Start a paper recycling business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your paper recycling business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a paper recycling business?
The startup costs involved in opening a paper recycling are minimal. Business owners need a:
- a vehicle and/or trailer for transporting collected paper
- a scale for weighing paper
- a covered and dry area for storing paper
- a utility knife for breaking down boxes
- a small office or desk area for keeping cash and managing books
The utility knife should have extra blades stored inside it, as cardboard will quickly dull even the sharpest blades.
Business owners who have limited startup capital can begin by using their personal vehicle, although owners who drive small cars may quickly want to invest in a trailer or larger truck that can hold more paper. Many business owners use a storage shed or garage to keep paper, essentially eliminating this startup expense.
What are the ongoing expenses for a paper recycling business?
The ongoing expenses for a paper recycling business are minimal. They include fuel and vehicle maintenance costs, and any facility costs for a storage area.
Who is the target market?
While almost every person and organization has paper to recycle, the most profitable sources of paper are usually businesses.
Small offices, print shops, and retailers are especially good sources. They’re usually located close to each other, so drive time between pickup locations is reduced. Also, their paper and cardboard isn’t contaminated with food.
How does a paper recycling business make money?
Recycling facilities pay paper recycling business owners for the paper they bring to the facility. The rates paid are usually given per ton(e.g. newspaper might command $50 per ton).
While some business owners might want to charge the people and organizations that they collect paper from, this practice is generally inadvisable. Charging to take paper away frequently results in a business taking away garbage as well as recyclable paper. Not charging to take away paper makes it easier for a business to require that people and organizations properly sort recyclable paper from unwanted garbage.
How much can you charge customers?
The rates that paper recycling businesses collect are set by recycling facilities. For example, a facility might pay $50 per ton of newspapers, $75 per ton of cardboard and $2,120 per ton of high-grade office paper. Business owners should check their local facilities’ rates to see what they could collect.
How much profit can a paper recycling business make?
It’s possible to make good money recycling paper. Part-timers can clear $300 in a weekend, and some full-time business owners earn over $100,000 annually.
How can you make your business more profitable?
Successful paper recycling businesses can increase profits by offering secure shredding services. Many businesses pay to have documents shredded, and shredded papers are frequently high-grade office paper that can be recycled at a premium rate.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your paper recycling business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a paper recycling business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A paper recycling business is generally run out of a large recycling facility. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a paper recycling business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your paper recycling business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a paper recycling business
The best way to grow a paper recycling business is through cold calling. Knocking on doors of homeowners and businesses will eventually lead to regular sources of paper.
How to keep customers coming back
If cold calling alone isn’t effective, a business can further entice homeowners and local businesses to set aside recyclable paper by offering to pay for it. Many individuals and managers will take the extra effort required to sort paper if they’re even just a small financial incentive to do so.
(Rates paid for paper that’s picked up should be lower than those paid for paper that’s dropped off, in order to account for the additional drive time required.)
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Paper Recycling Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who doesn’t mind a little manual labor and working alone at times may enjoy running a paper recycling business. Moving and sorting paper involves light-to-moderate physical work, and business owners spend a lot of time doing this by themselves.
Many people who start this type of business do so as a part-time venture (at least at first). Pickup, sorting, and drop-off times can easily be scheduled around a full-time job, family responsibilities, or other obligations
What happens during a typical day at a paper recycling business?
Paper recycling businesses handle literal tons of paper, so business owners spend a lot of time moving and sorting paper.
On a given day, business owners might be picking up paper, accepting deliveries of paper (see Insider Tips), sorting paper by type, or delivering paper to a recycling facility. To increase operational efficiency, business owners typically focus on one of these tasks in a single day.
What are some skills and experiences that will help you build a successful paper recycling business?
Business owners should be familiar with the different types of recyclable paper, as well as what kinds of paper aren’t recyclable.
In general, office paper, index cards, manila folders, newspapers, non-glossy magazines, non-glued books, and cardboard are recyclable. Non-recyclable papers normally include anything with plastic, glossy magazines, tissues, and paper towels. Some recycling facilities accept papers with adhesives, such as stamps and Post-It notes, but other facilities don’t have the equipment needed to remove the adhesive.
Local recycling facilities will have a list of exactly what papers they accept.
What is the growth potential for a paper recycling business?
A paper recycling business may remain a small, one-person operation, or it can grow to be a multi-state corporation. Mid-America Paper Recycling and Waste Management are two of the larger paper recyclers. Royal Oak Recycling is a mid-sized business. The smallest businesses usually don’t have websites, as they can get the business they need by driving (or even walking) around locally.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a paper recycling business?
In addition to collecting paper themselves, business owners can also entice youth organizations to collect paper through fundraisers. Offering to pay church youth groups, schools, scout organizations and sports teams for any paper they collect can provide these groups with some money and give the business a reliable source of paper.
Businesses that pay youth organizations should offer to give the organizations 50 to 60 percent of what the business will recieve from a recycling facility for the paper. If a recycling facility pays $50 per ton of newspaper, a business might offer $25 per ton to a youth organization. Usually, the rate is further broken down by the pound because kids will bring in factions of a ton.
How and when to build a team
Business owners don’t need to hire employees, but doing so can help a business collect more paper. At first, business owners may want to bring on up to three workers at minimum wage. With a four-person crew, the business owner can drive a vehicle while the three workers collect paper from nearby sources.
Additional employees, including drivers, can be hired if demand and revenue grow beyond what a single four-person crew can handle.