Anyone looking to partner on an FFL Type 1?

[sammamishJG]

Popping smoke here
As a self employed small business owner of 22yrs:

1. Business partners do not have to have equal ownership of a business. One can "own" 1% and be a partner. Silent, active does not matter. Partner is a partner. Just hammer all that out in your Operating Agreement before you get started. Not sure what an Operating Agreement is, STOP and go learn before talking partnerships at all. *

2. Investors - provide what is known as OPM or Other Peoples Money. = Bascily how every major business has EVER grown. It's NOT $$ made off the back of the person with the Idea. It is 100% other way around. Use THEIR (the investors) $ to grow your business, yes pay them dividends for the use of their $ but done right your growing your share exponentially at the same time. Done wrong they lose their $ and you don't lose as much. Risk v. reward. However usually done with some scale.

SOT = is not something that is shared. SOT is issued to a person, not a business. FFL can be a business with individual "responsible persons" in it. The SOT = is to a person in the business (a "responsible person") You don't share it.

To the OP, Welcome to the board. Don't lets others stop you from trying/doing a business. Just do the research and go in as best educated as you can. More than just getting an FFL, also figure out your business goals first then build backwards. I would flush out your FFL 01/03 plan more. Lots of home based FFL 01's out there. $150 for 3yrs is not allot of $ if your looking to sell/broker etc. Don't know many that take on partners to do that. The Form 03 SOT at $500 per yr is a bit more, and one would want to have a solid plan in place for how they are using their SOT business wise. But of course you have to FIRST get your FFL.


*I took on a biz partner 5yrs in on my business (Non firearms). 8yrs later it was like a divorce to separate. Sucked. But we did separate and my business took off once I got full ownership back. Me personally would have to have a major shift in my belief to ever take on a business partner again. BUT this is me.

Where do you get the SOT on an individual basis from? From what I've read about SOTs, they are issued to the FFL, each responsible person does not pay a separate SOT. EDIT - confirmed by Nosferatu and ATF forms.

 

[Nosferatu]

SOT = is not something that is shared. SOT is issued to a person, not a business. FFL can be a business with individual "responsible persons" in it. The SOT = is to a person in the business (a "responsible person") You don't share it.

That's completely wrong. SOT = Special Occupational Taxpayer. The type of SOT is tied to what type of business you're running and in turn, which class of SOT you have. You MUST have an FFL to get an SOT.

SOT 01 = Importer (O8/11 FFL)
SOT 02 = Manufacturer (07 FFL)
SOT 03 = Retailer (01/02 FFL) This is the commonly referenced "Class 3 Dealer"

I had an 07FFL w/SOT02. I got stuck with the added pleasure of paying $2500/yr ITAR fee.

OP: If you're serious about this, go talk to your local ATF office. I found them very helpful and they did everything they could to make sure we did everything correctly.

 

[sammamishJG]

That is what I thought, thanks for confirming. So in the SOT case, the more FFL partners/co-owners, the better.

 

[Nosferatu]

That is what I thought, thanks for confirming. So in the SOT case, the more FFL partners/co-owners, the better.

Don't take any info from us internet jackasses as gospel. Go talk to your local ATF office.

 

[Helocat]

That's completely wrong. SOT = Special Occupational Taxpayer. The type of SOT is tied to what type of business you're running and in turn, which class of SOT you have. You MUST have an FFL to get an SOT.

SOT 01 = Importer (O8/11 FFL)
SOT 02 = Manufacturer (07 FFL)
SOT 03 = Retailer (01/02 FFL) This is the commonly referenced "Class 3 Dealer"

I had an 07FFL w/SOT02. I got stuck with the added pleasure of paying $2500/yr ITAR fee.

OP: If you're serious about this, go talk to your local ATF office. I found them very helpful and they did everything they could to make sure

@ZA_Survivalist

Don't take any info from us internet jackasses as gospel. Go talk to your local ATF office.

@Nosferatu you are completely wrong.

Your second post: I agree with.

At no point did I say the SOT was not "tied to your FFL." I said its issued to the responsible person, not a blanket stamp to the FFL. As you have had an FFL then you know you can have more than one responsible person, and by law would have to list them. Its often assumed this means the SOT is then just part of the FFL and its not its separate. BUT you have to have the FFL for the SOT to exist. Sounds confusing, ya its the government but learn it before becoming one and thus on to your second posting that I agree with.

On your first post here is some context:
Some terminology that is very often misused in our industry. A Federal Firearm License (FFL) is something you have, while a Special Occupational Taxpayer (SOT) is something that you are. You don't get an "FFL and SOT." You get an FFL and become an SOT. [Ryan Cleckner, Attorney Specializing in FFL law.

When did I say you can be an SOT w/o your FFL? Understand your FFL 07 is a licance and the 02 SOT is a tax to the responsible persons. Sure you can have other responsible persons but its still a tax issued to the RP (s).

ANY 07/02 that "GOT STUCK" with the ITAR sounds as they went into it not knowing what was comming. ITAR is not always required there are ways to be 07/02 and not "get stuck" with ITAR, when one does the research and operates accordingly. IF an 07/02 thought they could crank out suppressors w/o ITAR compliance, ya reality check of $2500 per yr. This is where your second post of not taking any info from us internet jackassas as gospel and talk with the ATF speaks volumes. Then again a legit 07/02 business that qualifies, takes that $2500 per yr fee, adds in their $500 per yr (under $500k of sales otherwise its $1k per yr if you go over as we all know) 02, SOT tax stamp cost and just calls it a $250 per month cost of doing business fee on their P and L statement (Profit and Loss = P and L) .

A business makes money. A hobby is somthing you enjoy that does not make money. ATF licenses are issued with intent of actual business. Key thing for the OP to ponder as well. @sammamishJG

 

[Helocat]

Where do you get the SOT on an individual basis from? From what I've read about SOTs, they are issued to the FFL, each responsible person does not pay a separate SOT. EDIT - confirmed by Nosferatu and ATF forms.

You don't. I did not say you register each person.

I am stating how the ATF sees FFLs and SOTs. See my statement in my post above quoting Attorney Ryan Cleakner. When you set up your FFL you have to list each and every Responsible Person. Once you have your FFL, then you can apply for the SOT, Yes you use your FFL but the SOT is somthing that you then become. Its just how the ATF words it.

That is what I thought, thanks for confirming. So in the SOT case, the more FFL partners/co-owners, the better.

Applying for an ATF licance is meant for ligit business. Simply having more parters/co-owners for the better of just splitting the cost of the license does not sound like a legit business decision. I own and run a business, self employed for 22yrs. I had a partner for 6yrs and would never do it again. Having more than one just for lower licensing costs is not a business plan.

You want to run a real business do it. I am out front saying go for it. But anything else na' don't.

 

[sammamishJG]

You don't. I did not say you register each person.

I am stating how the ATF sees FFLs and SOTs. See my statement in my post above quoting Attorney Ryan Cleakner. When you set up your FFL you have to list each and every Responsible Person. Once you have your FFL, then you can apply for the SOT, Yes you use your FFL but the SOT is somthing that you then become. Its just how the ATF words it.

Applying for an ATF licance is meant for ligit business. Simply having more parters/co-owners for the better of just splitting the cost of the license does not sound like a legit business decision. I own and run a business, self employed for 22yrs. I had a partner for 6yrs and would never do it again. Having more than one just for lower licensing costs is not a business plan.

You want to run a real business do it. I am out front saying go for it. But anything else na' don't.

Agreed, but I've never said my entire business plan is more partners for that sole purpose, or that having partners is my business plan. There are several reasons an FFL business in the Bellevue/Eastside area up here to partner. First, unless you are going to be running the FFL business out of a home, you need to buy or rent a property. Taking into account the light profit margins for most FFLs, this will be a legitimate business but is likely not going to be something that becomes so profitable I leave my career. Any FFL that is not home-based needs some serious investment cash, and that is a great reason to have several partners in before starting.

 

[Helocat]

Agreed, but I've never said my entire business plan is more partners for that sole purpose, or that having partners is my business plan. There are several reasons an FFL business in the Bellevue/Eastside area up here to partner. First, unless you are going to be running the FFL business out of a home, you need to buy or rent a property. Taking into account the light profit margins for most FFLs, this will be a legitimate business but is likely not going to be something that becomes so profitable I leave my career. Any FFL that is not home-based needs some serious investment cash, and that is a great reason to have several partners in before starting.

Getting investors to help fund a new business is common. But usually people invest into a new business with the plan #1 they will get their money back AND #2 make decent money with the investment.

An investment proposal for a business that starts with the thinking of "is likely not going to be something that becomes so profitable", = No one would invest in with a legitimate business mindset. That's like saying "Hay give me a bunch of your money, but know you wont get it back or make anything off it."