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JROD82
October 27, 2009, 11:42 PM
I'm interested in getting my ffl to deal out of my home and have a few questions. So far as getting the license I understand the hoops I have to jumb through to get it. I know that i can not use it to souly build my own collection (maybe one here or there) but mainly have to sell to customers for a profit. The one thing on my mind is the business side of it.....from the info I've gathered, (correct me if i'm wrong) I will have to obtain a tax id number and establish my self as a business with the IRS. Now what boggles me is do I establish my self as Incorporated, Limited Liability Corp, etc. and what type of taxes should I look forward to paying and how often (yearly,Quarterly). Hopefully someone can guide me in the right direction in the NFA forum. Any advice would be greatly appreciated If would don't mind shareing experiance.:) Thanks.

David Hineline
October 28, 2009, 12:36 AM
Taxes will depend upon how much money you make, talk to your accountant.

Incorporations are not people if you go that route and drop your license you did not get to keep the inventory, that is for sole proprietors.

DRice.72
October 28, 2009, 03:46 PM
There are a lot of things to consider when deciding to set up a corporation, a Limited Liability corporation, or being a sole proprietor. INC's and LLC, offer levels of protection both legally and financially, how ever they are also more complicated and expensive to set up. There are kits on the internet, but most of the time those kits do not really do an adequate job of placing the protection you need. I would talk to both and attorney AND and accountant then see which one makes the most sense to you.

TRguy
October 28, 2009, 06:10 PM
ATF requires you to have a store front now with set business hours to get an FFL

docpadds
October 28, 2009, 06:31 PM
It is NOT a requirement to have a storefront, it IS a requirement to be in business, which is demonstrated with a business license (if needed), a sales tax registration/vendor license, a Federal Tax ID etc...

If your locale allows your home to be your business location (and if your insurance allows it) then there is nothing stopping you doing just that.

As far as whats best, LLC, Corp etc... you really need an accountant and lawyer to advise then setup for you.

scottycoyote
October 28, 2009, 11:33 PM
there are so many questions to be answered to decide which is the best route to go. If you do a search for "picking a tax entity", you should be able to find some flowcharts that will help walk you thru the different decisions. I push most of my clients towards LLC, but it also depends greatly on your state as well.....some states rules push you in one direction over the other.

Old Guard Dog
November 15, 2009, 12:33 PM
A good source of free information on starting any business is SCORE (Service Corp of Retired Executives). Contact your local Chamber of Commerce, their offices are usually with them. They will help answer all these questions, and help you develop a business plan. They don't charge anything for this service.

The biggest problem you may encounter is with the local zoning ordinances. If you are in a residential zoned area (you probably are), you will need to get a zoning variance. This will require a fee, and a meeting with the zoning board and they will contact all of your neighbors, who can contest this variance. Your local authority can show you the zoning ordinance which will explain the limitations of the business in a residential zone, even with the variance. Items like: no employees, no outside advertising other than a small sign, off-street parking, etc, etc, etc. Every place is different.

Don't be discouraged by all this. If you are sincere, make a list and go at it step by step. Most of the planning can be done without spending any money. Then decide if you want to pursue it.

I think you will see why businesses need to charge what they do to conduct a business. Don't go into any business just to be the cheapest. Find your niche and perfect it, and then get your fair price.

The federal stuff with the BATF is cut and dry. If you meet the criteria, you will get the license. The stumbling block is usually the locals.

Just my two cents.

Beretta686
November 15, 2009, 03:43 PM
ATF requires you to have a store front now with set business hours to get an FFL

I haven't heard that, but I understand that ATF is making it more & more difficult to get an FFL without having a "proper" business.

If you do it, I'd consider paying the $500 (I think) a year tax to become a Class III dealer, make a few transfers a year for $50-75 a pop & make friends with a PD who will want "demonstrations" of all sorts of cool, post-sample Machine-Guns.

GaryM&P
November 15, 2009, 05:47 PM
When I had my gun business many moons ago I had to get:
FFL
SOT ($500 annually to deal in NFA weapons)
Federal Employer Identification Number
State Sales Tax Number
Certificate of Occupancy

I had to send in sales tax every month.
I also had to file a Schedule C on my tax return every year.

dogtown tom
November 15, 2009, 09:36 PM
TRguy ATF requires you to have a store front now with set business hours to get an FFL

Internet myth. A storefront has never been an ATF requirement. If you can legally operate a business from home, you will be approved.

"Business hours" are required for the application. After all, ATF is issuing a license for dealing in firearms, so you should expect to devote time to your business. There is no requirement to be "open to the public". You could sit in your skivvies in front of the computer all day and do nothing but internet, phone & mail order sales- never seeing anyone face to face.





Anyway........JROD82, since you are a fellow Texan, I hope the below information helps.

DogtownTom's Steps to getting an 01FFL in Texas:



1. Check with your city and county to see if home based business are allowed or not. Deed restrictions or homeowners association rules may prohibit home business as well. If you rent your home then read your lease contract to see if home business is allowed. Usually city & county websites will have this info on their website. Print out a copy of those rules and keep them. If all is okay with a home based business then...

2. Decide what kind of business structure you want to have: corporation, LLC, partnership (if you have a partner) or sole proprietorship. There are advantages to each kind: sole proprietor is the easiest, corporation or LLC may give you certain legal protections. Once you decide...

3. Go to the county courthouse and apply for an assumed name (DBA). Do this before you incorporate or form a partnership because the name you want may be taken. If you’ve already done this for your other business you could just use that name. Now that you have a name for your business...

4. Go to the IRS website and get a Federal EIN # for Federal tax purposes. Then...

5. Go to http://www.state.tx.us/portal/tol/en/bus/home and apply for your Texas Sales Tax & Use Certificate- this will be required. BTW, there is no sales tax paid on transfer fees- only on firearms you sell. You do not collect Texas Sales Tax on guns the customer buys and has shipped to you.

6. Decide what your “business hours” will be. These are not necessarily hours that you are open to the public, but hours you plan to devote time and attention to your business. My real job is teaching- so I put my “business hours” as M-F 5-10p. ATF wants to see that you are actually going to be in the business of dealing firearms. You can always change those hours later if needed.

7. Complete the Form 7 Application for Federal Firearms License. It doesn’t carbon copy, so you’ll have plenty of writing to do. It is actually three identical forms. Keep a copy for yourself, send a copy to the chief law enforcement officer of your city or county- and put a sticky note on it that says “For Files Only- No Action Needed”. Along with the Form 7, ATF will have sent fingerprint cards. Go to any law enforcement agency and tell them you need “prints for file” or “prints for Federal background check”. They should not charge you. Use ONLY the ATF fingerprint cards. Get two passport size photos taken. Mail this last Form 7 to ATF along with the app fee of $200, fingerprint cards and passport photos. I sent mine Priority Mail with Delivery Confirmation. How long you wait for the FTF interview with ATF depends on the volume of FFL applicants. While you are waiting...

8. Go to www.atf.gov and start reading EVERYTHING. I started with the “FAQ’s”, but keep in mind they are not the actual law, just a quick reference. I applied in June ’08 after school was out and spent at least an hour a day reading something on the ATF site. At some point, an ATF Industry Operations Investigator will call to set up an appointment for your interview. The interview will be at your “licensed premises” (your home). Odds are, he will already know if your home is legal for a home based business, but show him the proof you got in #1 above. Then...

9. At the interview, the IOI will review your application for accuracy and briefly review the various forms. It shouldn’t take more than an hour. He may ask about safes, alarms, etc. NONE of which are required- but it would make ATF very happy if you have a safe and alarm system. “Secure storage” has to do with gun locks for customer guns. Federal law requires every FFL to have gunlocks available for every firearm that they transfer. Almost all new guns come with a lock. Free locks are often given away at gun shows or you can buy them for as little as $1 each. After the interview...

10. He should have given you an idea whether you will get approved. The app will be reviewed by his supervisor before being approved. You should get your actual license in three to six weeks. Once it arrives...

11.Do NOT sign the license- leave it blank! Take it to Kinko’s and make LOTS of copies. I highly recommend signing one copy and having Kinko’s scan it both as a .jpg file and as a .pdf file. You can then email that FFL rather than faxing it. Faxed FFL’s often come out unreadable, not to mention it cost me nothing to email a copy, while faxing costs me paper and a big phone bill.

12. Immediately register with the FBI NICS http://www.fbi.gov/hq/cjisd/nics.htm You can’t transfer guns until you do. I registered with NICS at 7pm, at 9:30am the next morning they called to tell me I was active. After that...

13.Order your 4473’s from ATF, along with Multiple Sale of Handgun forms, Youth Gun Safety brochures and other forms you might need. ATF may have sent some when you get your license, but more is better. There is no official “bound book” and there are several different ones out there- I buy mine from Brownells because they are cheap. Order at least a pack of three. Put them in a three ring binder. Then...

14. Go to GunBroker, Auction Arms, GunsAmerica, etc and list yourself in the “Find an FFL” directory. After that things like business cards and the like to spread the word about your new FFL.

15. Although not required I highly recommend getting insurance. Collectables Insurance http://www.collectinsure.com/index.html has a firearm dealer policy that protects your inventory, when you ship customers guns and your guns on the table at gun shows. I also have my personal guns insured through them. Very easy to deal with.

16. AR15.com has an FFL forum that has good information and is worth a visit.



Whatever you do………don’t buy one of those “Get your FFL Kits” off the internet. They don’t tell you anything I didn’t write above.

Beretta686
November 15, 2009, 09:49 PM
dogtown:
Thanks for posting all the info on here, I've thought about doing that myself a few times & you've got my wheels spinning, but I have a few questions:
-Is there a certain amount of transfers you have to do a year/month?
-Can you have your "official" location be one place but do transfers elsewhere (i.e.- can my family's Ranch be the place of business, but I actually do the transfers at my home in Austin, like people do at gunshows)?
-If you want to upgrade it and become a Class III dealer is there anything else besides sending in the $500?

Thanks!

Catfish25p2000
November 15, 2009, 09:51 PM
It is alot of work to get going, but has its benefits. I am an FFL and I file retail sales tax every month. There is alot to do on the business side of it all. My .02 on the class III is to let it go to the other guys with a storefront. There is more paperwork, and if you work full time, (I am assuming you do), there will come a point when you get sick of doing paperwork. Class III guns are also WAY more expensive then regular guns, and require much more money to get started. The nice thing about being a regular old 01 dealer from home is that you can decide how busy your business gets. I will give you one important tip... DONT GO TO A GUNSHOP AND TELL THEM YOU ARE AN FFL! If you want to snoop and poop around the store, that is great. You can even strike up conversation with the owner, but in my experience telling a gunshop owner you are an home based FFL will get you a bad attitude and some funny looks. There may be some shops that will help you, but in my experience, storefront owners don't like the fact that you don't have much overhead and they do. In many cases they will snub you or downright be a pecker head to you.

docpadds
November 15, 2009, 10:24 PM
Beretta686:
There is no requirement to do "X" amount of transfers at all.

You can only do transfers at the location listed on your FFL, any other location needs another license. There are exemptions for shows and special events but beyond that you need to be at the location listed on the license.

dogtown tom
November 15, 2009, 10:33 PM
Beretta686:

-Is there a certain amount of transfers you have to do a year/month?
There is no regulation that states a minimum by year or month. It would need to be enough to satisfy the Industry Operations Investigator that you are actually engaging in the business of dealing in firearms.

-Can you have your "official" location be one place but do transfers elsewhere (i.e.- can my family's Ranch be the place of business, but I actually do the transfers at my home in Austin, like people do at gunshows)?
No, a Federal Firearms License only allows you to do business at two locations- the licensed premises and at a gunshow. You cannot get a license to do only gunshows. Each licensed premises needs it's own license.

-If you want to upgrade it and become a Class III dealer is there anything else besides sending in the $500?
There is no such thing as a Class III dealer. It's actually an 01FFL (dealer in firearms) with a SOT (special occupational tax)

Thanks!

phagar
November 20, 2009, 06:52 AM
One other option is a gunsmith business .You can do work by appointment only and do not need regular hours .However this will depend on how many guns you sell per year .A few (?) will be excepted but too many make you a dealer and that number is up to the BATFE .

dogtown tom
November 20, 2009, 02:08 PM
Sorry, but ANY gunsmithing requires at least an 01FFL.


From the ATF FAQ's:
Is a license needed to engage in the business of engraving, customizing, refinishing or repairing firearms?

Yes. A person conducting such activities as a business[B] is considered to be a gunsmith within the definition of a dealer. See Item 16, “Federal Excise Tax” in the General Information section of this publication.

[27 CFR 478.11]

langenc
November 20, 2009, 03:06 PM
Whatever location you pick for the address for the FFL is subject to
'inspection' at the whim of the inspector.. day, night, Christmas or whenever they feel like it.

cycleguru
November 20, 2009, 05:33 PM
As far as setting up your buisness goes: My business (not a gun shop)is set up as an LLC. Here in Oregon filling out the LLC ap takes about 30 seconds. You send it in and in a week or so you get your approval back. What takes a little longer is getting your business name approved. Here you can get around that by using your full name in the title (Joe Smith's Gun Shop). If you want to be "Joe's Gun Shop", that's an assumed business name and it has to be approved by the state. They have to check to see that there isn't already a Joe's Gun Shop somewhere in the state. Getting my fed ID# wasn't very complicated either. My accountant had the forms, I filled them out, and he sent them in. That's all there was to it. Good luck.

docpadds
November 20, 2009, 05:44 PM
Getting my fed ID# wasn't very complicated either

You can actually do it all online at the IRS' web site now.

dogtown tom
November 20, 2009, 06:26 PM
langenc: Whatever location you pick for the address for the FFL is subject to
'inspection' at the whim of the inspector.. day, night, Christmas or whenever they feel like it.

Honestly, I don't know where some of this stuff comes from.:rolleyes:

ATF is limited BY LAW to ONE compliance inspection per YEAR. While they are not required to announce the inspection, it MUST be done during the business hours as submitted by the licensee. So "...day, night, Christmas or whenever they feel like it..." is complete and utter internet hogwash.

If the compliance inspection discovers that the licensee has significant errors in his recordkeeping or has failed to follow procedures or regulations, then ATF is allowed to conduct followup compliance inspections to ensure that the licensee is complying with the law.

By applying for a Federal Firearms License, the applicant agrees to cooperate with ATF & other law enforcement agencies when a criminal investigation requires information in the possession of the FFL (4473's and his bound book). No warrant is required and refusal to cooperate would be grounds for revocation of the license.

FFL's enjoy the EXACT same rights as every other citizen, namely the Fourth Amendment- protection from unreasonable search & seizure. Which means ATF cannot kick down your door and shoot your dog without a warrant or reasonable cause. They don't care what is in the FFL's sock drawer or buried under the front porch.

freakshow10mm
December 14, 2009, 10:11 AM
Yup. I've been an FFL for three years, HOME BASED. Storefront is a myth. You have to comply with local zoning ordinances. In my village there is no such thing as zoning. If I want to get my Type 10 FFL I can make missiles in the back yard if I felt like it.

Let me give you some advice about being an FFL that I've learned.

The ATF industry ops team are basically accountants. They are NOT trained how to fire a weapon and are not authorized to carry a firearm. The field agents carry guns. The industry ops don't.

The ATF cares about paperwork. They don't give a crap that I have machine guns and silencers because I have the proper paperwork. My company is an 07/02, all weapons are on the proper Form 2, and properly logged into my manufacturing log book. They are also locked up tight and out of view.

My clients (the very few local transfer clients) do not ever see where guns are stored and they never come close to the proximity of their storage facility. They walk into my office, their gun is laying out for inspection, we do paperwork, and I walk them out. They have no clue what I have, where it is, or even if it's stored on the premises. There are no signs on my home, I don't advertise locally, nothing. The only thing suspect that I'm running a home based business is UPS comes buy about 3-4 out of 5 days of the week, but the mailman comes by 6 days a week and that's normal too.

I will also advise you if you run home based, as soon as you can afford to go to another facility do it. It's nice not having to commute, etc and for my business model (internet sales and LE agency sales) I don't worry about walk in customers since my local customer base is either a few transfers a month or the two gun shows up here. Next year I'm moving out of the home and getting a separate business facility.

dmitch4545
January 18, 2010, 06:40 PM
freakshow - When you move to a different location does your FFL go with you or do you have to go through the whole application process again?

n7qvu
March 8, 2010, 01:27 PM
I applied for my FFL about 3 weeks ago. I spoke to ATF about the home business and no issues were brought up. He told me because of holidays and the snow shutting down DC, it probably would take the full 60 days as they state.
Per the ATF website(which has lots of great info), there are only two places you can do business(location on license and at gun shows in your state). There is an exception for gunsmiths doing work at ranges.

Hope this helps.

Balog
March 19, 2010, 11:50 PM
Very interesting, thanks folks. I've been considering becoming an 01FFL with a business model of doing mainly after hours transfers and maybe ordering a few guns or cases of ammo for locals from forums or the range. This was spurred on after it took me two weeks to pick up a pistol I bought on gunbroker as the shop closed before I could get there after work, and the proprietor was gone the first Saturday. I think I could turn a modest profit, and the side benefit of getting dealer prices on guns and ammo for my personal use is a nice perk.

dogtown tom
March 21, 2010, 09:12 AM
Balog:...maybe ordering a few guns or cases of ammo for locals from forums or the range...


No FFL is required for selling ammunition.

Balog
March 21, 2010, 02:56 PM
But dealer pricing from the large wholesalers is generally lower than retail offered to the general public, correct? So I could sell it to a range for less than what they would otherwise pay, while still making a profit.

dogtown tom
March 21, 2010, 10:57 PM
"Dealer pricing" is a myth. A better term would be "volume pricing". Check prices at wholesalers and then check the price at Bud's. Bud's is often cheaper than my distributors. There is no set dealer discount- it is totally dependant on how many firearms you buy at a time or how many per month.

An 01FFL will get you a discount at many wholesalers. Understand that a retailer like Academy or WalMart will beat your discount everyday.

I'm an FFL and I cannot get Winchester, Federal or Remington ammo at a wholesale price for anywhere near the price that WalMart sells it at retail.

This is why you see WalMart ammo for sale at gunshows.

Balog
March 22, 2010, 02:00 PM
Interesting. Would that apply to guns as well as ammo?

docpadds
March 22, 2010, 04:10 PM
It can. You have to be very active and observant to see whats available that you could make some money on. We have a few things that are great sellers for us but it costs us a lot of up front investment to get the stock levels necessary to get a good discount.

This business is not going to make you rich, but that said provide a good service and be friendly to the customers, you will be surprised when they come to you rather then a big box because they feel like they matter.

Balog
March 22, 2010, 04:17 PM
If I get into the business it'll be as a side gig focused on doing transfers from people buying on gunbroker etc, so the low margin on ordering guns is less a concern...

hknut
March 22, 2010, 08:38 PM
Wow, this is a very imformative thread. I have often wondered about setting up a FFL for myself to buy cheaper and transfer guns for friends.

n7qvu
April 4, 2010, 10:22 AM
Does anybody know how long it usually takes to receive the approved FFL?
I'm at 7 weeks and no ATF contact.

Interesting that para (b) says 'shall' and that para (c) says 60 days.

****

(b) The Chief, Federal Firearms Licensing Center, shall approve a properly executed application for license on ATF Form 7, ATF Form 7CR, or ATF Form 8 Part II, if:

(c) The Chief, Federal Firearms Licensing Center, shall approve or the Director of Industry Operations shall deny an application for a license within the 60-day period beginning on the date the properly executed application was received:

dogtown tom
April 4, 2010, 07:54 PM
I had my "interview" two months after I sent in my app. The actual license arrived a month after that.

I recently moved....sent the "change of premises" form in the last week of December. The licensing center said it would take thirty days to update my license with the new address. It took over two months.

durham937
April 21, 2010, 04:29 PM
This thread is an amazing wealth of info. I was wondering if anyone has info for a homebased ffl dealer(and perhaps gunsmithing) in Ohio?

durham937
April 21, 2010, 04:32 PM
There's an older gentlemen in my town(village actually) that somewhat deals from home. He is getting up there in age. I just kind of want to "take over". I am in preble county in Ohio. I am just now starting my reasearch on getting an ffl. Thnx for your time.

n7qvu
April 22, 2010, 09:32 PM
"durham937"

That what I'm going thru in AZ. I applied 9 weeks ago and had my ATF onsite face to face today for 2 hrs and 15 min. Very detailed.

I had to get an OK from my county for a home-business, since I don't live in a city. ATF required that, but an e-mail approval was ok, since co seat is 50 miles away.

ATF agent said I should have my license in about 3 weeks.
I applied for a 'manufacturer of firearms', but process-wise it's about the same. She gave me my FFL #, but cannot use until I get paperwork back.

Hope this helps,

langenc
April 23, 2010, 04:39 PM
I did not read all posts.

As to the allowability of 'in the home'?? I do recall reading that wherever you decide to do this is subject to inspection at the will of the inspector!!
That would include the WHOLE house if in the home..

Hkmp5sd
April 23, 2010, 05:19 PM
I did not read all posts.


Like you said, you didn't read the posts. As such, your information is wrong. Please make sure of your information before posting.

slab11
April 26, 2010, 09:48 PM
So, i have applied for my FFL, waiting on the inspector to contact me. I am starting a home based FFL business, mostly to get experience and may open a store at some point. My question for those of you with experience as FFLs is: how do you get your guns? I read the post about Bud's and wholesalers. are wholesalers easy to work with. Does everyone charge a fee for Credit card use? You cannot really get this info from the web without an FFL number first.
Thanks

n7qvu
May 16, 2010, 01:09 PM
@slab11
I'm kinda surprized nobody replied to your question.

I'll give it a shot:
I received my FFL-07 about two weeks ago. I scanned it and saved as .pdf. I knew companies I wanted to work with as a dealer, so I started contacting them. I emailed them my FFL 'onfile' then asked for dealer info. I've started to receive a lot of that info. Some want you to fill out an application and fax/e-mail back, others want some business license also. Some venders with online stoles for their dealers WILL NOT allow a home based FFL to have one of their online stores. I was surprized at the dealer discounts...nice. Some give another discount if you buy $1-2k at a time. I also provided my 'FFL on file' to gunbroker.com and registered to do xfers. I received my 1st call about 2 days later for a xfer.
Hope this helps, PM for more info.

Rivet
June 1, 2010, 12:07 PM
This is indeed a great thread. Anyway, I am getting the ducks in a row to start a firearms side business and requested all the paperwork from the BATFE. I do have some questions that maybe someone can answer.

I see the option for dealer (01/02), but I am not seeing a check for SOT. Is this a separate form? I would like to be able to offer NFA items.

The option for 07 manufacturer is only an additional $150. I think this might be valuable to have, but does this add any additional regulatory burden? Am I reading this right in that it would also qualify for manufacturing NFA items (sans DD)?

There is a question asking "do you intend to engage in business as a pawnbroker?" I don't plan to do so, so will answer no. However, if I ever did so, would I have to amend the license?

There are two additional forms they included—Supplemental Information on Water Quality Considerations and Environmental Information. Anyone know what this is about?

I'm sure I'll have some more questions, but those are the ones that come to mind now. Thanks all for the assistance.

docpadds
June 1, 2010, 12:09 PM
SOT is a whole separate item you get after you have your FFL, its a tax paid to allow Title II dealings. It runs July 1st to June 31st. Get the FFL first, this comes second.

Rivet
June 1, 2010, 12:11 PM
Oh, I see. It's added to an existing license. Thanks.

4T4MAG
July 28, 2012, 09:16 PM
Just doing a little homework on the FFL. I realize this is a very old post, but, does anyone know how an FFL holder needs to log a personal firearm purchase, does this go in the bound book? How does the ATF distinguish personal firearms and firearms that are purchased for resale? Does the ATF take an inventory of my personal collection? Just wondering, I know our 2nd amendments rights are under constant attack. I am fearful that there will be a "tax" to own firearms just like there is a tax on people who do not have health insurance. We all know that a tax can be placed on something to make it out of reach for most people.

David Hineline
July 29, 2012, 08:47 AM
Personal firearms you have before the FFL get tagged personal firearm not for sale, best if kept in separate storage. They will not be inventoried.

After the FFL all guns in/out personal/for sale come through the FFL books and any you want for yourself, you log out to yourself.