Question for FFL holders

DougB

New member
I'm in the process of getting a Federal Firearms License - and all the other stuff California requires me to have in order to buy and sell firearms. This will be a part-time home business. Here's my problem: I have to specify hours of operation. I'd like to say "By appointment," but the BATF person told me that I need to specify business hours so they can drop in to inspect. She also said that I have to really run a business (not just order for myself and friends), and being open for too few hours might give them the impression that I'm not serious about this being a business-and result in my application being denied. So, for you FFL holders out there, what do you think I can get away with as far as business hours? I'm thinking of maybe saying something like 6-8:00 PM on Tuesdays and Thursdays or buy appointment, but I don't want to be denied the license because this isn't considered sufficient.

By the way, any other advice or info for a new FFL holder would be much appreciated. Thanks.

Doug
 
Couple things I had found out when I was considering the same thing:

1) The address has to be a business address. If you do it at home, you have to make sure you have the firearms' business set up like the IRS specifies for a home office tax write-off:
  • The room you use for the business can only be used for the purpose of the business, and not for any other home use. (If it's in your laundry room, you have to remove the washer and dryer).
  • It must be accessible from the outside, and it's got to be easily seen from the street (ie, use your front or side door as the entrance, not the back, and make sure the driveway leads to that door).
  • It must comply with local codes and ordinances (ie, handicap access rules, fire codes, special use permits, etc).
  • You better have another entry into your regular house (like a back door or somethin).
  • You cannot have regular access to your house through the business's premises (put a door to the regular house that locks from the business side).
2) As for hours, "by appointment", as you found out, is not acceptable. You need to be open during what they call "regular business hours". Make sure that's at least 4 hours of the regular work day, and that it amounts to at least 22 hours a week (less than 21 hours a week makes it a 'part-time', which isn't acceptable). My local ATF man suggested 12PM-9PM as an acceptable day for a home-based business, with mornings by appointment.

It used to be easy to get a home-based FFLed business, build up the inventory, sell it all to yourself, and go out of business in the first year. They made the above rules to stop that practice.

Getting some advice from a full-time CPA would be better than getting it from an FFL-holder. As many FFL-holders can contend, the ATF makes list after list of rules and regulations that change, seemingly, daily. Your questions actually relate more to specific IRS code, which, as you know, is the ATF's boss.
Get the final say-so from your local ATF man, who is the one who has to inspect you anyway.

Building a close relationship with your local ATF man now might not be a bad idea.
 
Once you get the license, NEVER let it expire! Even if there are periods when your business is idle. It only costs $90 every 3 years to keep it current. As long as you play by the rules, ATF will not bother you.
 
not to rain on yer parade but under the Clinton Administration the BATF was activly reducing the number of FFLs

They were quite proud of their efforts and would work with the local zoning boards t0 weed out many home FFLs

Changes in the Federal Firearms
Licensing System
In 1993,the Administration and Congress
focused on efforts to keep firearms out of the
hands of criminals and regulate the illegal
flow of guns.Noting that it was often easier
to acquire a gun dealer license than a driver ’s
license,the President directed a review of gun
dealer licensing in August 1993,aimed at
ensuring that only those engaged in a legiti-
mate firearms business are licensed.At that
time,ATF estimated that 46 percent of li-
censed dealers conducted no business at all,
but used their licenses to buy and sell fire-
arms across State lines at wholesale prices,
often in violation of State and local zoning or
tax laws.
In modifying the Federal firearms licensing
system in 1993 and 1994,Congress added
more safeguards to ensure that only legiti-
mate gun dealers obtained Federal licenses.
The 1993 Brady Act increased the dealer
licensing fee from $10 per year to $200 for
the first three years and $90 for each addi-
tional three-year period.The Brady Act also
requires license applicants to certify that they
informed their Chief Law Enforcement Of-
ficer (CLEO)of the locality in which their
premises will be located of their intent to
apply for a license.Subsequently,under the
Violent Crime Control and Law Enforcement
Act of 1994 (Crime Act),licensees were re-
quired to submit photographs and finger-
prints as part of their application,and to
certify that their firearms business complied
with all State and local laws,including zon-
ing regulations.
Following these changes,the NLC reviewed
the eligibility of the entire licensee popula-
tion over a three-year period.As licensees
applied for renewal of licenses,they were
required to submit complete new application
packages with photographs,fingerprints and
information about the proposed business.
The majority of these renewal applications,as
well as new applications,were sent to field
offices where inspectors contacted the appli-
cants.Beginning in 1993,ATF field offices
established partnerships with State and local
licensing and zoning authorities to disqualify
the licensees who were operating in violation
of State or local law and to ensure that appli-
cants had notified local CLEOs of their intent
to enter the gun business.

Commerce
in Firearms
in the
United
States
February 2000
Department of the reasury
Bureau of Alcohol,Tobacco &Firearms

“Working for a Sound and Safer America
through Innovation and Partnership ”

http://www.atf.treas.gov/breakingnews/020400report.pdf
 
Think about it - a lot!

As the others said, a home business is possible, but difficult, especially since you also have to comply with the local zoning laws to get a dealer's license. A home business also brings complaints from neighbors about parking, strangers in the area, etc.

I suggest you check around for a small store which is already in a business zone, and be prepared to spend enough to make it work. But think about it - A LOT.

If you are like most of us, you are a hobbyist who would like to buy and sell guns. But you simply can't think that way unless you are independently wealthy. Even if you are, both ATF and IRS require that after some period (I think it is 3 years) you show a profit, or you are not considered as being in business for license and tax purposes.

If you are going to even cover expenses, you have to lose the hobbyist thinking and become a business man. No more sales to your buddies at cost. No more taking the best of the stock for your own collection. No more taking off to go hunting or when you feel like it (hunting season is your big sales time - you sell guns so other people can go hunting).

You have to keep good books (I mean financial books) and either become a bookkeeper or hire one. You have to know all the federal, state, and local laws (not just the gun laws) that regulate businesses. You have to do estimated taxes and do tax withholding for any employees, as well as cope with Social Security, IRA's, OSHA rules, etc., etc. Believe me, the gun laws and regulations will seem simple when you encounter all the other myriad of rules that cover businesses in general.

You have to have or be able to borrow capital to put into the business. I am not sure any more, but you probably should think in terms of $100,000 minimum in capital. You need to pay lease or rent up front. You need to fit out the place to suit the business. You have to make the building secure with bars and a costly alarm system before you can even get the FFL. You then have to buy stock and business furniture, like showcases and safes. You have to have at least a telephone. If you borrowed money, you have to start paying it back, whether you are making any money or not. You will feel at times like the business is draining you; that you have no life and no money.

And firearms dealers, unless they go big time, don't make fortunes, though most full time dealers make a comfortable living. But they usually made a lot of sacrifices before they could do that. Part time dealers seldom make much money. At best they can add to their regular income, but at the cost of having little personal life. Marriages get strained very rapidly when one of the partners has a full time day job and an evening job as well.

Jim
 
Thank you all for your advice and comments. Lots of food for thought. I am still pursuing my FFL, and planning to work part time from home. I called the ATF today and asked about putting "by appointment" in the business hours section. The representative I spoke with said this could be acceptable - and that, in any case, they would contact me if it is a problem (not just reject my application). I hope she's correct.

Touching some of the other points raised:

- I have checked with county zoning and received an okay.

- I do intend to make a profit.

- My wife's an accountant and will keep the books

- Regarding the IRS, I don't intend to "write-off" much (at least related to my firearms business).

- I've visited my local ATF office and talked with them on the phone a few times - they've always been helpful.

I don't harbor any illusions about getting rich from a home-based firearms business. I do consulting and make decent money. This would be something I can focus on between consulting jobs and part time. If it goes well, and when I learn the ropes, I may rent space and expand it into a more full-time business. Thanks again for all the advice and info.

Doug
 
Back
Top