Urahara used to be a captain for squad twelve, the science squad, but he left Soul Society and became a shop keeper. When Ichigo planned to go to Soul Society to save Rukia, he was the one who taught Ichigo how to use his shikai in a short amount of time with intense training.
Urahara is a funny guy because he’s always got some screwy, new idea and he’s kind of a pervert. However, he’s also very intelligent because as screwy as his ideas seem to be, they usually work out in the end. He’s also incredibly powerful from being a previous captain and setting up shop hasn’t taken too much away from his power level. He has a shikai, which happens in the form of a blood shield that can hit opponents or block opponents’ attacks. He uses this ability to rescue Rangiku from a tentacle villain before there are any dire consequences, which knowing Bleach could’ve been just about anything. He also has many tricks up his sleeve that allows him to get an edge on opponents.