How do I open a charity shop?

I want to open a charity shop. What do I do first?

1. Register as a charity with the Charity Commission.

2. Learn about the statutory obligations that come with being a retailer, charity, employer and occupier of property.

3. Learn about tax and charity shops. Charity shops are exempted from corporation tax. They benefit from zero rated VAT on the sale of donated goods, and 80% mandatory non-domestic business rates relief. The HMRC website has guidance on these issues.

4. Approach your local council, to arrange rates relief.

5. Create a budget for the shop, with likely income (from sales) and expenditure (from rent, wages, repairs, bills, insurance). Remember that 60-80% of a shop’s income may go to running costs, such as rent and wages.

6. Raise your start-up capital. You will need to pay the rental deposit, usually the shop-fit, potentially essential building repairs and possibly staff recruitment.

Getting your charity shop up and running

1. Choose a geographical area for your shop. Usually a mixed income area with good footfall and nearby parking.

2. Find a property with a good sized backroom for storage and stock preparation, and a suitable public area. In order to comply with Health & Safety legislation and the Disability Discrimination Act (DDA) (www.equalityhumanrights.com), the shop will need to be safe, well lit, and accessible to those with disabilities.

3. Fit front-of-shop with shelves, railings and a counter with a till, while the backroom will need storage and sorting facilities. Security equipment is highly recommended as suits your budget.

4. Hire a shop manager with retail experience. They will be responsible for all the shop’s activities including all aspects of stock, volunteers, cash handling and sales reporting.

5. Find volunteers with a view to a minimum of two people working in the shop at all times, for safety, security, and stock processing. The average charity shop has 20 volunteers.

6. Train your workforce to know about your charity’s aims, customer service, retail law, product safety, stock preparation, spotting valuable goods, as well as issues like health & safety and security.

Prepare your charity shop for long term success

1. Encourage donations from your community via social media, signage and neighbourhood forums.

2. Sort, clean and price your stock. Unsold textiles (i.e. too old or damaged) may be bought by a textile recycler – we recommend a TRUST-accredited recycler – who will recycle or export them.

3. Make sure the shop is a safe and secure place to be and to work in by completing risk assessments and display the correct posters and notices including: employer’s liability insurance certificate, Health & Safety law poster, employer’s Health & Safety policy statement, fire emergency instructions and the emergency aid notice. The Royal Society for the Prevention of Accidents website has more information.

4. Make sure the shop is welcoming to disabled customers and volunteers to comply with the DDA regulations. This involves practical things, like having a ramp over steps, as well as training staff on how best they can help.

5. Make sure the shop complies with consumer law, and sells safe goods of satisfactory quality. Visit Trading Standards for further guidance. Our members have access to charity retail-specific guidance.

6. Apply for a music licence if desired.

Further information

We recommend the following sources of information:

• The Charity Commission provides information on the legal aspects of charity trading, including operating under a trading subsidiary in CC35 – Charities and Trading.

• Consider joining us. We have many members who have joined prior to taking the step of opening a shop in order to gain access to our advice and guidance and information.

There are charity retail consultants available too – some of whom you can find here.