merchandise.
As a permit holder, you are agreeing to collect and remit sales tax to the Tax Board in your state.
As a broker, you are required to collect sales tax from you customer who resides in the same state that you operate your business from, unless the customer provides you with a copy of their resale license. Typically, when buyers purchase from you in bulk in this manner, they too are planning to resell the merchandise. When they resell the merchandise, they will then be responsible for collecting the sale tax from their purchasers.
Most wholesale suppliers will require that you license be on file, so it will be
mandatory for you to obtain this certificate for the purposes of completing business transactions. This certificate lets the wholesaler know that you plan to resell and will collect the appropriate amount of sale tax as required by the Franchise Tax board for your state.
Traditionally, the application process will include information about your business, and your license can take several weeks before it has been processed completely.
Your application for a resale license will contain all the information you will need to comply with collecting and distributing sales tax for the items that you sell in your state. It is mandatory to collect sales tax for the items purchased in the same state that your business resides in. To find out more information about retailing across state lines, you will need to contact the Franchise Tax Board or an account to get specific details on this process.
• Internet Faxing Service: As a broker, you will need to receive and send manifests to your potential customers on a daily basis. However, in 2013, traditional fax machines are becoming obsolete. Instead, you should consider signing up for an
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internet faxing service. This service will allow you to read incoming faxes within your email account. Not only does this save you space, but is a much more ecofriendly option.
• Voice messaging/Auto Attendance Service: It is not uncommon when starting your own business to wear many hats and perform many functions, including that of secretary to yourself. However, a virtual messaging service will let your prospective clients know that you are a professional company. This will also allow you to take sales calls whenever and wherever you are. This is important as a new broker, because you never want to miss an opportunity to make a sale because you might not get the chance again! This service also allow you to maintain another full time job while you get your feet wet, or even take vacations, attend family events, etc.
This service allows you to track incoming calls, and will route the voice mail directly to your email address so that you can check it at your earliest convenience.
• Email List Building Software: It will be necessary as a broker to send mass emails pertaining to new pallets and truckloads to as many potential customers at one time as possible. Legally, you have to have a program which allows you to send these text and/or HTML emails quickly and with an option for the receiver to unsubscribe.
• Invoicing Software: To be a fully functioning business, you will need to have the ability to create detailed invoices of the goods that you sell. Your invoices should describe what you are selling and offer full Terms of Sale. The Terms of Sale should include details like your refund policy.
• Freight Account: Freight accounts will need to be set up for shipping merchandise across the country. Choosing a freight business is important and could make or break your business. Do your research and call various companies and get more information about setting up a new account. Typically, they will be able to send you information on their specific process.
• Bank Account under the name of your business: Before making a final bank selection, you should complete interviews with several banks and determine what services they can off you, their customer service, and their prices and fees for any accounts that you may decide to open. When opening a business account, it is necessary for you to obtain a Fictitious Name statement, which you can obtain at your local city offices.
Believe it or not, you may want to make smaller, local banks your front runners.
Typically, the smaller the bank, the better the customer service will be. Local banks offer a more personalized approach to your banking needs. While larger, chain banks make their loan decisions off-site, most local banks are made “in house”, which helps to increase your likeliness of getting a loan when necessary.
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You will need to have the basic foundations of your business laid before you decide on a bank, as they will generally need the legal status of your business (Partnership, LLC, Incorporation, or sole proprietorship) as part of the paperwork and necessary information before your account is opened.
Banking Checklist
• What types of checking accounts does the bank offer?
• What fees are accrued or added for each type of available checking account?
• Do any of their accounts pay you interest over time?
• As a checking account customer, will you have access to a debit, credit, or deposit card?
• What is the required process to acquire credit and/or a small business loan?
• How much time will it take the bank to approve payments from your customers, and what will the hold time be?
• What are the procedures, requirements, and documentation required to open a new account?
• The bank should be in a convenient location for you.
• The bank should be a registered with the Federal Reserve Bank and FDIC.
• Find out what the minimum balance requirement is to maintain a checking account that bears you interest.
• Gather information on the fees and interest charges charged by the bank when you use their credit cards and compare against other banks to see if the rates are competitive.
• Learn all that you can about the bank and the services they provide to small business owners.
• Find out exactly what the bank charges for the types of business transactions that you will normally be making.
• PayPal and Merchant Account: As a broker, wire transfers will be the main source of funds that you receive and will be used more often than not in your business dealings. Not only will you be receiving wire transfers often, but you will be sending them as well to purchase the merchandise for your customer from the supplier.
For each transaction, you will receive an associated fee. This cost will need to be included in the cost of each transaction. Most banks charge fees ranging from
$10-$20 per wire transfer for both incoming and outgoing wire transfers. Some banks
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may offer you a reduced rate per transfer depending on your volume. You should inquire about this during your initial interview for a business bank.
Should you choose to accept Visa, MasterCard, Discover, and/or American Express, you will need to be approved for a merchant account at your bank. Typically, this requires you to apply to be a merchant processor with a bank representative.
Applying for Visa and MasterCard is usually done in one application, but to process Discover or American Express, you will be required to complete separate
application processes. Normally, you will pay a monthly fee to process credit and debit transactions based on the expected number of transactions you believe you’ll have each month. Like wire transfers, there is an associated fee with each
processing transaction as well. It isn’t unusual to pay a per-transaction fee as well as a small percentage of each sale back to the bank.
When considering how to handle these types of transactions, you may find more competitive rates online for processing credit and debit purchases. One popular example of processing these transactions is by using a PayPal account. Accepting credit and debit cards can be problematic because of chargebacks. A chargeback is when the credit card company withdraws the money for a transaction from a
merchant’s account and deposited in a consumer’s following a dispute. Additionally, you’ll also be charged a fee for this transaction, on top of the money being
withdrawn from your account.
Due to the nature of buying and selling liquidation, charge backs will be a regular occurrence, should you choose to accept these types of payments. You should make sure to inquire about the fees associated with chargebacks as part of your decision process in choosing a bank and also the procedure for providing evidence to combat unwarranted chargebacks.
• Website: The best way to introduce yourself to potential customers is to create a website for yourself and your business. This website will serve as your calling card and attract and educate potential new clients.
You should provide information about your company and your sales policies and procedures.
How to contact you: This is especially important. This is literally your digital business card.
Frequently asked questions-To tempt new customers into purchasing, having them be informed is important to their feeling of security and safety. Having a FAQ sections helps to lets your customers know that you are a legit brokering business.
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Education information about liquidation merchandise including customer returns, shelf pulls, and salvage merchandise. Again, it is important to be transparent with your customers about the merchandise that they will be purchasing because this will help build you a positive reputation with your clients and earn you repeat business.
If you have the ability to build your own website, you can go this route. If you don’t have this particular skill set, you can instead purchase a monthly or yearly
subscription with a web hosting company.
Most will allow you to create your website using a step-by-step process, choosing your domain name, and setting everything up using standardized templates. The whole process should only take a few hours to complete!
• Merchandise sources: As a broker, the most important thing you’ll need to run a successful business is access to merchandise and inventory. Inventory Scouts offers you a full list of vendors, from consumer goods to apparel and more! Merchandise varies from off-lease inventory to used merchandise, to customer returns and shelf pulls.