Question for Type 07 FFL Class 2 SOT


January 21, 2008, 12:27 PM
A friend and I want to become an SOT 2 manufacture of NFA Items. I am trying to get information in regards as to what others have done in forming their business corporation? S Corp, LLC, LLP

Also the way I understand the process to be is establish a business and get an EIN much like any other business. (Business will be registered to my shop address) They apply for a Type 07 FFL then for a SOT 2

Warm Regards,

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January 23, 2008, 04:47 PM
You will want to get some legal assistance with regards to the legal entity part...IE: S Corp, Corp, LLC, sole propriertor etc. each have different regs and accounting issues as well as tax may be better than another for your state.

Most guys will get their FFL 01 and then proceed...If you like you could go straight for your FFL07. Once this is obtained you can pay the $500.00 for your SOT if your under a certain $$$ per year sales.

The SOT tax is due each July if you pay it in march then you have to re-up again in 4 month....if you plan it you can save the extra $500.

Do you plan on selling to M&P? An 07 SOT is not a license to manf. for your personal use/ have to be in an active business.

Good luck...

Jim K
January 23, 2008, 05:15 PM
If your shop is in a commercial zoned area, and there is no problem with local codes, you should be OK. Yes, you should establish the business (corporation, S corporation, LLC or whatever) first, the get the license for the business. Then do business. BATFE is reasonable, but they don't like to give out those licenses and SOT stamps to guys who just want to play with machineguns as a hobby. Since you can't manufacture MG's for individuals, manufacturing suppressors, SBRs, SBSs (if legal in your area) is one way to justify the license.

Of course, once you have the licenses, you can have a fair amount of fun with sample or development guns.


January 23, 2008, 05:30 PM
Thanks Bushman15 and Jim,

I'm in oregon so suppressor and MGs are good.

I have elected to go with the LLC for me and my partners. Our primary focus will be manufacturing. And not so much retail sales. Probably some Title 1 and 2 items. Yes I definatly read that part about being in buisness and not to futher ones collection. :rolleyes:

I'm assuming the ATF is wanting to see an honest effort to be in business. Which I will put forth. But competition is pretty stiff out their not sure how competitive my pricing will be and what kind of contracts the M&P in my area already have in place. I should be able to get a few profitable transactions a year. :)

I will open a website and offer some products for sale along with some postings on Gunbroker and such. One project I am considering taking on is removing the fake suppressor on the GSG-5 and permantly attaching a real Suppressor and keep the 16" overall length so it will just be a 1 tax weapon.

Also I could get some 80% AR15 receivers and complete them and then offer them for sale as well under our brand.

Also will probably create some various suppressors and offer those as well.

I do currently have some items on a FORM 4 so I'm not totally new to the NFA process and have read a lot of information at great lengths including the NFA handbook posted on the BATF website.

I will probably take a trip and visit with some of other local SOT guys as well. Bowers, TROS ....

Jim K
January 23, 2008, 05:58 PM
I have said this to the point of irritating people, but gunsmiths and manufacturers tend to fail because they are what is called hobby businesses. In other words, the people know the product, but have not the foggiest idea how to run a business. If you are already running a successful business, then taking on the NFA stuff would be just a matter of expanding your line or setting up a subsidiary.

A lot of folks think all that is needed is the FFL and a few simple tools. The big need is capital for tools and equipment. Next is taking a business course, often at the community college. You need an accountant, a book keeper, and an attorney, and you need heavy insurance.


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