Considering becoming FFL/SOT licensed ...

[CountryGent]

For a variety of reasons, which I will outline below, I am seriously considering obtaining a dealer license (01) and, once approved, applying for SOT Class 3 (Dealer in Firearms) license. I'm not 100% on the idea as of yet, but I've made some progress on the research. I thought I'd start a thread to discuss the idea and ask some questions.

Why I am considering this business venture:

• I have space in a commercial building in town that I am not using for my other operations. Right now, it is just sitting empty, so putting it to some use would be good.
• The primary overhead costs (e.g., space, electricity, Internet connection, phones, office equipment and furniture, et al.) are already taken care of. Costs would be obtaining a business license, obtaining the ATF licenses, and consumables (e.g., paper, file folders, etc.).
• The "kitchen table" FFL that I, and many people in the local gun club, used over the years has left the state. There are other FFLs that handle transfers in the area, though their fees range from reasonable (lowest I've found is $25 + $10 BGC) to ridiculous ($100 + $10 BGC). The cheapest is about 45-60 minutes round trip, depending on where you are.
  
• The SOT that handled many of the NFA transfers in the general area closed up shop as the owner retired. There is another in the area, but they don't keep much in the way for inventory, and their NFA transfer amount is almost double the aforementioned closed shop. Other SOTs in the general area around 2+ hours round trip.
• To offer shooters in the area an alternative for their transfers.
• To bring in some extra income. I am not planning on making this a replacement for my present income sources.

What I would be offering:

• Low cost transfers for Title I firearms. I plan to undercut everybody on this front. If I can get transfers down to $10, I will.
• Easy and lower cost transfers for Title II firearms.
• No hassle Internet sales/transfers both directions. Basically, buy what you want online and have it shipped. There is no nice way to put this, so I'll just say it: the unbelievable idiocy I've encountered with something this pedestrian is one of the inspirations for this idea.
• Consignment sales for those that don't want to do it themselves.
• Comparatively inexpensive new firearms. I wouldn't charge much over my own costs.
• I would likely not do anything at gun shows as I've given up on those a decade ago. However, if that would change, I suppose some merchandise could be moved there.

Where I'd advertise:

• At a couple local gun clubs. One of which has a large membership.
• Local publications.
• Here on NWFA.

Now, onto the questions:

1. Thoughts on this in general?
2. Any concerns?
3. For those that applied for such licenses, how did it go? Any advice?
4. For those that are currently licensed, how has the regulatory burden been? The reason I ask is if this is significant, it reduces the viability as a side-project. Some additional notes on this:
   1. My only experience with ATF licenses is a C&R for many years. The one (1) compliance inspection I had was trivial, but I'd imagine this is apples and oranges.
   2. While my experience with ATF regulatory compliance is limited, my experience with compliance with other federal agencies (note plural) is very extensive.
   3. Feedback I've received when talking to other FFLs about this has ranged from nonexistent (one had been licensed for almost 15 years and said he had no inspection ever, no phone calls, and just dealt with record keeping, BCGs, etc.) to moderate (paperwork and a small number of trace phone calls) to outright annoyed (one gunsmith I talked to groused about the burden at some length.)
5. Any services, beyond what I mentioned above, would you like to see in a local FFL?
6. For those that are in the industry and use a computerized "bound book" program, which is it and do you like said? Any you would avoid?

Thanks all!

Read More

 

[TOVO]

Have been a FFL I would ask yourself why I would go though the work and all the paperwork if you are only going to do transfers. There is very little money in transfers and if you are going to have a separate location you will need to drive there to make $ 20 for transfer or a $50 transfer if you get your SOT you need to pay for and hold a class 3 items for 6+ months.

If you are thinking you are going to purchase firearms at a cheap price that is just not the case. Distributors wants very high volume sore front businesses to give the deep discounts too.

I personal think someone time and all the licensing is not worth the cost of a transfer. Just my two cents. Must wishes.

 

[CountryGent]

There is very little money in transfers and if you are going to have a separate location you will need to drive there to make $ 20 for transfer or a $50 transfer

I should have been more specific on this point; the commercial building that I am talking about is where I am most days, all day. I wouldn't need to drive anywhere. I'd likely set up one of the rooms for this purpose though; at least for storage, recording keeping, and a safe.

 

[wired]

Class 3 dealer ? Nah. Go 02/07 and you can make your own posties. I would do 02/07 and have in the past. I'd be doing it now but Yakima does not allow home FFL's.

The transfer thing does help a little in defraying the $3K ( 02/07) a year in license and ITAR costs but dont get into it thinking you are going to make any money off it and it will be fine. The transfers legitimize your hobby. FWIW I never had an inspection either after the initial meet and greet.

 

[CountryGent]

$3K ( 02/07) a year in license and ITAR costs but dont get into it thinking you are going to make any money off it and it will be fine.

The ITAR fee is why I am not considering obtaining a Manufacturer (07) license.

FWIW I never had an inspection either after the initial meet and greet.

Thank you for the information.

 

[billdeserthills]

Having been an FFL I would remind you of an unfunny joke I have heard that really describes the situation well.
How do you become a millionaire as a licensed gun dealer?
Start with 2 million

As a licensed gun dealer you will have lots of competition and none of those folks will be charging manufacturers retail prices either. You will constantly be cheaped down on your very fair prices, because gun buyers have to save money or the wife will beat them, and because the 'big box' stores constantly have loss leader sales that sell for low prices you cannot afford to imitate. Whenever possible you can buy ammo to resell, the same ammo that Wal-Mart will sell for less, sometimes even less than you pay.

Best of luck with you're venture

 

[wired]

Just dont be a stocking dealer. By doing transfers only you dont risk a dime of your own money. Its a reasonable hobby job but don't expect to make a living as a stocking dealer and you'll be fine. 3-4 transfers a week is $60-$100 a week in extra gun cash.

 

[billdeserthills]

Just dont be a stocking dealer. By doing transfers only you dont risk a dime of your own money. Its a reasonable hobby job but don't expect to make a living as a stocking dealer and you'll be fine. 3-4 transfers a week is $60-$100 a week in extra gun cash.

Not at $10 a transfer it ain't

 

[IronMonster]

I got no input, I just want to say that is a beautifully thought out and organized post. It's nice to see something so throughly considered and explained.

 

[wired]

Not at $10 a transfer it ain't

At $20-$25 like everyone else charges it would be . He'll find the right balance of traffic and transfer prices. Standard rate on a Class 3 transfer being closer to $50 ( and even more ) . Point is its not going to be a money maker but it sure doesnt have to be a money loser as a kitchen table operation. A couple of C3 transfers and a dozen or so standard transfers and the license has paid for itself. Stocking and maintaining a showroom/gun shop is a bank buster to be sure but filing the paperwork at the right time and going through the motions of running a business will keep the ATF dogs at bay and let the OP do what he really wants without losing anything.

 

[Who The F R U]

We have a book for:
* MFG'd gun's
* Title 2 gun's
* Acquired guns
* Repair's

It makes it easier to keep track of what's what.
If your going to pay the SOT might as well get the 02.

 

[CountryGent]

We have a book for:
* MFG'd gun's
* Title 2 gun's
* Acquired guns
* Repair's
It makes it easier to keep track of what's what.

Thanks; I'm checking out the site now.

If your going to pay the SOT might as well get the 02.

Out of curiosity, why do you recommend that? As I understand it, the licensing costs are substantially different and I have no interest in the manufacturer of new firearms.

Dealer for three years: $200 01FFL + ($500 * 3 SOT, Class 3) = $1,700.
Manufacturer for three years: $150 07FFL + ($500 * 3 SOT, Class 2) + ($2,250 * 3 ITAR) = $8,400.​

If there is some advantage that could justify that increased cost, I would certainly entertain it though.

 

[wired]

It all depends on your budget and what you like to do. I got my 02/07 because I wanted to build machine guns and shoot them in Washington. Only way to do that is to become an 02/07 and $3000 ( I lie. No one paid ITAR then but I would have. ) , while not chump change, wasnt breaking the bank by any means. All hobbies have expenses and it was a lot cheaper than buying them even as a class 3 dealer. I buzzed through a lot of ammo and built a lot of guns and got the bug out of my system. Cut the guns up ( good luck selling posties ) , sold the parts and called it a day and went back to being a schmoe again.

 

[shredjesse]

I've debated this. I'm a programmer who does a lot of web work, and there are plenty of distributors who have inventory, availability, pricing etc etc all available through API's. You can also place orders automatically You can sync with distributor for availability twice daily, and then combine online purchases every other day into shipments from the distributor and only have to manage already paid for inventory. You can even formulate just what price you want over distributor cost in any fashion you want, and adjust the variable facets (% markup, average shipping cost, etc etc) as your rates change with volume.

Were I not already doing so well without the hassle, I'd be seriously looking into this!