How to Become a Firearms Dealer

Is it time to take your interest in guns to the next level? Looking to share your passion with those who have similar interests? Perhaps it is time to do some research on how to become a firearms dealer and determine which type of FFL might be right for you.

What is an FFL license?

The answer isn’t easy. There are nine different types of Federal Firearms Licenses and each of these FFLs carries different restrictions. Knowing the differences is really important.

Getting an FFL isn’t as easy as getting a driver’s license—but it is hardly difficult. Most types require that you are actually engaged in a business venture of some sort. Then there is the assumption that you’ll remain in compliance with all of the rules.

FFL license types

Here are the different types of FFLs. Each license allows you to do something slightly different.

• Type 01 FFL – Firearm Dealer and Gunsmith
• Type 02 FFL – Pawnbroker and Firearm Dealer
• Type 03 FFL – C&R Collector
• Type 06 FFL – Ammunition Manufacturer
• Type 07 FFL – Firearm Manufacturer
• Type 08 FFL – Importer of Firearms
• Type 09 FFL – Dealer of Destructive Devices
• Type 10 FFL – Manufacturer of Destructive Devices
• Type 11 FFL – Importer of Destructive Devices

Type 01 FFL – Firearm Dealer and Gunsmith

The Type 01 is a fairly typical license—the kind you would find in most mom-and-pop brick-and-mortar gun stores. This allows you to buy and sell new and used guns.

Type 02 FFL – Pawnbroker and Firearm Dealer

The Type 02 is more for used guns. Most pawn stores don’t sell new guns they’re buying from manufacturers.

Type 03 FFL – C&R Collector

The Type 03 is unique and only allows you to buy guns that have been legally determined to be curios and/or relics. This is a collector’s license, though you can use it to buy and sell some old guns. Only old guns.

Type 06 FFL – Ammunition Manufacturer

Type 06 licenses allow holders to make and sell ammunition. This isn’t needed if you are a simple reloader, reloading for your own range trips. But if you plan on selling your ammo, this is a useful option.

Type 07 FFL – Firearm Manufacturer

Everyone can make guns for their own private use. Selling those guns is more complicated. If you plan on making firearms for other people (selling them to other people), the Type 07 is for you.

Type 08 FFL – Importer of Firearms

The Type 08 is an important step in the importation of guns. There are many rules that govern what can and cannot be brought into the country, and this importation license is an important first step in the process.

Type 09 FFL – Dealer of Destructive Devices

The Type 09 FFL allows for the sale of destructive devices. What exactly is a destructive device? Glad you asked. https://www.atf.gov/firearms/firearms-guides-importation-verification-firearms-national-firearms-act-definitions-1

• A missile having an explosive or incendiary charge of more than 1/4 oz.
• Any type of weapon by whatever name known which will, or which may readily be converted to expel a projectile, by the action of an explosive or other propellants, the barrel or barrels of which have a bore greater than one-half inch in diameter.
• A combination of parts designed and intended for use in converting a device into a destructive device and from which a destructive device can be readily assembled.

Type 10 FFL – Manufacturer of Destructive Devices

Now that we know what a destructive device is, we can talk about the Type 10. That’s the FFL you need if you intend to manufacture any of those items in the list above.

Type 11 FFL – Importer of Destructive Devices

And, as the name suggests, the Type 11 will allow you to bring these destructive devices in.

Many of the companies engaged in this industry will have numerous different types of FFLs. There are proverbial lines that might be crossed in ambiguous definitions and having a good combination of coverage will help ensure that all operations stay above board.

How to get an FFL license

FFL license requirements are strict. There are obvious prerequisites like age and criminal history. Apart from that, the biggest question is often if have to have a separate “place of business” than where you live.

You don’t. You can work from home in almost all locations. Homeowners associations and local ordinances may interfere, so you should look into those regulations locally—before you get started.

Once you begin the process, you may find that the paperwork is cumbersome. Like many governmental processes, there are numerous forms, background checks—and (depending on the type of license you want) visits from your local ATF agents.

Many people go through a guided DIY service like FFL 123. These courses are designed to break down the application process, provide the resources and answers to the more complicated questions, and guarantee that you get the guidance you need to complete the application.

If you are more of a DIY type, head on over to the ATF’s webpage. You’ll find the FFL license application you need there. And it can be done alone.

How do you become a gun dealer?

Getting an FFL is one step in the right direction, but it doesn’t make you a dealer. In order to begin selling, you first have to have guns to sell. And there are numerous places to find those.

Many FFLs resell guns on the used market. This can be a lucrative business model if you can find good deals on the antiques, classics, rare, or in-demand firearms. But it isn’t likely to make you rich.

Most Type 01 FFLs buy guns from distributors. Manufacturers sell their guns in bulk to companies like Lipsey’s or Davidson’s, and those companies sell to the retail stores. Distributors carry numerous brands and offer FFLs one-stop-shopping, in some cases.

Some manufacturers sell directly to some FFLs. This cuts out the middle-man. This is especially common for the larger accounts—big-box stores and chains, too.

Smaller gun companies will sell directly to some dealers. Again, if you haven’t picked up on the theme, scale is important. The more guns you sell, the more likely you are to build bridges in the industry.

If you’re asking “how do I become a gun dealer,” you probably have a passing familiarity with how all of this works.

FFLs for personal use

You can get an FFL for your personal use—that’s the Type 03. Those are very useful for collectors of vintage guns. If you have a Curio & Relic license (C&R), some guns can be shipped directly to your door.

But you won’t make it far if your intention is to get a Type 01 and use it to buy guns for your personal collection at wholesale prices. There’s way too much oversight for that to fly. And you would have a hell of a time convincing anyone to sell directly to you.

Do gun dealers make good money?

Any money is good money, right? Maybe not. That’s clearly not the answer to the question.

FFLs and gun dealers don’t make a ton of money. Look at the most successful one you know personally. Some may make a respectable living, and that could be what you’re after, but it is real work and there’s a lot more to their business models than just selling guns.

That isn’t to say that you can’t supplement your income selling firearms. You can. And there are thousands of dealers who work gun shows, sell through online outlets, or do after-hour sales for select customers, and some of these folks make a hobby into something more.

What is an SOT?

There’s another layer here, though, and that’s the Special Operations Tax. You may well hear that someone is an FFL/SOT. That means they’re also capable of working with silencers, short-barreled shotguns and rifles, and machine guns.

The Types of SOTs

 

• Class 1 SOT – These SOTs may Import and deal NFA / Title II firearms
• Class 2 SOT – These SOTs may manufacture and deal NFA / Title II firearms
• Class 3 SOT – These SOTs may deal NFA / Title II firearms

A Class 1 SOT buys and sells imported and domestic NFA and Title II firearms. It is useful for those who engage in business that requires them to import such items. Otherwise, the Class 3 SOT would be fine.

A Class 2 SOT can deal in these NFA and Title II firearms, but they can also make them. Some custom shops are Class 2 SOTs, and all silencer makers in this country, and all of the gun manufacturers that make short-barreled rifles and shotguns.

A Class 3 SOT is more limited and reserved for those dealers who want to sell these NFA and Title II firearms without manufacturing anything or importing anything.

How much does it cost to become an FFL dealer?

The last question may be the most commonly asked. How much it costs to become an FFL depends on the type of FFL you intend to get. The Type 03 is easy on the wallet. Even the Type 01 isn’t bad (just $200 for the first three years, and $30 per year after that).

Some, like the Types 09, 10, and 11 are $3,000. SOTs will pay more in taxes—obviously. The word Tax is in the title.

You may want to put aside some scratch for legal guidance or practical assistance. You might also find there are costs associated with preparing your place of business to safely store and protect the guns. And then there is the never-ending cost of the guns themselves.

Do you need an FFL?

In the end, ask yourself what you want to do and why. The answers will guide you in the right direction. If you want to jump in and take on the business aspect, get an FFL. If you were hoping this might be a good way to get guns cheap, odds are you’re not on the right track.

And there are other options, too–ways to get into the business that don’t require an FFL. One way is to become a reseller. Accessories, parts, uppers, barrels… many of the components of firearms are sold without any need for an FFL.

Want to find out more? Check out how to become an AT3 reseller. It could be the start of something big.

One Last Tip

If there’s anyone that knows the AR-15 platform, it’s the US military. As a special offer for our readers, you can get the Official US Army Manual for AR-15/M4/M16 right now – for free. Click here to snag a copy.