Any Class III Dealers in here? Need advice

GLP Standard · October 11, 2010, 09:00 PM

I know very vague details on what is involved in becoming a dealer of NFA items. I want some advice from any dealers of NFA items on here on what is involved in getting started.

Just to clear things up right off the bat to prevent any confusion on my intentions, I want to go through this to start a legitimate, albeit small business on the side. I DO NOT want to obtain this license to avoid the tax stamp when purchasing NFA items, and I DO NOT want to get this license because I think it will allow me unlimited access to post '86 full auto. I am well aware that any post '86 firearms require a demo letter from a LE agency, and this is certainly not my intention.

That being said, I want to obtain information on:

a. What is involved in getting started? How much money would I be looking at?
b. How do you obtain inventory?
c. When obtaining inventory, do dealers get a discounted price?
d. How much money can potentially be made a year from such a business, considering the fact that it would be run at my home (if zoning allows) and it will be part time?
e. How many sales would I need to make a month to cover the yearly fees + a profit?

Most of those questions are self explanatory, but to elaborate on b and c...full auto is very expensive. I know this. At approximately $15,000+ for a preban full auto weapon, Im confused on how someone would get started when doing this out of their home? You almost have to take out a loan for a car just to make 1 sale. Say someone just got their dealer license, and is just starting out, has no NFA items, and wants to start making sales. How does this work? Do dealers get cheap weapons only to sell for full price and make a huge profit? How much of a profit can be made from one sale?

Please take these questions seriously. I know this has been asked before, but I want to run a LEGITIMATE business. My main motivation for doing this is because its the American dream to own your own business, and be your own boss. This would be a very small side gig, but nontheless, it would be MY OWN business, and thats what makes it worth it to me. If its impossible to make a profit, even if its only a few grand a year, I wouldnt bother. I have no interest in commiting tax evasion and thats not why Im asking this.

Any info would be great. My main concern is how you get started with inventory. I feel thats information I could only find from asking someone personally who has done it. My FFL dealer when I bought my AR had his Class III, and he worked solely out of his home, just him, so I know it can be done, and if he takes the time to do it, I know a profit can be made.

Things I know about getting a Class III license:

a. You first need an FFL
b. You need to own a legitimate business
c. You avoid paying tax stamps for transfers
d. Post '86 items are unobtainable unless a demo letter is obtained
e. The license costs $500.00 a year to maintain
f. You can expect yearly visits from the ATF to inspect your business
g. Record keeping is very tedious and has to be done a very precise way

Zak Smith · October 12, 2010, 12:19 AM

I won't delve into the business aspect of it, but you need to be fully zoned and commercially licensed to get your FFL/SOT.

As a class 3 SOT, you can also do transfers for people who are buying NFA items from out of state. This requires no investment on your part (other than the business location and safes for storage), and you could charge a reasonable transfer fee (more than a regular gun transfer due to additional NFA regulations).

You can sell new NFA items other than MGs, like SBRs, SBSs, silencers, AOWs, etc. These are often sold pretty much like regular firearms-- you order from manufacturer or distributor for your stock or a customer, mark it up to retail or a bit under, and sell.

You can acquire transferable MGs but these are very expensive and require substantial investment to stock. Also, note that all transfers from individuals to class 2/3 SOTs require another $200 stamp, and then another $200 stamp when transferred to the next individual owner (ie Form 4).

GLP Standard · October 12, 2010, 07:32 PM

So basically what it all boils down to is this: If you're going to work out of your house, part time, its a huge hassle and the money you make will be slim to none, making it not worth it, and a possible negative return if you don't do enough business in the year? If you're a business with a gun shop that does hundreds of thousands of dollars in sales every year, its well worth it?

What about an FFL? Is that a little bit more "small part time business" friendly?

mapsjanhere · October 12, 2010, 08:26 PM

Class 3 as a side business is a risky thing. You have the $500 SOT, you also will get a substantial charge from your insurance for the guns you will have to store at your place if you do transfers. You hold 3 MGs at a time, you'll need some $50k liability insurance just in case you get robbed etc. So a "I do a transfer every other months at $100" won't cover your cost, you'll probably have to do one every month to just break even. Now, if there's no class 3 fellow in the county you might do great. If there's already a professional dealer the cost will most likely eat any profits you might make.
I'd actually thought that the post-86 rule was the only reason to get a class 3 license unless you're a full time high volume dealer.

James K · October 14, 2010, 12:17 AM

FWIW, I suggest NOT running a gun business out of your home, especially when you deal in auto weapons. Just too much danger to your family.

Jim

medalguy · October 14, 2010, 12:37 AM

I was a Class 3 SOT for a good many years. It's difficult to make a go of a small business. Part time is just not very likely considering the fixed overhead of a gun business. There are no special breaks on prices. You see a MG offered at X dollars and you try to bargain it down to X minus Y dollars but you're competing against everyone else out there. Guns are where you find them and at whatever price you can get them at. Good luck.

David Hineline · October 22, 2010, 12:54 AM

How is having a good selection of guns in your house a danger to one's family.

mapsjanhere · October 22, 2010, 05:45 AM

While many of us have many often valuable guns at home, we don't advertise the fact and what specifically can be found in our safes. By definition, as a dealer you're telling the potential thief what can be had in your home. Worse, as a part time you also involuntarily have to tell the "customer" when you're not at home, leaving whomever of your family left at home exposed.

David Hineline · October 22, 2010, 09:59 AM

So if I have a high dollar camera collection, jewels, watches, electronics, I want to hide it away in my safe room and never take it out to play and let the public see it, for fear someone else may want it. That is insane.

Here is a photo of just one of my guns, if you want it I will email you my address and go ahead come and take it. The Blazer will be parked outside, keys are inside so if you manage to get my gun you get the Blazer as a bonus to transport it away.

Being a weakling of a man is what makes one a target.

gyvel · October 22, 2010, 02:00 PM

Quote:

Being a weakling of a man is what makes one a target

Discretion has nothing whatsoever with being a "weakling." It's common sense not to advertise what's in your home in this day and age. A big mouth is what makes one a target.

David Hineline · October 22, 2010, 04:30 PM

Go ahead and hide you head in the sand like an Ostrich and see how that works out for you, I on the other hand am going to continue to be the Alpha Male.

gyvel · October 25, 2010, 07:19 AM

Quote:

Go ahead and hide you head in the sand like an Ostrich and see how that works out for you, I on the other hand am going to continue to be the Alpha Male.

Good for you, "alpha male."

Sometimes the squeaky wheel gets the grease and sometimes the squeaky wheel gets replaced.

Nisei · October 25, 2010, 09:31 AM

http://www.atf.gov/firearms/how-to/become-an-ffl.html

This is the link I looked at back when I wanted to do FFL stuff. There's a few more links around that area that might answer more of your questions.

Off topic....

David, let me get this straight. You hop on this thread, not to contribute to the topic, but to show how much of a macho man you are? Alpha males don't go seeking attention.

Running a small business out of your house is dangerous because people of all walks of life will enter your home and know the layout. They will know the contents of the safe. That's what makes it a danger to your family. Unless your daughter is a Marine. In which case you probably do just fine.

Why email your address? You're a strong alpha male. Why don't you post your address, your phone number, and the time of day you'll be in and out of the house right on the board for everyone to see?

EDIT: Now is it your house or your shop that's by Harney Elementary School?

David Hineline · October 26, 2010, 10:41 PM

All FFLs are public records avail, on the web. So trying to be all secret and the like is pointless. http://www.fflfinder.com/FFLSearch.aspx?ST=PA

Being percieved as weak is what draws predators, not being strong.

House and shop are both close to Harney school where my Marine daughter was shaped.

So how is the whole prison guard thing working out for you? Still part time officer or have to give that up?

Friends with Darin Reiss? I am.

Hard to be friends with a person who hides behind a CB handle.

Maybe we just roll different in NE where we raise beef instead of growing wheat.
http://www.facebook.com/group.php?gi...18495&v=photos

So to the original poster, if you can comply with the local zoning that is your first hurdle if wanting to do it home based. It will take around 60 days for an ATF interview where they will talk about compliance rules and regs, then another 30 days for your license. You can pay the SOT anytime after your license issues, but it will come due again in July so time your license as not to waste too much of your SOT year.

October 11, 2010, 09:00 PM	#1
GLP Standard Senior Member Join Date: September 27, 2005 Posts: 286	Any Class III Dealers in here? Need advice I know very vague details on what is involved in becoming a dealer of NFA items. I want some advice from any dealers of NFA items on here on what is involved in getting started. Just to clear things up right off the bat to prevent any confusion on my intentions, I want to go through this to start a legitimate, albeit small business on the side. I DO NOT want to obtain this license to avoid the tax stamp when purchasing NFA items, and I DO NOT want to get this license because I think it will allow me unlimited access to post '86 full auto. I am well aware that any post '86 firearms require a demo letter from a LE agency, and this is certainly not my intention. That being said, I want to obtain information on: a. What is involved in getting started? How much money would I be looking at? b. How do you obtain inventory? c. When obtaining inventory, do dealers get a discounted price? d. How much money can potentially be made a year from such a business, considering the fact that it would be run at my home (if zoning allows) and it will be part time? e. How many sales would I need to make a month to cover the yearly fees + a profit? Most of those questions are self explanatory, but to elaborate on b and c...full auto is very expensive. I know this. At approximately $15,000+ for a preban full auto weapon, Im confused on how someone would get started when doing this out of their home? You almost have to take out a loan for a car just to make 1 sale. Say someone just got their dealer license, and is just starting out, has no NFA items, and wants to start making sales. How does this work? Do dealers get cheap weapons only to sell for full price and make a huge profit? How much of a profit can be made from one sale? Please take these questions seriously. I know this has been asked before, but I want to run a LEGITIMATE business. My main motivation for doing this is because its the American dream to own your own business, and be your own boss. This would be a very small side gig, but nontheless, it would be MY OWN business, and thats what makes it worth it to me. If its impossible to make a profit, even if its only a few grand a year, I wouldnt bother. I have no interest in commiting tax evasion and thats not why Im asking this. Any info would be great. My main concern is how you get started with inventory. I feel thats information I could only find from asking someone personally who has done it. My FFL dealer when I bought my AR had his Class III, and he worked solely out of his home, just him, so I know it can be done, and if he takes the time to do it, I know a profit can be made. Things I know about getting a Class III license: a. You first need an FFL b. You need to own a legitimate business c. You avoid paying tax stamps for transfers d. Post '86 items are unobtainable unless a demo letter is obtained e. The license costs $500.00 a year to maintain f. You can expect yearly visits from the ATF to inspect your business g. Record keeping is very tedious and has to be done a very precise way

October 12, 2010, 12:19 AM	#2
Zak Smith Senior Member Join Date: December 12, 1999 Location: Fort Collins, Colorado, USA Posts: 2,682	I won't delve into the business aspect of it, but you need to be fully zoned and commercially licensed to get your FFL/SOT. As a class 3 SOT, you can also do transfers for people who are buying NFA items from out of state. This requires no investment on your part (other than the business location and safes for storage), and you could charge a reasonable transfer fee (more than a regular gun transfer due to additional NFA regulations). You can sell new NFA items other than MGs, like SBRs, SBSs, silencers, AOWs, etc. These are often sold pretty much like regular firearms-- you order from manufacturer or distributor for your stock or a customer, mark it up to retail or a bit under, and sell. You can acquire transferable MGs but these are very expensive and require substantial investment to stock. Also, note that all transfers from individuals to class 2/3 SOTs require another $200 stamp, and then another $200 stamp when transferred to the next individual owner (ie Form 4). __________________ Zak Smith . DEMIGOD LLC . THUNDER BEAST ARMS CORP . COLORADO MULTI-GUN *My PM inbox full? Send e-mail instead.*

October 12, 2010, 08:26 PM	#4
mapsjanhere Senior Member Join Date: August 6, 2009 Location: Albuquerque Posts: 2,832	Class 3 as a side business is a risky thing. You have the $500 SOT, you also will get a substantial charge from your insurance for the guns you will have to store at your place if you do transfers. You hold 3 MGs at a time, you'll need some $50k liability insurance just in case you get robbed etc. So a "I do a transfer every other months at $100" won't cover your cost, you'll probably have to do one every month to just break even. Now, if there's no class 3 fellow in the county you might do great. If there's already a professional dealer the cost will most likely eat any profits you might make. I'd actually thought that the post-86 rule was the only reason to get a class 3 license unless you're a full time high volume dealer. __________________ I used to love being able to hit hard at 1000 yards. As I get older I find hitting a mini ram at 200 yards with the 22 oddly more satisfying.

October 22, 2010, 05:45 AM	#8
mapsjanhere Senior Member Join Date: August 6, 2009 Location: Albuquerque Posts: 2,832	While many of us have many often valuable guns at home, we don't advertise the fact and what specifically can be found in our safes. By definition, as a dealer you're telling the potential thief what can be had in your home. Worse, as a part time you also involuntarily have to tell the "customer" when you're not at home, leaving whomever of your family left at home exposed. __________________ I used to love being able to hit hard at 1000 yards. As I get older I find hitting a mini ram at 200 yards with the 22 oddly more satisfying.

October 25, 2010, 09:31 AM	#13
Nisei Member Join Date: September 16, 2008 Posts: 78	http://www.atf.gov/firearms/how-to/become-an-ffl.html This is the link I looked at back when I wanted to do FFL stuff. There's a few more links around that area that might answer more of your questions. Off topic.... David, let me get this straight. You hop on this thread, not to contribute to the topic, but to show how much of a macho man you are? Alpha males don't go seeking attention. Running a small business out of your house is dangerous because people of all walks of life will enter your home and know the layout. They will know the contents of the safe. That's what makes it a danger to your family. Unless your daughter is a Marine. In which case you probably do just fine. Why email your address? You're a strong alpha male. Why don't you post your address, your phone number, and the time of day you'll be in and out of the house right on the board for everyone to see? EDIT: Now is it your house or your shop that's by Harney Elementary School? __________________ "In anything at all, perfection is finally attained not when there is no longer anything to add, but when there is no longer anything to take away." - Antoine de Saint Exupéry Last edited by Nisei; October 25, 2010 at 09:46 AM.

October 12, 2010, 07:32 PM	#3
GLP Standard Senior Member Join Date: September 27, 2005 Posts: 286	So basically what it all boils down to is this: If you're going to work out of your house, part time, its a huge hassle and the money you make will be slim to none, making it not worth it, and a possible negative return if you don't do enough business in the year? If you're a business with a gun shop that does hundreds of thousands of dollars in sales every year, its well worth it? What about an FFL? Is that a little bit more "small part time business" friendly?

October 14, 2010, 12:17 AM	#5
James K Member In Memoriam Join Date: March 17, 1999 Posts: 24,383	FWIW, I suggest NOT running a gun business out of your home, especially when you deal in auto weapons. Just too much danger to your family. Jim

October 14, 2010, 12:37 AM	#6
medalguy Senior Member Join Date: August 31, 2009 Location: New Mexico Posts: 1,033	I was a Class 3 SOT for a good many years. It's difficult to make a go of a small business. Part time is just not very likely considering the fixed overhead of a gun business. There are no special breaks on prices. You see a MG offered at X dollars and you try to bargain it down to X minus Y dollars but you're competing against everyone else out there. Guns are where you find them and at whatever price you can get them at. Good luck.

October 22, 2010, 12:54 AM	#7
David Hineline Senior Member Join Date: December 23, 1999 Location: South Sioux City, Nebraska Posts: 704	How is having a good selection of guns in your house a danger to one's family.

October 22, 2010, 09:59 AM	#9
David Hineline Senior Member Join Date: December 23, 1999 Location: South Sioux City, Nebraska Posts: 704	So if I have a high dollar camera collection, jewels, watches, electronics, I want to hide it away in my safe room and never take it out to play and let the public see it, for fear someone else may want it. That is insane. Here is a photo of just one of my guns, if you want it I will email you my address and go ahead come and take it. The Blazer will be parked outside, keys are inside so if you manage to get my gun you get the Blazer as a bonus to transport it away. Being a weakling of a man is what makes one a target.

October 22, 2010, 04:30 PM	#11
David Hineline Senior Member Join Date: December 23, 1999 Location: South Sioux City, Nebraska Posts: 704	Go ahead and hide you head in the sand like an Ostrich and see how that works out for you, I on the other hand am going to continue to be the Alpha Male.

October 26, 2010, 10:41 PM	#14
David Hineline Senior Member Join Date: December 23, 1999 Location: South Sioux City, Nebraska Posts: 704	Public Records All FFLs are public records avail, on the web. So trying to be all secret and the like is pointless. http://www.fflfinder.com/FFLSearch.aspx?ST=PA Being percieved as weak is what draws predators, not being strong. House and shop are both close to Harney school where my Marine daughter was shaped. So how is the whole prison guard thing working out for you? Still part time officer or have to give that up? Friends with Darin Reiss? I am. Hard to be friends with a person who hides behind a CB handle. Maybe we just roll different in NE where we raise beef instead of growing wheat. http://www.facebook.com/group.php?gi...18495&v=photos So to the original poster, if you can comply with the local zoning that is your first hurdle if wanting to do it home based. It will take around 60 days for an ATF interview where they will talk about compliance rules and regs, then another 30 days for your license. You can pay the SOT anytime after your license issues, but it will come due again in July so time your license as not to waste too much of your SOT year. Last edited by David Hineline; October 26, 2010 at 10:51 PM.