Considering FFL business venture...

[2dswamp]

I'm seriously considering obtaining my FFL for the purpose of brokering the purchase of firearms, registration transfers and etc. I buy enough firearms annually to justify the licensing fee so why not use it to generate some additional income?

Any of you guys run a similar business from your home? Any advice or comments would be greatly appreciated.

Moderator...please move to another forum if this is in the wrong location.

 

[Bubba613]

First, if your house isn't zoned for a commercial business then ATF won't give you a license.
Next, most people don't appreciate the liability involved. Think about that some before you jump all over it.

 

[mgkdrgn]

As Bubba stated, your "local" hurdles are going to be greater than the federal ones ... not that the federal ones are not considerable. You'll need to get a state/local business license, collect sales taxes, file monthly sales tax reports, and pay any other taxes your locality puts on a business. That means you are going to have a fair (putting it mildly) amount of book keeping and paperwork to deal with you don't have now.

Oh, and the 4473's ... you have to hold on to them for 20 years, and be able to find any particular one the feds come looking for during that time. You'll also be open to their inspection at anytime. Don't comply and you will (at the very least) no long be an FFL, and could well end up with a hefty fine or find your self on an unscheduled vacation at "Club Fed".

And yes, I'm a home based FFL.

 

[Salty1]

You can run the FFL business out of your home, you need to have posted business hours and actually be in the business and it will require local LE sign off. The ATF will spend almost an entire day with you prior to granting the actual license. They will not allow FFL's to just purchase at wholesale prices for personal use. The ATF has been pulling the licenses of people who are not actually running a business. You will need all of the appropriate business licenses, if you live in a HOA community then you will also need the HOA's written approval. The entire FFL process is a pita, once you receive your FFL then getting the distributors to sell to you can take some time, and for the most part you will be on COD or have to pay with a credit card. Many of the larger wholesale distributors will only sell to stocking dealers who have an actual storefront. Very few manufacturers sell direct to FFL's. The gun industry is very competitive, internet sales do not help as many people will buy that way just to avoid the sales tax. From our experience we get profit margins in the single digits in order to be competitive. Do not expect your business to be immediatly successful, it takes time to build a loyal customer base and you need to be available for your FFL transfer customers on their schedules not necessarily your own, same with receiving the shipments so plan on numerous trips to the post office to pick items up. Our initial start up costs were in the $5k range so expect it to take some time to see a return on your investment, from my perspective if your not in this for the long term then it is not worth pursuing, you won't get rich but will get to handle all kinds of great guns...... maybe even some Glocks...

 

[2dswamp]

I've received the Application from the ATF, filed a copy with my local Chief of Police, got my fingerprint cards and determined that my local odinances will allow me to work out of my home. Have not sent off the application and fee as of yet.

My real intent would be to handle transfers. You know...guy buys gun from Gunbroker.com and needs an FFL to do the transfer. Selling firearms and investing in inventory is not very appealing to me for many reasons.

I'm an excellent record keeper and very organized, so other than opening your home to strangers...what would stop you from pursuing this venture?

 

[TIMC]

I'm an excellent record keeper and very organized, so other than opening your home to strangers...what would stop you from pursuing this venture?

I did the home based FFL thing for several years and did pretty well with it for a part time job. What finally drove me out of business was my free time which after the first year and a half I had none. I was either working at my real job (the one that pays the bills) or my fun job selling guns. I found after a while I didn't have any time for the range or hunting or anything else. I did earn enough to buy some really nice toys for myself but I had to close down to be able to go out and play with them. I may pick it back up when I retire but who knows.

 

[Dominus]

What are the rules for using an FFL for personal purchases?

 

[harmonic]

You don't say what state you're in, but locally our transfers are around $10 per. That's just not much profit.

As per working out of your house, you'll be receiving firearms for customers. That makes you a target for thieves, regardless of what you actually have in the house. It's their (the thieves) perception that counts.

You're putting you and your family at risk for peanuts.

 

[jimmyraythomason]

The only FFL for personal purchases is the 03 Curio and Relics license. It only covers C&R eligible guns,ie.50 years and older and a few others. You cannot use an 01 FFL for personal purchases.

 

[CoRoMo]

Well, you can't use your license exclusively for personal purchases, but when you do purchase a gun that goes into your personal collection, you can use your license in that transaction... right? That's how I understand it to be, but if you get your license and only make purchases for your own collection, you might expect the ATF to yank that license away upon your first inspection.

 

[Bubba613]

It will depend on how the ffl is held.
If it is held in a corporate name, then the gun belongs to the corporation and the dealer would have to execute a 4473 etc etc, just like anyone else.
If it is held personally I think he must keep it for a certain amount of time. Buying guns on your ffl bound book and disposing of them from your personal collection sounds like a great way to earn yourself a trip to the pokey.

 

[CoRoMo]

I don't think Dominus was asking about a way to launder the guns through the bound book, then into and out of the personal collection. I figured he wanted to know how a licensee purchases guns for himself.

 

[Win1892]

I had an FFL for 7 years, running a special order and transfer biz out of my existing unrelated biz. I carried no inventory. All was well until my business moved into a commercial location that did not allow firearms sales. I transfered the FFL to my house and 3 weeks later the BATF showed up at my house to do a check. Because the FFL was at my home address I had relinquished all my rights to having the feds essentially search my house, including every detail of my extensive personal collection.

I handed my FFL original, my bound book, and my 4473's to them on the front porch and said good riddance.

 

[Dominus]

The OP:

...I buy enough firearms annually to justify the licensing fee so why not use it to generate some additional income?...

I read that as 2dswamp would be doing some purchases for himself, thats why I asked. It was not meant to be a hijack.

I'd rather pay the transfer fee then deal with all the head aches that come with an FFL.

 

[Bubba613]

I don't think Dominus was asking about a way to launder the guns through the bound book, then into and out of the personal collection. I figured he wanted to know how a licensee purchases guns for himself.

That's the answer. If the ffl is corporate, then he buys them from the corporation just like any other Tom Dick or Harry.
If personal, then he buys them and signs them out to himself. But the downside is he cannot just dispose of them whenever he wants.

 

[GRIZ22]

You need to be careful. If ATF sees that you do internet transfers for other people and all or mots of the guns purchased under the FFL are transferred to you they may construe this as not being in the business. Being in the business means you're in it to make money

 

[dogtown tom]

Salty1:
...you need to have posted business hours...

Nope. You do have to state your "business hours" in your FFL application, but there is no requirement to post them for everyone to see. There is also no requirement to allow the public into your home.

...it will require local LE sign off...

No LEO "signoff" is required. All that is required is to mail a copy of your application to the chief LEO. There is no action required on his part, it's notification only.

...The ATF will spend almost an entire day with you prior to granting the actual license...

My ATF inspector spent all of one hour at my kitchen table. He would of been gone sooner if I didn't have more questions.

Win1892:...Because the FFL was at my home address I had relinquished all my rights to having the feds essentially search my house, including every detail of my extensive personal collection...

My ATF inspector asked specifically which room in my home would be the location of my records. This is noted in their records and would be the ONLY place where ATF would be allowed access. As ATF is limited to one unannounced compliance inspection per year- this is no biggie to me. To search your sock drawer ATF would need a search warrant and probable cause.

Don't want ATF looking at your personal collection? Don't store them side by side with your "business" guns. If you do comingle business & personal guns you are required to tag or mark those personal guns as "not for sale-personal firearm". You could also keep them in a separate safe marked "personal firearms". ATF hates poor recordkeeping and doesn't want to muddle through 100 guns that you don't have in your bound book.

Getting my FFL has been a rewarding experience. I wish I had done it twenty years ago.

The negatives:
-Just like any after school job (I'm a teacher), you're giving up free time for your business.
-Mistakes in transferring firearms or recordkeeping could cost you your license, a fine or jail time.
-Your neighbors see a parade of mostly middle aged white guys going in and out your front door. Imagine their horror when they discover those guns are not registered.
-Dealing with the USPS counter clerk.

The positives:
-I get to fondle Mauser C96's, Lugers, AR15's by the dozen, $5,000 shotguns, $200 Hi Points, and every Glock, HK, Sig and 1911 imaginable.
-I learn from my customers what i will never buy (and who I will never buy from)
-I've met three hundred odd people who like guns as much if not more than me. I consider all of them customers and friends.