Legal Requirements: Licenses, Sales Tax & Reporting

Business Licenses and Registration

Before conducting your first coin transaction as a dealer, you must establish your business legally. Requirements vary significantly by state, county, and municipality, so research your specific jurisdiction carefully. The consequences of operating without proper licensing range from fines to loss of the ability to set up at coin shows (most show promoters require proof of licensing).

Common requirements:

• Business license — Most jurisdictions require a general business license for any commercial activity. Cost: $50–$500 depending on your location. This is typically the first step and is usually straightforward — file an application with your city or county clerk's office.
• Secondhand/precious metals dealer license — Many states and cities require a specific license for dealing in coins, precious metals, and/or secondhand goods. Requirements may include background checks, fingerprinting, bonding, and detailed record-keeping of all purchases (to assist law enforcement in recovering stolen property). Some jurisdictions require you to hold purchased items for 7–30 days before reselling (a "holding period" designed to allow theft victims to identify stolen property). Research your state and local requirements carefully — this is the license most specific to coin dealing and carries the most detailed compliance obligations.
• Sales tax registration — Most states require sellers to collect and remit sales tax. Many states exempt coins and precious metals from sales tax (partially or fully), but you must register regardless and understand the specific exemptions in your state. Some states exempt bullion but tax numismatic coins, or exempt items above a certain dollar threshold. Non-compliance with sales tax obligations creates serious legal and financial liability.
• DBA (Doing Business As) — If operating under a business name different from your personal name, file a DBA with your county. Cost: $10–$50. This legitimizes your business name and is required for opening a business bank account.

Business Entity Structure

Choosing the right business structure affects your taxes, personal liability, and operational flexibility:

• Sole proprietorship — Simplest structure. No formal filing required beyond business licenses. Business income reported on your personal tax return (Schedule C). Disadvantage: no personal liability protection — if the business is sued or incurs debts, your personal assets are at risk. Appropriate for very small, part-time operations.
• LLC (Limited Liability Company) — The most popular structure for small coin dealers. Provides personal liability protection (your personal assets are shielded from business debts and lawsuits). Pass-through taxation (business income flows to your personal return, avoiding double taxation). Filing cost: $50–$500 depending on state. Recommended for any dealer with significant inventory value or show activity.
• S Corporation — An LLC or corporation that elects S-corp tax treatment. Can provide payroll tax savings for profitable dealers by splitting income between salary and distributions. Adds complexity and accounting costs. Generally appropriate once annual dealing income exceeds $50,000–$75,000.

Insurance Requirements

Coin dealing involves transporting and displaying valuable inventory in public settings, creating significant loss exposure:

• Inland marine / dealer's stock insurance — Covers your inventory against theft, loss, and damage during transit, at shows, and in storage. This is the essential insurance for coin dealers. Policies are available through specialty providers (Hugh Wood Inc., Jewelers Mutual, and through ANA membership programs). Annual cost: typically 0.5–1.5% of insured value. A dealer with $50,000 in inventory might pay $500–$750/year for comprehensive coverage.
• General liability insurance — Covers claims arising from injuries at your booth (someone trips over your display case), product claims, and other general business liability. Required by some show promoters. Cost: $500–$1,500/year.
• Business property insurance — If you operate from a physical location (home office or retail shop), covers business equipment, display cases, and on-premises inventory.
• Vehicle insurance — Standard auto insurance may not cover valuable coin inventory transported in your vehicle. Verify with your insurer or add a rider to cover inventory in transit.

Record-Keeping and Compliance

Coin dealers have specific record-keeping obligations beyond normal business accounting:

• Purchase records — Many jurisdictions require detailed records of every item purchased: date, description, seller's name and address, seller's ID information, and price paid. These records must be maintained for specified periods (typically 1–5 years) and made available to law enforcement upon request.
• IRS Form 8300 — Cash transactions exceeding $10,000 (or structured transactions designed to avoid this threshold) require filing Form 8300 with the IRS. This applies to both buying and selling.
• 1099-B reporting — Dealers must report certain precious metal purchases from the public on Form 1099-B (25+ oz of gold coins, $1,000+ face of 90% silver, etc.).
• Anti-money laundering (AML) — While coin dealers are not currently required to have formal AML programs like banks, awareness of suspicious transaction patterns and willingness to report them protects your business and reputation.

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