Start a consignment store in Canada: agree consignor terms in writing, clear municipal licensing for the exact shop, register the business and tax accounts, and run pricing, payout, and unsold-stock routines from the first intake.
Applies in: CA
A consignment store sells goods that belong to other people. The consignor brings an item in, the store displays and sells it, and the consignor is paid only when it sells, less the store's agreed commission. The business is therefore a trust business as much as a retail business: the shop floor is full of other people's property, and the record that links every item to its owner, its price, and its payout is the core asset. Get the consignor agreement right, clear the municipal licensing for the exact shop, and run intake, pricing, payout, and clearance as fixed routines from the first item.
Decide what the store will take before looking for premises. Clothing, furniture, jewellery, books, sporting goods, and children's goods each need different space, handling, and security. Clothing needs racks, fitting space, and fast turnover. Furniture needs floor area, delivery access, and room to move pieces without damage. Jewellery and small valuables need locked display and a higher standard of record-keeping and insurance. A store that takes everything takes on every category's problems at once; a store that starts with one or two categories it can handle well can add categories as the routines prove themselves.
Decide also how selective the store will be. A consignment store that accepts anything fills its floor with stock that does not sell and spends its time managing returns. A store with stated acceptance standards — condition, cleanliness, seasonality, and brands or categories it carries — can apply them consistently and explain a refusal without an argument. Write the acceptance standards down and give them to every consignor at intake.
There is no national consignment licence. The licensing layer is municipal, and it varies by city and by what is sold. Toronto regulates more than 50 types of businesses and trades through Toronto Municipal Code Chapter 545, the Licensing Bylaw, and its published licensing review schedule lists second-hand goods related businesses for review in 2027. That tells a Toronto consignment store two things: the category is on the city's regulatory radar, and the rules may change. Other cities regulate a consignment shop through zoning and a general business licence only, with no second-hand category at all.
Ask the municipality, for the exact address, whether it licences second-hand or consignment shops, what goods and activities the licence covers, what record or register rules apply, and what the application fee and timeline are. Ask specifically about any category the store will carry that a city may name separately, such as jewellery, electronics, or precious metals. Get the answers in writing before signing a lease, and check zoning for retail use at the address at the same time. A lease for a shop that cannot lawfully trade as a consignment store at that address is the most expensive mistake in this guide.
Every consignor signs an agreement before the first item goes on the floor. The agreement covers the items, the price, the commission, the markdown schedule, the payout timing and method, the consignment period, the end-of-period outcome for unsold items, responsibility for loss or damage, and responsibility for GST/HST. It states plainly that the consignor remains the owner of the goods until sale, and it states what identification and contact details the store keeps for each consignor.
Two terms deserve care. The first is markdowns: the agreement should state the markdown dates and percentages, and who may authorize a deeper markdown, because a markdown applied without authority is a dispute about the consignor's money. The second is the end of the period: the agreement should state the notice the store gives, the date by which the consignor collects unsold items, and what happens if they are not collected. A store that donates or disposes of goods without the agreement allowing it is handling someone else's property without authority. Have a lawyer review the agreement form before opening, and ask specifically about the province's Personal Property Security Act and whether registration is relevant to protecting a consignor's ownership while goods are in the store's possession. This guide describes the process; it is not legal advice.
Register the business name in the province where the shop sits, where the business trades under a name other than the owner's legal name. Get a Canada Revenue Agency business number through Business Registration Online, reached through a Canada Revenue Agency account; new registrations must be made online and the number and account details are received instantly after registration.
Register for GST/HST when the business must, and consider voluntary registration before then. A business must register if it is not a small supplier and it makes taxable sales in Canada, and a small supplier is a person whose revenue from worldwide taxable supplies was $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters. Once the threshold is exceeded in a single calendar quarter, the business must charge GST/HST on the supply that made it exceed the threshold and register within 29 days of the effective date of registration. State in the consignor agreement whether the commission split is calculated before or after tax, and confirm the store's exact GST/HST treatment with the Canada Revenue Agency or a tax professional, particularly where a consignor is itself registered. In Quebec, Revenu Quebec generally administers the GST/HST as well as the QST.
The shop needs three zones: an intake area where items are received, checked, photographed, tagged, and recorded; a display floor where items are priced and presented; and a back area for items awaiting markdown, return, or payout processing. The intake record for each item should carry the consignor, the date received, a description sufficient to identify the item, the agreed price, the commission, the markdown schedule, the consignment period end date, and the item's status. Keep the record from the first item, in a system that can produce a consignor statement on demand: who sold what, for how much, and what is owed to whom is a question the store must be able to answer at any time, not at month end.
Security and insurance follow the record. Locked display for valuables, a camera position covering the intake and till areas, and property coverage that expressly covers consigned goods are the baseline. Confirm with the insurer, in writing, that consigned goods are covered and to what limit, and make sure the agreement's promise about loss or damage matches the policy. If the business hires staff, workers compensation registration in the province comes with the first hire.
Three routines run the store. Pricing: items are priced at intake from condition and from what comparable items sell for in the store, with the markdown schedule applied on the agreed dates. Payout: consignors are paid on a fixed cycle, with a statement showing each item sold, the sale price, the commission, and the amount paid, and the payout run happens on the same day each cycle whether the week was busy or quiet. Clearance: items reaching the end of their consignment period are marked down, notified, returned, or otherwise dealt with exactly as the agreement states, and the floor is refreshed with new intake.
The discipline is the business. A consignment store that pays late, loses track of whose item sold, or lets stale stock sit will lose consignors, and consignors are the supply chain. A store that pays on time, accounts clearly, and returns unsold items promptly will keep receiving the good stock that makes the floor worth visiting.
The sale to the customer is a consumer transaction, and the province's consumer protection law applies to it. The store should describe goods honestly, honour the price as marked, and handle returns and complaints under the province's rules and the store's stated policy. Where a province's consumer protection law imposes disclosure or fair dealing obligations on the sale, those obligations bind the store as the seller, even though the goods belong to the consignor. Keep the store's return policy posted and consistent, and do not promise a consignor's goods are something they are not. If a category the store sells carries its own rules, such as recalled products or safety-regulated goods, check those rules before the category goes on the floor, and do not sell recalled or unsafe goods.
No commission rates, licence fees, or earnings figures are stated in this guide, because none was verified on an official page. Commission splits vary by store and category and are a matter for the consignor agreement. Municipal licence fees vary by city and category and are confirmed on the municipality's own licensing page for the exact address. No provincial consumer protection page specific to consignment terms was verified on an official page, so this guide states the general consumer protection position only and directs the reader to confirm the province's rules and to have the agreement reviewed by a lawyer, rather than stating a consignment-specific rule that was not verified.
Ownership is the difference. A thrift store buys its stock, or accepts donations, and owns what it sells: the shop keeps the full sale price and carries the loss if an item does not sell. A consignment store sells goods that still belong to the consignor, and pays the consignor only when the item sells, keeping an agreed commission. That changes everything downstream: a consignment store needs a written agreement with every consignor covering price, commission, markdowns, payout timing, and what happens to unsold items, plus a record linking every item on the floor to its owner. A thrift store's key licensing question is usually second-hand dealer rules for goods it buys from the public; a consignment store's key question is the consignor agreement and the record-keeping that proves whose goods are whose. The thrift store guide linked below covers the owned-inventory model.
There is no national consignment store licence, and the answer depends on the municipality and on what is sold. Municipalities license businesses by category, and second-hand goods businesses are a category some cities regulate directly: Toronto regulates more than 50 types of businesses and trades through its Licensing Bylaw, and its published review schedule lists second-hand goods related businesses for review in 2027, which is a sign the category is actively regulated there. Other cities regulate a consignment shop through zoning and a general business licence only. Ask the municipality three questions for the exact address: does it licence second-hand or consignment shops, what goods and activities does the licence cover, and what record rules apply? Get the answers in writing before signing a lease. If the shop sells regulated goods such as jewellery, electronics, or other specified second-hand goods, ask specifically whether those categories carry extra rules.
The consignor's and the store's names, a description of each item sufficient to identify it, the asking price and who may change it, the commission or split and how it is calculated, the markdown schedule and who authorizes markdowns, when and how the consignor is paid after a sale, how long the item stays on the floor, what happens at the end of that period, whether unsold items are returned, donated, or disposed of, and who bears the loss if an item is damaged, stolen, or lost while in the store. It should also state who is responsible for GST/HST on the sale, and that the consignor remains the owner until the item sells. Put it in writing, signed by both sides, before the item goes on the floor, and keep a copy with the item record. This guide is process information, not legal advice: have a lawyer review the agreement form before the store opens, and check whether the province's Personal Property Security Act registration affects the consignor's ownership protection.
Work it out before the first sale and write it into the consignor agreement, because the store and the consignor can each have a GST/HST position. The store charges GST/HST on its taxable supplies, and a consignment sale is a taxable supply of the goods unless the goods are zero-rated or exempt. The Canada Revenue Agency's small supplier test applies to the business's own revenue from taxable supplies: $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters means the business does not have to register, though it may register voluntarily. Where the store is registered, it charges GST/HST on the sale and claims input tax credits on its taxable inputs, and the commission arrangement with the consignor should state whether the split is calculated before or after tax. Where the consignor is itself a GST/HST registrant, the treatment needs professional advice. Do not guess: confirm the treatment with the Canada Revenue Agency or a tax professional for the store's exact arrangement.
Whatever the signed agreement says, and nothing else. A consignment agreement should set a fixed consignment period, a markdown schedule within that period, and a clear end: return to the consignor by a stated date, donation or disposal with the consignor's written consent, or purchase by the store at an agreed price. The store should notify the consignor when the period ends, keep a record of the notification and of the return or disposal, and never donate or dispose of a consignor's goods without the agreement allowing it. Unsold stock is the consignment store's version of the thrift store's back-room problem: a floor full of stale items stops new consignors from bringing good stock, so the markdown and return routine must run on schedule, not when the floor is full.
In practice, yes, and the consignor agreement should say what the insurance covers. The store holds goods it does not own, so property coverage for stock should expressly cover consigned goods in the store's care, and liability coverage should cover customers on the premises. A leased shop will usually require the landlord to be named on the policy. If the agreement says the store is responsible for loss or damage, the insurance must match that promise; if the agreement says the consignor bears the risk, that must be stated plainly and the consignor should be told to insure valuable items. Get the coverage confirmed in writing from the insurer before the first intake, and do not promise consignors a level of protection the policy does not provide.