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How to Start a Thrift Store

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While resale shops and thrift stores are not exactly a new premise, they seem to flourish in a challenging economy. These shops can generate tremendous sales, whether they are a for-profit business or a charity, if they are stocked with enough high-quality merchandise at reasonable prices. Since these shops do not always have a definite supplier for all of their merchandise, it can take some skill and planning to find and maintain inventory. If you have skill as a buyer and a passion for the industry or for a charity, consider opening your own thrift store.


Decide whether you will be a for-profit business or a charity. If you are going to be a for-profit store, secure your employer identification number and sales tax license from your secretary of state's office with the help of your tax accountant. If you are going the non-profit route, consult your tax accountant about establishing a 501c3 charity.

Write a business plan that carefully outlines the way your store will operate. Include sections about how you will acquire inventory, projected profit margins, estimated payroll and other details that demonstrate that you understand what is involved in the business.

Find a location for your store. Locate one big enough for a considerable inventory and with a staging area in the back room in which to get merchandise priced and ready for resale. Placing your shop in an area with considerable traffic will help generate customers.

Apply for financing using your business plan. Borrow enough capital to purchase store fixtures, a cash register and cash wrap area, shelving and other goods to complete your floor layout. Borrow enough extra to cover payroll for three to six months to help smooth out your business launch.

Contact your local city hall to arrange a building inspection and acquire a merchant's license. You can also find out about any local regulations and zoning requirements pertaining to thrift stores at the city hall.


Maintain a steady flow of salable merchandise and clearance or discard that which is less desirable. Purchase clean, salable merchandise when possible. Be diligent to only display merchandise that is clean and free of damage.

Provide a tax receipt for the estimated value of the donated amount if you are a charity. Contact mid- to large-sized retailers to see if you can purchase overstock and distressed goods at a substantial discount. For a charity, some may trade the merchandise for a donation receipt.

Watch for going-out-of-business sales. Visit the store and offer to purchase all remaining inventory at a substantial discount. If a charity, offer a tax receipt for the appraised donation.

Consult your newspaper and other media looking for auctions. Often clothing and knickknacks sold at auction will be sold by the box or even the pound.

Offer delivery service for large items. While you may not make a profit on the delivery itself, you will sell more large items than if the customer has to arrange to pick them up.


Purchase garage-sale leftovers, discarding or giving away what is not salable. Purchase inventory-management software to help keep track of your stock levels and store profitability. Seek trade fairs and conventions tailored to thrift stores. If you buy enough bulk in these venues, the price can be very minimal. Sell valuable merchandise on online auction sites rather than at bargain prices on your sales floor, when possible.


Arrange to have a certified appraiser valuate large donations to follow IRS statutes regarding sizable donations. If you accept a donation valued at $500 or more, you must give the donor an IRS Form 8283, "Non-Cash Charitable Contributions," to file with their tax return. If you accept a donation of more than $5,000 in goods, you need to offer an appraisal for the donors to include on their form 8283.