FFL/SOT

[mikecatt13]

Looking for some advice from those that are experienced with FFLs, here is my situation:

I have thought about getting my FFL for a few yeas, I currently own other businesses not related to firearms but guns, shooting, hunting, and fishing are my true passion so I've kicked around the idea of a retail firearm business. It obviously wouldnt be my only business or source of income, (my 100% primary focus) I would however intend on basically making some supplemental income from it, likely focusing mostly on online sales aND transfers (I've had less than stellar experiences with our local FFLs that do transfers as have many others). Part of this decision is I may already have a building that's paid for to do this out of, I have to look into the zoning. If it's not zoned correctly, or cannot be approved I will likely nix the idea.

I definitely think there's a market in my area for someone knowledgeable with good service. Good enough to open a full store aND do it full time? No, but good enough to make some money with the right focus if I take it slow and am smart about it definitely.

Here is my main concern.... the more I research the regulations the less clear some become, not surprising of course lol. Considering the market, I wouldn't jump into it with a lot of risk (inventory etc), would take it slow and if it works it works if not no big loss. That being said, if an FFL/SOT is starting out and were to focus on transfers, nfa (I drive over an hour currently for my new dealer as he's the only good one around), and used guns and that dealer acquired some transferable and/or pre dealer machine guns....if it's not working out or worth it business wise in a few years is it a problem to have bought especially the dealer samples? Or is it fine because the business was legitimately attempting to make a profit? I don't plan on closing shop, but if it doesn't work out how I plan I don't want to end up in a bad spot on the regulations either...what's really unclear about that is, is there a real regulation as far as what they consider "to enhance a personal collection" or is it something they review based on sales, purchases, the agents mood that day lol and will just "ask" you not to renew your license type of thing. My plans would be to deal in some nfa and it's a risk this may not work out business wise or may not be for me so the situation of giving up a license while having nfa items is possible enough I want to be clear on the laws.

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[Aguila Blanca]

I'm not an FFL but I believe I see a flaw in your thinking. You are asking about starting a business as an FFL. Then you mention "enhancing a personal collection." Commercial FFLs don't have personal collections -- they have inventories of stock. People who have personal collections of firearms are not in business to make a profit.

You can't mix the two, and it appears from your post that your plan does mix the two.

Can you do both? Sure. The owner of the range and shop where I shoot does both. His guns for sale are in the shop at the range -- that's his business location. His personal collection is at his home. Any time he decides to sell one of his personal guns, he brings it from home to the store, and transfers it from his personal collection to the store inventory by entering it into the bound book.

 

[dogtown tom]

1. This may be the worst time in history to begin a retail gun shop. If you haven't noticed firearm sales have fallen drastically since the two Obama gun panics. Those gun buying panics caused quite a few guys to get in the business because they thought they were going to rake in cash by the wheelbarrow. Those guys are barely scraping by now and many shops are closing. I can name a dozen FFL's within a twenty minute drive of me that are no longer in business.
2. You won't beat the online price from Bud's, Kentucky Gun Co, Grabagun or Palmetto State Armory. Their wholesale cost is MUCH lower than a small timer. As is their cost of shipping. If you choose to do primarily transfers this works in your favor as your transfer fee is likely greater than profit from an actual sale from inventory.
3. Business Plan? If you don't have one, write one. "Because guns are cool" is not a valid reason for getting in the business. If you are currently driving over an hour to find a "good dealer"...........think about why that may be.
4. Be clear on WHY you are getting into the business. Is it to make $$$$ or acquire NFA firearms? If you think you will get fully transferrable pre '86 machine guns cheaper than a nonlicensee you are wrong. If you think you can easily acquire post '86 machine guns you are wrong. If you think you can keep those post '86 machine guns when you give up your FFL/SOT you are wrong.
5. If you are a sole proprietor, you can keep your SBS, SBR, silencers, AOW's and fully transferrable machine guns when you stop paying your SOT or give up your FFL. If your business structure is a partnership, corporation, LLC, etc you will have to transfer all NFA firearms on a Form 4 to yourself at $200 each. Any post '86 machine guns can only be transferred to another 01FFL/SOT with a law letter or to any 07FFL/SOT.

 

[Evan Thomas]

No matter how knowledgeable you are about guns, you need to be knowledgeable about business if you're going to set up and run one; there's a lot more to it than complying with regulations governing FFLs. If you've never operated a business, you'd be smart to take some courses in management, bookkeeping, etc. Your first step should then be to write a business plan and find a good accountant who can advise you about the financial aspects; it would also be wise to consult an attorney who knows firearms law, rather than seeking advice from strangers on the internet.

 

[dogtown tom]

Aguila Blanca I'm not an FFL but I believe I see a flaw in your thinking. You are asking about starting a business as an FFL. Then you mention "enhancing a personal collection." Commercial FFLs don't have personal collections -- they have inventories of stock. People who have personal collections of firearms are not in business to make a profit.

Not true.
Many (if not an overwhelming majority) of licensed dealers have personal firearms collections.

While ATF will not issue an FFL to someone who intends to use it only for acquiring personal firearms, it doesn't prohibit the dealer from acquiring firearms for his own use. If the FFL is a sole proprietor, once he acquires a firearm he records it in his bound book as an acquisition and can further note the disposition to his personal collection and no Form 4473 is required.

If the dealers business is structured as a corporation, LLC, etc then he must complete a Form 4473 and NICS on himself. He then records the disposition in his bound book just like any other transfer.

If the dealer keeps his personal guns comingled with his business inventory, then ATF asks that he tag or identify them as "personal collection-not for sale". (when ATF does a compliance inspection they sure as heck don't like to find guns on the premises that aren't in the bound book)

....The owner of the range and shop where I shoot does both. His guns for sale are in the shop at the range -- that's his business location. His personal collection is at his home. .

Contradicts your statement above.

Any time he decides to sell one of his personal guns, he brings it from home to the store, and transfers it from his personal collection to the store inventory by entering it into the bound book

And that can be done just as easily by a home based dealer. Just log the firearm as received from his personal collection.