Washington Type 7 FFL, Insurance, Fees etc.

[SunTzu]

Questions:
1: How much is liability insurance for a small Type 7 FFL selling a small number of parts (a few dozen at first) like adjustable gas blocks etc???? How much insurance should I carry?

2: Can I register the LLC after I get my FFL??? That way, if I don't get approved to have an in-home FFL I'm not stuck with a useless LLC?

3: Any reason I wouldn't get approved to have an in-home type-7 in my basement (we own the house)? Of course I'm legal to own guns, have CPL and already legally own NFA items etc.

4: Is it a good idea to delay applying for an SOT? Many of the gas blocks and other parts I have in mind stem from problems I've encountered with silencers, SBR's and other NFA items.

5: I don't intend to immediately sell NFA items, but the items I'm selling would be appropriate for NFA items, so an SOT would be helpful. EXAMPLE: adjustable gas blocks to allow easier swapping between suppressed and non-suppressed, making sure parts are durable enough to withstand full auto fire etc. As such, it would be very useful for me to be an SOT so I can make test-mules to verify function and durability of the gas blocks etc.

6: As an alternative, how hard is it to get a "law letter" in Clark County, Washington? Small basement operation outside city limits (we own the house) trying to make more durable adjustable gas blocks and test them for suppressed and full auto use.

MOTIVES: I love tinkering and want to make it a small business that provides useful items that nobody else is making to help with using suppressors and SBR's. Eventually, I may make my own suppressors for sale, but that would be way down the road after I have much better machines (lathes, cnc mills etc).


back story:
Over the years I've made/modded several parts for rifles such as the SCAR17s and of course the ar15 and I own NFA items as well. I want to start selling gun parts for use on the SCAR and AR15 platforms. Based on my research, a type 7 ffl is what I want. I live in rural Clark County, Washington with a Camas address but well outside city limits. It would probably be best to be an in-home business because I have a full basement that I can independently lock and use as secure storage along with various gun safes.

While others would likely be interested in these parts, I'm nervous about selling "gun parts" without having all my ducks in a row, and don't want to start paying fees etc until I know I can complete the process.

Fees that I understand:
State of Washington LLC: $200.00
BATFE Application for Type 7 FFL: $150.00
Insurance for selling gun parts online: $$$$$$$$$$$$$$$ no idea.



thank you in advance!

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[wired]

If you are selling gas blocks you don't need an 07. If you are building guns or modifying them you need an 07. I get what your'e trying to do I think and that is getting an 02/07 SOT . You don't NEED insurance . Its just one of those things that keeps you from being miserable the rest of your life IF something bad happens. As far as your basement thats fine if you are zoned for it. If you arent zoned multi use you'll never get it approved. Your local ordinances control what you need for storage etc. The ATF doesnt care.Clark county probably doesnt mind either.

In any case an an 02/07 SOT you don't need a LEO letter to build a Post Sample. You just build one. To be honest you really don't need to build anything for sale or get insurance as an 02/07 SOT. Basically you can function as a class 3 dealer and do customer initiated transfers without ever building anything. The need for insurance goes out the window and you can still build posties to do "research and development" .

Learn some lathe skills and build some integral cans. Its a fun pass time.

You'll need ITAR registration at $2250 a year too plus $500 a year 02 SOT fee plus the 07 fee.

 

[oremike]

I got my business insurance through the NRA Business Affiliate Program. I'm an 06 Ammunition Manufacture so the rates might be different, I pay $145.00/month.

 

[SunTzu]

Ok thank you! I really appreciate the data point. Was trying to get quotes but they wanted specifics about the business (but the biz doesn't exist yet).

If you are selling gas blocks you don't need an 07. If you are building guns or modifying them you need an 07. I get what your'e trying to do I think and that is getting an 02/07 SOT . You don't NEED insurance . Its just one of those things that keeps you from being miserable the rest of your life IF something bad happens. As far as your basement thats fine if you are zoned for it. If you arent zoned multi use you'll never get it approved. Your local ordinances control what you need for storage etc. The ATF doesnt care.Clark county probably doesnt mind either.

In any case an an 02/07 SOT you don't need a LEO letter to build a Post Sample. You just build one. To be honest you really don't need to build anything for sale or get insurance as an 02/07 SOT. Basically you can function as a class 3 dealer and do customer initiated transfers without ever building anything. The need for insurance goes out the window and you can still build posties to do "research and development" .

Learn some lathe skills and build some integral cans. Its a fun pass time.

You'll need ITAR registration at $2250 a year too plus $500 a year 02 SOT fee plus the 07 fee.

I've seen the ITAR notices on items like electronic optics (aimpoint, eotech etc). Just to clarify, I need ITAR registration to sell gas blocks and similar small gun components?

Thank you! Doing the math, at 25-30k for one fully transferable item, I'd have a good start on funding a small machine shop and be an 02/07.

I hear that ATF frowns on "private collections" so since I already make/mod parts for personal use, why not make it a real biz so I can have a side income and sponsor myself as a competitive shooter and have cool stuff for RESEARCH. Of course I'll have legit profits and pay a modest dividend to shareholders (me), but also the lifestyle would be a perk too.

 

[wired]

You need ITAR registration to be an 02/07. An 02/07 can do everything an dealer can plus repairs. Selling and doing transfers is business.

 

[SunTzu]

Selling & transfers seems easier, but I'm an introvert and don't feel like i know enough people to support a biz on that, and I wouldn't have any competitive edge on others just doing transfers. How many transfers do i need to be "a real business"?

in contrast, a product that fills a niche (while harder to build), would be a natural draw for customers and i could sell them online.

 

[wired]

Transfers are initiated by the customer. You just put your name on a list and you get money thrown at you.

 

[User 1234]

If you sign up for Gunbroker's pre-approved transfer FFL people can find you when they buy a gun on there and need a local FFL to receive it.

 

[wired]

Yes, good point. It can be ANY gun you transfer not just NFA stuff. 20 bucks here, 50 bucks there pretty soon you are paying off all the yearly fees.

 

[SunTzu]

I'm currently licensed as a managing real estate broker and I also do software development, so paperwork, dealing with govt red tape and ridiculous technicalities are a strong suit... knowing/meeting hundreds of people lining up to transfer firearms is my weak spot.

I'm outside city limits on acreage and own the land in Clark County, WA so there shouldn't be any city ordinances holding me back... maybe being 02/07 and being able to transfer NFA items would also be a way to differentiate myself.

 

[CountryGent]

If you sign up for Gunbroker's pre-approved transfer FFL people can find you when they buy a gun on there and need a local FFL to receive it.

True. Beyond GB, I've done the same with Grab-a-Gun, Bud's, Sportsman's Guide, Palmetto State, et al., and the the transfers roll in.

 

[SunTzu]

True. Beyond GB, I've done the same with Grab-a-Gun, Bud's, Sportsman's Guide, Palmetto State, et al., and the the transfers roll in.

Thanks for the great data point, that's really encouraging to know that there are revenue streams out there that don't require a lathe, a cnc mill and months of product development time. Doing transfers for people that have already picked a firearm and just want it shipped seems like a viable way to start monetizing the company. It also seems like the clientele who want a gun shipped/transferred etc would be more experienced purchasers than you may get wandering into a local gun shop.

Manufacturing is where i'd like to get to, but supporting a side-biz on manufacturing from the get-go would be much more difficult compared to doing some transfers to cover my FFL licensing and company overhead.

 

[Aero Denezol]

Anything on the US Munitions List (USML) requires ITAR, and anything on a gun is on the USML.. even the little trivial parts you wouldn't think.

ITAR compliance is a fairly serious matter. Non-compliance can lead to fines and/or jail. Any ITAR sensitive data has to be safeguarded (this includes extensive cybersecurity protocols) and you'll have to keep a log of any guests in and out of your facility. Depending on what you're manufacturing, you will have to badge and/or escort guests, background check your employees, and remove personal cameras from the production floor.

On the positive, if you jump through the hoops with ITAR, a whole new world of customers will open up for you.

 

[wired]

Anything on the US Munitions List (USML) requires ITAR, and anything on a gun is on the USML.. even the little trivial parts you wouldn't think.

ITAR compliance is a fairly serious matter. Non-compliance can lead to fines and/or jail. Any ITAR sensitive data has to be safeguarded (this includes extensive cybersecurity protocols) and you'll have to keep a log of any guests in and out of your facility. Depending on what you're manufacturing, you will have to badge and/or escort guests, background check your employees, and remove personal cameras from the production floor.

On the positive, if you jump through the hoops with ITAR, a whole new world of customers will open up for you.

None of that happens with 02/07 SOT's . Been one. Known plenty.

 

[Aero Denezol]

None of that happens with 02/07 SOT's . Been one. Known plenty.

Did you do any military work?

 

[wired]

Did you do any military work?

No. Thats the point. Not all ITAR required 02/07 SOT's are the same.

 

[madladchad]

FYI ITAR fees are down to $500 if application is done by Spring. This year only due to COVID, so if you're in a halfway decent position to manufacture, I would jump on the opportunity.

International Traffic in Arms Regulations: Temporary Reduction in Certain Registration Fees

The Department of State is making a temporary change in the Tier I and Tier II and new registrant payment guidelines on the Directorate of Defense Trade Controls (DDTC) website at www.pmddtc.state.gov. These guidelines outline the registration fees charged to persons who engage in the United...

www.federalregister.gov

DoNaLd TrUmP HaTeS GuNs.


::rolls eyes::

 

[mrchris]

My understanding is the ITAR and requisite registration with the DDTC changed this year with the export reform act. Except for things like machine guns, normal civilian guns for export now go through the Department of Commerce and you only need register if you are exporting what you produce.

[BREAKING] ITAR Firearms Regulations Significantly Lessened

Are you up to date on your firearms regulations? Check inside to find the new ITAR firearms regulations that might just benefit you.

gununiversity.com

exercpt:
What the Move from ITAR to Commerce Means
Firearms are still regulated.

The move from ITAR does not change any significant gun control laws in America.

And, firearms are still regulated for exports.

However, instead of dealing with the ITAR rules and State Dept. licensing, the firearms industry will be able to use the more efficient export system through the Department of Commerce for most firearms. Certain firearms, like machine guns, will still stay under State department control (under ITAR).

If you're a manufacturer FFL, you will not longer have to register with the Directorate of Defense Trade Controls (DDTC) per ITAR. This will be a great help to small-scale firearms manufacturers! Information like firearms plans can now be shared easily, including online, and foreigners can now visit a firearms manufacturing plant without special licensing.

This is HUGE for the industry.

 

[SunTzu]

I have a dialogue open with dept of commerce to clarify which parts i could manufacture without itar, I'm mainly interested in gas regulators and accessories for the scar platform at the moment, but of course will do some ar stuff down the line.

 

[mrchris]

My understanding was that registering with the Dept of Commerce wasn't required unless you were going to export those parts. If you sell to domestic customers nothing should be required at all. That seems to be how it is being taken by most. I'll try to find one of the articles I read that had that information.