How does a person become a coin dealer?
MastaHanky
Posts: 933 ✭
Since I only work three or four days a week at my current job, I have a lot of spare time. I've thought about selling coins on the side, partially as a learing experience, partially to help me a bit with my current collection, and partially for a little extra money. 
I was wondering how one gets started in something like that. Obviously, the business license and tax ID number are the first place to start, but where do you go from there? I know that at shows, there is often a day where only dealers are allowed to browse and buy/sell to each other. How do they know that you're a dealer vs. a member of the general public? How long does it take for you to start networking with other dealers? etc, etc.
I was wondering how one gets started in something like that. Obviously, the business license and tax ID number are the first place to start, but where do you go from there? I know that at shows, there is often a day where only dealers are allowed to browse and buy/sell to each other. How do they know that you're a dealer vs. a member of the general public? How long does it take for you to start networking with other dealers? etc, etc.
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Frank
I would also like to hear some info about setting up a business license, getting the Tax ID, etc. What does it cost to start up? What are the annual fees that you must pay?
It will be an interesting thread.
JJacks
It would be just a virtual store, and maybe eBay auctions.
I would take care of all of the domain administration, programming, etc. I was more concerned about the actual acquistion of material. I would mainly be interested in dealing in slabs in the $100-$1000 range.
Dragon
The ones with real stores also buy stuff people are looking to sell and give about 50% of what they will ask for the coin.
You might also put a classified ad in the newspaper saying you buy coins.
<< <i>To become a successful dealer, you must be able to look someone in the eye as they are holding a coin you just handed to them and you priced at $4600.00 (which you recently paid $1300.00 for and got bumped 2 grades), and be able to say with a completely straight face..........."hey, $4600.00 is the best I can do, I'm into it for $4550.00 and just looking to flip it for a small profit" >>
And this is why I couldn't become a coin dealer...
I'll temper this by saying that I know all dealers aren't like this and that there are some out there that will deal straight with you.
Here are a few thoughts that come to mind:
Most any coin show promoter who does not have a waiting list for tables, will probably allow you to "buy" a table at his show. This can be very expensive (hundreds of dollars) at the largest shows but fairly inexpensive at smaller shows (I was at a small local show this past weekend where dealers were charged roughly $40 per table). You need not be a "dealer" to set up as a dealer at such shows. And, you can "test the waters" without shelling out lots of $ in the process. Typically, dealer set up is the day before, if not hours before the show is open to the general public. You could also consider splitting/sharing a table with someone you know. It saves $ and is better for security purposes.
You might check into getting a booth at an occasional small antique show too.
If you haven't already done so, you might consider settting up an account through Ebay and seeing if you can slowly build up a following for your listings.
Check with local coin shops and let them know you'd like to try to start doing some business. It's often difficult to build up those relationships but is worth a try.
You might consider running a few buy ads in a local paper.
If you're going to give it a try, I'd recommend building up at least a small inventory - you will need that to "deal"!
Take it slowly. It can be difficult and frustrating but you have to start somewhere.
I hope this helps a bit.
Collect all the change you can get your hands on, request change in pennys, save em all and then once you've got like a jug or two....congratulations your a coin dealer. Simply get a table at the next flea market, advertise the jugful as RARE COINS 2 for $1 .
You can always purchase a popcorn cart, and collect the change.....
Just some random thoughts............
Marc
I was just joking and hope that no one took me seriously.
Dragon
Russ, NCNE
<< <i>I was just joking and hope that no one took me seriously >>
Dragon - no problem - however, like Stman, I too have heard that line many a time, and often knowing that the true situation is much different. I'm not saying that most dealers are like this - I know and trust quite a number of dealers, both one's that I've met in person and on here. It's my view that you will always have a more loyal following by being straight forward and honest as opposed to putting on a dog and pony show. I don't mind if a dealer tells me that a coin "bids" or "asks" for a certain amount. If it does, so be it. I do mind when they give me a song and dance about how much they have invested in the coin. I would never ask a dealer how much they paid for a coin, that's not my business. If I happen to find out by other means, that's fine - part of the game, but don't try to tug at my heart strings when I know darn well that there's money to be made at every transaction. If you have a coin, a good coin, give me a fair price and see what happens. If you have a crappy coin, or you think you have a crappy coin, like an AT coin, don't try to sell it to me as genuine, that'll just make me mistrust you.
Frank
I am always fair and upfront, but you can't be afraid of walking away from a deal. there are some people who are just unreasonable on what they want out of their coins.
You don't really make money selling coins, you make it by buying them right. Most people will understand that you need to make a profit, as long as it isn't unreasonable.
The biggest problem I have, is selling the coins I buy..LOL..I guess that is probably a major issue with a collector who is trying to play both sides of the street. I have too much stuff here now and really need to sell some of it. But I got it at a good price.......LOL.....
If you run an ad in the paper, it is a good way to get started because you can "pick" the deals that interset you. you will run into the people who think they have rare coins that don't turn out to be (double dies that are hub doubling etc.). You will also get the ..."I have a coin i would like to sell..it;s a Buffalo Nickel but it doesn't have a date...does that make it rare"
I always spend some extra time with the people I meet with to explain to them what they have and why it is worth what it is. make sure you carry some good reference material with tou. Oh, and a gun isn;'t a bad idea either.
Anyone want to buy some Mint Sets and proof Sets, or rolls of Walkers, Or Kennedys, or Circulted Morgans or....
Greg
But like you mentioned I don't care to hear how much they paid etc. etc. I've seen many dealers say they have such a small profit in this coin. Go sell it to them and they give 10% below blue sheet and sell 30% above grey sheet. Thats a pretty good spread for someone that is only making a small profit. But I like most dealers.
Here are some suggestions from a non-dealer but I have a few small dealer friends.
1] Being a coin dealer is different from being a collector, are you prepared to let your hobby become your "job"? Even part time?
2] Many people believe coin dealers make alot of money. Most do not. Just because some notable internet or large dealer has hundreds of high value coins does not mean they are wealthy. Many are selling other people's coins on consignment. The coins are not their property. Sort of like the live-in who takes care of the mansion in Bel Air. Sure she gets to live there and pretend but reality is she will one day move on.
3] Are you prepared to deal with lots of whining cranky annoying flakey collectors [other dealers]?
4] If you really want to learn try hooking up with a local dealer first, I think you will soon change your mind. {It is not all that glamorous.
Good luck.
If you sell on ebay or yahoo out of your home - it would be a quite awhile until someone forces you to get a license or special permit. Depending on what state you live in, eventually you may need to get a sellers permit to collect sales tax on items shipped to your state - every state has different rules on this - depends alot on their designation of periodic seller (like garage sales) or continuing basis - hundreds every week.
Good luck and best wishes!
TRUTH
A "vest pocket" part-time thing may make more sense, it's a lot easier to make a good return on your time/money if you aren't trying to "force" a living out of it and can wait for a good deal to come along.
In any event, I would start with as little monetary investment and start buying/selling some coins right away to see if it's something you enjoy. As mentioned, that would likely not include having to do any of the licensing stuff until you were doing enough that you'd be considered a dealer. Selling on eBay would be a good way to get your feet wet.
Even after becoming a dealer, if you're strictly mail-order you may be able to avoid a lot of regulatory hassle by only selling out-of-state, or if you live in a state that doesn't require sales tax on coins.
Even still, for any business, tax-time will be a whole lot less fun than it already is. You'll need to file with the Feds, and probably your state. Maybe even a county assessor, for which you will be taxed simply for owning stuff in conjunction with your business. And don't forget the endearing self-employment tax.
All that's not to dissuade you from starting a business, but you should be sure the business is something that you really enjoy, AND makes a decent buck.
Coin dealing often comes up short on the second part. Capital requirements are high, margins are laughably low, and success is not readily scalable -- because every part of the process is labor-intensive. Coins are not generic and don't lend themselves well to bulk acquisition and sale.
You've been warned! But if you ignore that advice... wanna buy a coin web site?
How does a person become a coin dealer?
1) Buy a bunch of coins.
2) Try and sell them for more than you paid.
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since 8/1/6
That's exactly what I'd like to do. There's no way I'm giving up this job to be a coin dealer full time.
I think the perfect place to start will be the bid board at the local coin dealer. I'm grabbing bargains off of there all the time. Maybe I'll start grabbing material I don't collect, turn around and dump it on eBay. I guess that's a good way to test the waters and see if it sucks or not.
Great advise
Greg
I only buy and sell circulated semi-key coins (and some semi-keys can be $5. coins) of many different series.
Most people I think buy on eBay to get a bargain. I find most often that your keys and high-ticket coins are the ones that usually go for bargain prices (and I'm not talking ACG or other problem coins) and that makes dealing in those type of coins IMHO very difficult to make a short-term profit.
On the other hand, I find that I can buy semi-keys for much less at shows than can be purchased on eBay and that is why I buy semi-keys at shows and sell them on eBay.
Now before you jump to conclusions, I do this because it is my hobby and I enjoy what I am doing, it is NOT about making money (which by the way when all is said and done I average about $1./hour)
Other than my job, which I enjoy, there are not too many other things that I would rather do then buying and selling coins and I get paid to do it. What a country! (OK one other thing but then I would only get about .25)
Good luck whatever you decide.
Joe.
One comment I would like to address is pricing of coins. The public or another dealer shouldn't care what I paid for a coin, it's my coin, if you want to buy the coin from me you must meet my price needs. It's no differance when you have a coin. If the coin is worth $100.00 and you sell it for $50.00 that's your choice and If you need the coin and it's a key and VERY few are available I may want $125.00 to part with it. Three factors are involved, supply and demand and is there a replacement anywhere? That's why in auctions some coins go for 3 to 5 times bid.
The business license & state resale cert. is the least of the costs and worries.
Hey! What's your secret??
The self-employment tax is a killer, figure at least 10% of your profits go to this
Actually it's 15.3% of net income -- and yes as you mention it's completely separate from income tax.
It goes down after the first $85K or so of income, but as a coin dealer that's probably not applicable -- see above.