Scrap Metal Dealers, ways of Learning the Trade

Scrap metal dealers:  A scrapping business can end up making money in two major ways: Some people will pay you to haul away junk which you can then break down and sell to buyers. Find out how to start a scrap metal business to decide if it can be a wise investment of time and resources.

Be able to identify and sort different metals. Buyers will be purchasing specific metals by the pound. You will need to accurately identify your scrap for sale. To do this, first use a magnet to check the metal’s ferromagnetism (whether or not the magnet sticks). Weigh this information with the metal’s appearance, weight, and item of origin. There are five major metals that will likely make up the bulk of your scrap.

  • Iron and its alloy steel have many uses and are probably the most common metal you’ll be scrapping. Iron is ferromagnetic, strong, and lighter than most other metals except for aluminium. While normally different shades of gray, it rusts into a reddish brown.
  • Aluminium is non-ferromagnetic and very light. Like iron, it is ubiquitous.
  • Pure copper is slightly pink, while lower grades are a reddish brown. It tarnishes into a jade green colour. Copper is non-ferromagnetic and slightly heavier than iron. You’ll find copper in wiring and quality cookware.
  • Bronze is an alloy of copper but is worth significantly less. It is a much lighter, almost gold colour. It is commonly found in instruments, decorations, and pipe valves.
  • Lead is extremely soft and heavy. It is typically used to make bullets and as radiation shielding. Keep in mind that lead is extremely toxic, so use protection when handling anything you suspect to contain it.
  • Keep in mind that within these basic categories there are also many different grades with their own properties. For example, most stainless steel is non-ferromagnetic. Additionally, you will probably come across rarer valuable metals if you scrap electronics. Study these before starting your business.

Read also: How to find the best metal scrap yard near me

Scrap metal dealers

Get insurance coverage for your vehicle and property. If you have a site that is open to the public, you’ll need to cover liability issues. At the minimum, have customers sign liability waivers before entering the site. Having insurance will also help you to recoup costs in the event of theft or a natural disaster.

Keep accurate records of all business expenses and income. While different countries and locales have varying tax laws, the need for accurate records is universal.

  • If you live in the US, you will need to file an IRS 1099 Form each year as part of your tax return. Report all sales made. Be sure to claim deductible business expenses to reduce your tax burden. Use the Internal Revenue Service’s Cash Intensive Businesses Audit Techniques Guide as a reference. This document is available for free on their official website.

    See also: How to Open Metal Recycling Business

    Scrap metal dealers


Talk to your county or town about necessary licenses and permits. Many local municipalities require that scrap metal businesses obtain appropriate licenses or permits. If you run a scrap yard or other area that is open to the public, you may have to deal with zoning issues like traffic, parking, and safety. Because of this, you may need to demonstrate your safety practices, show proof of insurance, pay a fee and/or indicate your knowledge of local laws.

Speak to an attorney. Consult an expert on scrapping or similar businesses to make sure you have everything covered. Ask about any tax, licensing, or occupational safety issues you may need to address.

  • If you live in the United States and have at least one employee, your business must be compliant with standards set by the Occupational Safety and Health Administration (OSHA). Read the requirements on OSHA’s website before hiring to make sure you offer a safe work environment.

    Read on: How to Make Money on Western Metal Recycling Business

    Scrap metal dealers

Hire an employee or find a business partner. Even if you’re strong and in great shape, most scrap hauling is at least a two person job. Figure out a fair salary for an employee or share in the profits with a partner.

Start making arrangements to collect scrap. Major sources include businesses that use and discard metal and homeowners throwing away bulky items like refrigerators and air conditioners. You may even choose to buy used cars at scrap prices.

  • The business transaction that comes from obtaining your scrap will vary. Many commercial sources will require payment from you. However, if you advertise as a junk-disposal business to consumers, you can often obtain scrap for free or even charge for your service.

    Scrap metal dealers

Advertise your new business. Take out ads in your local newspaper, post your business on online forums, and flyer door to door. Let your neighbours know that you are starting a scrap metal business and ask them to send any discarded metal your way.

Find buyers for your scrap metal. A larger local scrap yard or recycling center are some options. You can also advertise scrap metal that you have for sale. If you decide to start a scrap yard, it can be open to the public at certain times for customers to browse and buy.

Read on: How to Make Scrap Metal Business more Profitable

Scrap metal dealers

Work out a schedule. Optimize the efficiency of your business by organizing your time. Set aside different day(s) to obtain scrap, sort and dismantle metal, and delivering it to buyers. Keep at it to make sure your operation runs smoothly. If you neglect any of these three tasks, the work can build up and make doing the other two impossible.

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