How to get a FFL?

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  • Gaudard

    Marksman
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    Aug 29, 2009
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    Terre Haute
    To start I did do a search for FFL, Class 3, and checked the FAQs.

    I'm trying to figure out if I can, and if so how to go about getting a FFL.

    I've done a large amount of searching the web, I can find information about it but it seems to be dated. Also many many many... forum threads about it, but most of those read like the blind leading the blind.

    I've read:

    ATF Online
    ATF Online - ATF P 5300.4 - Federal Firearms Regulations Reference Guide 2000 (9/05) *not cover to cover*

    Basically what I know, or think I know is that I can get an FFL if:

    1. I need to have a business that will buy/sell/transfer firearms.
    2. I might need a store front or barn.
    3. I will need a safe.
    4. I will need to keep records.
    5. I can't use the FFL solely to increase my collection.

    And some the following may or may not be fact:

    6. I need to profit.
    7. I need to buy/sell/transfer a certain number of firearms per month.

    So, correct so far?

    1. So to come up with a business. Internet FFL transfers? Co-workers, friends, family, and you use me to do FFL transfers.

    2. I have an outbuilding and a garage. Those work?

    3. I have a personal safe in my house. Need a second one?

    4. Records, no problem.

    5. This seems to be my main problem, because why else would someone start any firearms business?!

    6. Ok, so it can't cost that much to do a transfer if there are folks doing it for $20, so I charge $20 surely there is some profit in there?

    7. How can I control how many transfers I do? I don't really care to buy firearms to sell... I suppose I could do a gunbroker.com type of business.

    So, any guides or help would be appreciated.

    Also, if I have to have a business what do I need to do to go about doing that for the State?

    Thanks!

    *edit
    Got some good information in this thread so far, thanks a bunch!

    Here is another thread on the subject:

    https://www.indianagunowners.com/forums/general_firearms_discussion/37777-is_it_worth_being_an_ffl.html
     
    Last edited:

    rc5699

    Marksman
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    3   0   0
    Aug 30, 2009
    176
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    Muncie, IN
    I've often wondered the same thing. I've done the research as well, and I think I have a good idea of what the requirements are. But whenever I spoke to anyone about actually doing it I'm told "it's not worth the effort" or "they will just deny you".


    I would love information on the subject as well and will keep an eye on this thread.
     

    westfork

    Sharpshooter
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    19   0   0
    Mar 25, 2009
    304
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    Ellettsville
    not sure if your searches of INGO brought up this thread, but a while back i posted some background on what it took for my wife and i to get our FFL. might not answer all of your questions, but it's at least the story of how we went about acquiring ours.

    good luck!
     

    IndyGunworks

    Grandmaster
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    25   0   0
    Feb 22, 2009
    12,832
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    Carthage IN
    get zoning approval
    submit application...

    sounds easy but its a pretty lengthy proccess... i have been in the works trying to get mine for about 9 months now and just a few weeks ago got to the point where i thought all the basis's were covered and submitted the application.... now 3 month wait to find out if the atf will approve...
    must be for profit
    must keep records
    dont need a safe
    dont need a store front if you can get zoning approval otherwise
    i will make a thread with my process once i hear from the atf
     

    Michiana

    Master
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    2   0   0
    May 3, 2008
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    Pros and cons of a FFL

    This is my second go around at being a FFL, I was one in Elkhart from 1996 until I moved to So Florida in 2002 and could not get permission from the city in which I lived to sell firearms out of my residence. Zoning seems to be the big sticker with most applications and where you should start first and save yourself a lot of work if the town/city you live ends up refusing you permission to run a business from a residential structure.

    I got permission from my town with the understanding that I would not run a business where I would have any type of street traffic; it was not an internet store, and I did not keep a large inventory. I do mostly transfers and special orders and it works out fine. If I see a specific gun I like I might buy one for myself and a couple to sell but I do not carry any type of inventory to speak of. If you have several people a day coming to your house you might end up with neighbors complaining to the town which would open up a can of worms.

    The paperwork to get your FFL is not difficult and I believe mine took around three months start to finish. You do need to do something with the license besides buy guns for yourself at dealer cost. I have never heard a figure on how much of a specific type of business is required to fill that requirement. You need a place to secure your firearms, I do not believe you are required to have a specific type of safe but you do need to identify your business inventory and keep that tagged separate from your personal collection using some type of string tag or other label. All guns need to be locked or in a locked cabinet.

    You have to understand that if you are running a business it involves having a business license and collecting Indiana sales tax and reporting same on a scheduled basis. You also have to keep business records for tax purposes and report your profit, pay SS to Uncle Sam, set up a business bank account, and do your yearly income tax for the business along with your personal taxes. You also need a license to sell handguns from the Indiana State Police if you plan on purchasing and selling handguns. You need to set up accounts with distributors and develop a credit relationship so you do not have to be sending money orders before they ship to you or pay COD charges. My guess money wise including licenses and other expenses is in the $300 to $400 range depending on what you have to start with. You will need a copier, fax machine, computer and a file system.

    In my opinion the hardest part of the business is waiting home for delieveries. UPS, FedEx and the USPS do not always deliver the same time every day and if you get notified of a gun transfer coming your way you need to be there for it as your customer usually knows when you do and wants his gun ASAP. The same holds true for meeting with customers, you have to be flexible to meet their needs if you don’t have specific “business hours” and stick by them. If you are a home based business you have people coming to your home you have never met before and that can be hard for some people. Luckaly I have a great customer base and have not had one customer I have not felt comfortable with being in my house.

    You need a good security system for your home/business and a secured cabinet to store guns until they can be picked up by the buyer. You need to purchase a “bound book” for recording all your transactions and set up an account with the FBI to do your NICS background checks. They can now be done over the internet so you need a computer and internet access. You need to be willing to utilize the local BATF office when you have questions you can’t find the answer to in the literature you get with your license at the time of your interview. You will have a BATF employee come to your place of business and conduct a face to face interview with you which will decide if you get your license approval or not. The lady who did mine was very nice and I agreed to allow her to bring a trainee with her and ended up doing two interviews which took almost four hours. This double interview-training session helped me a lot and was well worth the extra time.

    Bottom line, getting a FFL is not as big a deal is some people make it out to be but it is not all fun and games and you will probably make yourself some spending money but you will not get rich doing this part time at home. If you value your privacy don’t become a homebased FFL, if you enjoy seeing a lot of nice guns and meet some really nice people it can be rewarding in a non-monitary way. I have a class I FFL so I cannot comment on what it takes for a class III if anything besides more $$$.

    Adding one other thing to this post; keep in mind once you become a FFL you can no longer sell any private guns you have owned less than a year without first entering them into the business and selling them like any other transaction which means doing the 4473, background check, collecting IN sales tax and the transaction must be at your place of business. No more face to faces in the Wal-Mart parking lot.
     
    Last edited:

    6birds

    Shooter
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    Jul 15, 2008
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    "Luckily I have a great customer base and have not had one customer I have not felt uncomfortable with being in my house."


    Wait until I bring all the kids at once!!

    Nice read! The little hassles that you list are the reason I'll pay transfer fees for a while longer. You communicate well with you customer base and value customer service, and it shows.
     

    Michiana

    Master
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    Wait until I bring all the kids at once!!
    Nice read! The little hassles that you list are the reason I'll pay transfer fees for a while longer. You communicate well with you customer base and value customer service, and it shows.

    Dan, if I have put up with you this long your kids would be a snap. Anyways they can entertain themselves with the puppy and cats and we can talk guns. Thanks for being one of my favorite customers. :rockwoot:

    Dick
     

    Michiana

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    Interesting question

    Thanks for the info, keep it coming.

    So now another question, by having a FFL I could become a dealer for various manufactures?

    That’s a good question and obvioulsy I can only speak from personal experience. When I had my first FFL I primarily dealt with three distributors and no direct manufacturers, the distributores were SOG, RSR and CDNN. I am not sure if the Gunbrokers.com’s were active during that time period but I never did transfers until I started back up last fall. Back then AK-47’s were the popular guns and I sold a lot of those along with some hanguns and a shotgun or two. Today I do mostly transfer I get from Gunbroker for the specific reason you are asking about, supplier issues.

    Some manufacturers require you to be a stocking dealer to buy direct and that might not be allowed by your zoning when you got permission to have your business. Also you have to outlay some big bucks on inventory and take a specific mix of guns, some of which might be hard to unload. Some have buy ten and get one free but you are talking as much as ten thousand dollars and might end up with some you have to sell at bargin prices to get rid of. Being a stocking dealer has its plus side if you can afford it and have the customer base to sell to. Without street traffic it is a lot harder to sell guns in stock.

    The problem the small home FFL has is lack of volume to make them a valuable customer to distributors and manufacturers. Many distributors will only sell to store front FFL’s but you can find some that will work with you. Although they all tell you that they abide by “first in-first out” we all know that the big customers get preferred treatment with almost any company; it is just good business. If I had someone who ordered one hundred rifles at a time and another one who ordered one I would make sure the guy who orders a hundred at a time gets what he needs when he needs it.

    The small FFL has to look at all the factors involved in purchasing and reselling and shipping costs is a big one. I have distributors who charge from $22 down to $5 for shipping the same handgun. When you have small margins you need to take shipping costs into account as well as the actual price you pay for the firearm. Most distributors are fairly close price wise on an average but on occasion you can find a $20-$30 difference in a $500 gun. Add an extra $17 shipping cost to the $20 and you have $37 you have to add to the price you are charging your customer. That can break the deal if they are looking at an out of state direct internet store like Buds where they will not have to pay sales tax on the gun which an IN FFL has to collect.

    I have lost a lot of sales the past six months due to the innability to get product. I have had to cancel several rifles and pistols because my customers got tired of waiting months for their gun and found it for a little more someplace else; I can’t blame them one bit. The distributors are having trouble getting inventory and most manufacturers will not give their distrbutors even estimated delivery dates due to issues with their sub contractors supplying parts to them to manufacture the guns.

    Volume sellers also get better pricing then the home FFL and small mom and pop gun stores. You add all this up and it is easy to see where the small guy is at a big disavantage to make a reasonable profit when it comes to selling firearms. To be compeditve we have to drastically reduce our profit margins, sometimes to the point it is not worth the effort to buy and sell some guns. A couple weeks ago I asked the question on a post what people think is a fair markup and got anywheres from 10% up to 30%. My target is at least 10% but I don’t always get there. Items such as stripped lowers are as much work as selling a $1,000 gun and require the same paperwork as a customer transfer plus outlaying the money and then doing all the accounting involved in the buying and selling ofthe gun. Ten percent on a $130 item is a lot less than 10% on an $800 item but both require the same work from the FFL.

    I just looked at my records and I have purchased over $10,000 from Rock River Arms so far this year and had to cancel over $3,000 in guns on order at customers requests. To me this is decent money but to large retail stores it is a drop in the bucket. Had I been able to get product this past year that amount would have been several times what it is but unfortunately that was not the case. I can purchase RRA product from Midwest Gun Exchange Wholesale for about the same price I get it directly from RRA so that should tell you they buy for a lot less than I do. I sell most guns to my customers at a lower price than MGE does so you can see they have a much bigger margin than I do. Obviously they have a much larger overhead but that is covered in the selling price. The high volume is where they make their profit to stay in business.

    I have direct accounts with Rock River Arms, Stag Arms, DPMS and a dozen other manufactures and distributors. If they don’t have the product to send me and people can go to places like GunBroker.com and pay 5% more and get the gun in a few days that is often the way they go. I end up doing the transfer for them and collect my $20 which nets out to around $12 when all expenses are taken out. You have to do the math on each sale and see if it is worth while for you and your customer.

    If the market was like it was a couple years ago and you could find most guns in stock at the distributors and manufacturers it would be a lot more fun being a dealer. If you are in this for the money don’t waste your time getting set up; if you want to do it because you like guns and consider it a hobby that will allow you to make some spend money and meet like minded people go for it. Being retired it keeps me out of my wife’s hair and I get to fondle a lot of guns and meet some nice people in the process.

    Hope this added information helped. If you have anything specific PM me.
     
    Last edited:

    danmdevries

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    Apr 28, 2009
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    I started the process but was stopped cold very early into it. Long story short, a dream house hit the market with the caveat that it had been rezoned light commercial. But since it was grandfathered as residential I could purchase it but couldn't do rennovations and couldn't get a loan without having some sort of commerical interest in the property.

    I had many of my ducks in a row to buy this house (I mostly wanted it for the two story 4 car garage with attached workshop and powerventilated paintbooth as well as 30a 3ph power already there). Had a bunch of friends (MBA, CPA and Lawyer) help me out with paperwork etc for being able to buy the house and setup a business in order to get the house.

    What wound up killing my chances were two things. One: police chief or town council or someone in charge, don't recall whom, had to sign off on it. They refused. And two, I would be unable to rezone/split addresses between my personal and the business. Therefore I wouldn't be able to keep my own guns at my residence because they would be considered business property or soemthing along those lines, I don't remember everything.

    It's a very difficult and time consuming process, good luck doing it. If you're not going to be running the shop full time, it's probably not going to work out so well for you. Lots of good posts with good insight already, I just wanted to throw in my two cents from the perspective of the casual FFL. I wanted to have an amorer's certification and do transfers. Considering this building's location (exactly .25mile from the state line with IL) I thought it would be a strategic location for cross-state transfers. But as with 3/4 of my business ideas it never happened and I had to scratch the whole plan.
     

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