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Starting a Consignment Business?

Q. I would like to start selling a novelty item through consignment. Do I have to have a license? What else, legally, do I have to do, before I start selling? - Rebecca

Advice by Nach Maravilla
Publisher, PowerHomeBiz.com

A. Dear Rebecca,

When you want to go into business seriously, it is important that you are doing it legally. The most important item you must have is a business license (if required for your business). Given that business guidelines can be different from one county to another, I suggest you visit your county clerk of court or your Business Information Office in your City Hall and ask for guidelines, rules and regulations and licenses needed to operate your planned business.

Even if you are not required to have a license, it is important to register your business in the county where you reside or want to do business. I suggest you read the article "Most Common Questions Asked When Starting a Business" at http://www.powerhomebiz.com/vol45/questions.htm . Aside from registering your business, you need to have a fictitious business name for your business banking account, sales tax number (if required) and employer identification number (if applicable)

The whole point of registering your business is to protect your own business interests. Since you plan to sell your products on consignment, it is very necessary that you have some kind of business identity; otherwise the stores that you want to deal with, may not even entertain you. With a registered business, you are conveying the impression that that you are a professional business that should be taken seriously. Some stores or companies normally don't pay much attention to individuals making deals with them. They prefer to deal with legitimate businesses no matter how small.

The success of a consignment arrangement depends on the leveling of the expectations of the consignor and the consignee. You may want to read the article "11 Tips When Selling Through Consignment" at http://www.powerhomebiz.com/vol58/consignment.htm  to get ideas on what to look out for when consigning your products to others. The article provides some guidelines on setting of the rates, retrieving of your goods and making sure that everything is in writing. Sometimes, we trust other people so much because we are honest. However, you should always set precautionary measures specially when you consign your goods with someone else. Some people can take advantage of you, particularly if they know that you are doing business without a license.

After that you may start planning by writing a business plan for yourself. The business plan will be your road map which will be your guide on running the business. Remember, if you have a plan for yourself, you will never go to the wrong direction because you have set everything up. If you need assistance on this let us know and we shall refer you to a book which you can really use.

Good Luck !

About the PowerHomeBiz.com Guide: 

Nach Maravilla is the Publisher of Power Homebiz Guides. He has over thirty years experience in sales and marketing of various products, which covered as he jokingly describes, "from toothpicks to airplanes"  He also had extensive experience in International trading and he always excelled in special promotional ideas for  retail outlets. 


The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.