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With the demand for guns is at an all-time high among gun enthusiasts, sport shooters, concealed carriers, and law enforcement, individuals interested in beginning online firearms and accessories businesses may see a unique opportunity.CBS News. “U.S. gun sales surge to record high in 2020”. Accessed March 11, 2022. Low startup costs, low overhead, and a captive market make this a lucrative industry. But if you’re thinking of entering the business of buying or selling firearms, you may find yourself in need of a federal firearms license (FFL).
With an FFL, gun-friendly credit card processor, and less than $200, you could become a legal weapons dealer or firearm manufacturer in the United States. Read on to explore how to get an FFL and distinguish between the different FFL types.
What is an FFL?
The acronym FFL stands for “federal firearm license.” Established to implement the Federal Firearms Act of 1938, FFLs serve the purpose of giving certified arms dealers access to legally sell firearms. Furthermore, there are several FFL types, ranging from Type 1 to Type 11 available for prospective sellers. FFL types range from manufacturing firearms to simply selling or facilitating the trade of a gun between two parties. The latter is known as an FFL transfer.
Generally, all firearm manufacturers and dealers that ship or receive guns and ammunition require an FFL to conduct business. This license prevents businesses from selling these types of items to customers without meeting safety conditions.
Who is Eligible for an FFL?
- Are 21 years of age or over
- Are not prohibited from shipping, receiving, transporting, or possessing firearms, ammunition, or accessories
- Have not failed to disclose material information or made false statements concerning material facts in connection with their application
- Not in violation of the regulations of the Gun Control Act
- Have a physical location or premises for conducting business
And certify that:
- The business conducted under the license is not prohibited by state or local law
- Within 30 days after approval, the business complies with the conduct requirements of state and local law
- The business does not make transactions under the license until the business conduct requirements of state and local law are met
- The applicant has notified the chief law enforcement officer that they intend to apply for a license
- Safe and secure gun storage and safety devices are available at the place in which firearms are sold
Applicants who fall outside these criteria may not be eligible for a license. However, you may be able to sell at gun shows without one. As always, it’s important to do your own research to determine what’s best for your business.
How to Get an FFL
You’ve determined that you’re eligible for an FFL. Next, you need to navigate the application process. To help, we’ll break down the steps you need to take to successfully get your FFL.
Step 1: Review FFL Requirements
If you’re 21 or older, and can legally purchase a firearm, you likely meet the criteria by the ATF to be eligible for an FFL. Still, it’s important to double-check to be sure you qualify.
Unfortunately, certain groups of people cannot possess firearms or ammunition, and therefore aren’t eligible for an FFL. These are “prohibited persons” by the ATF, and include anyone who is or has been:
- A felon
- A fugitive
- An undocumented immigrant
- Adjudicated as a mental defective
- Committed to a mental institution
- Under indictment or found guilty of a crime punishable by more than a year in prison
- Found guilty of a domestic violence crime
- Under order from the court restraining you from making threats against, stalking, or harassing an intimate partner or their child
- An unlawful user of any controlled substance
- Received a dishonorable military discharge
- Relieved of U.S. rights of citizenship
If you meet all the criteria required for a license, the next step is to ensure you’re not considered a prohibited person. After this, you can move forward with your application.
According to the US Bureau of Alcohol, Tobacco, and Firearms (ATF), there are 9 FFL types. They are as follows:
- 01: Firearms dealers or gunsmiths
- 02: Pawnbrokers/dealers of firearms
- 03: Collectors of curio and relics. This is a non-professional license, which basically allows you to buy curio and relic firearms more freely than typical firearms. You cannot sell firearms with this license
- 06: Manufacturers of only ammunition
- 07: Manufacturers of firearms and ammunition
- 08: Dealers/importers of firearms
- 09: Dealer of destructive devices
- 10: Manufacturers of destructive devices, ammunition for destructive devices, or armor-piercing ammunition
- 11: Importers of destructive devices, ammunition for destructive devices, or armor-piercing ammunition
Each type of license serves a different purpose. For instance, if you collect antique guns you will need a different license than if you manufacture guns or ammunition. Use this guide, as well as the ATF website, to decide which license is right for you before applying.
Step 2: Decide on the FFL Type
There are eight different varieties of federal firearms licenses. As mentioned earlier, the type of FFL for which you’ll apply depends on what you plan to do with the license.
If you plan to deal in firearms or be a gunsmith, you’ll need a Type 1 license. If you plan to manufacture firearms, you’ll need a Type 7 license. A Type 7 Federal Firearms License also allows you to be a firearms dealer. Therefore, if you want to manufacture and sell firearms, a Type 7 FFL covers both.
If you plan on importing, dealing, or manufacturing silencers, machine guns, and/or other products that fall into the NFA category, you need to register as a Special Occupational Taxpayer (SOT). There are three classes of SOT. They are as follows:
- One – Importer of NFA firearms
- Two – Manufacturer of NFA firearms
- Three – Dealer of NFA firearms
SOT registration is valid for one year, but that year is specifically from July 1 to June 30. A SOT registration beginning in April may not be a great investment, as you’ll have to renew in a few months.
SOT registration varies between $500 to $1,000 for entities over $500,000. For entities under $500,000, SOT registration is $500.
Step 3: Take an Online Course
There are currently only a few online certified FFL courses available. When looking into choosing an FFL course, you want to make sure you are receiving:
- Advice from a licensed firearms attorney that has the necessary qualifications
- Guidance from an industry professional who knows the ins-and-outs of the ATF and the firearms industry
- Software that helps you track your progress in the course
- Automatic notifications of updates in the applicable firearms law
- Any compliance training available for both you and your employees
Step 4: Apply for Your FFL
Once you’ve decided to file an application for a Federal Firearms License, mail in your application! The application must include the appropriate application fee, which you can pay by check, credit card, or money order. After processing the fee, the Federal Firearms Licensing Center will enter your information into the database and commence a full review of your application. Next, a field office supervisor will issue assign an Industry Operations Investigator (IOI) to conduct your in-person interview. The IOI will discuss the legal requirements and go over your application with you to be sure the information is current and correct. The IOI will prepare a report of their interview and the inspection and make a recommendation to issue you the license or deny the application.
How to apply for an FFL
Below is an in-depth guide detailing the FFL application process outlined in the paragraph above.
Fill out the required forms
To acquire an FFL, there’s some paperwork you need to square away. First, fill out the ATF Form 7/7CR. Along with this completed form, your application requires a fingerprint card, which you can obtain through Form FD-258, and a 2 by 2-inch photo of yourself. The photo must be current (taken in the last six months) and show your full face (no hat or head covering).
If you’re applying for a Type 03 FFL, you may skip the fingerprint card and photo and send in your completed AT Form 7.
Federal Firearms Licensing Center (FFLC) background check
After the Federal Firearms Licensing Center (FFLC) receives your completed application, they’ll review your materials and perform a background check on each responsible party. Once your background check goes through, the FFLC sends your application to the local ATF Field Office.
Industry Operations Investigator (IOI) in-person interviews
At your local ATF Field Office, your application goes to the Industry Operations Investigator (IOI) assigned to your case. This IOI will conduct an interview with you to better understand your case. They will also inspect your place of work to ensure you’re starting a legitimate business. Overall, their goal is to ensure you are responsible and knowledgeable, as well as confirm all the details of your application check out.
There are a few ways to prepare for your interview and visit. For example, do your research on starting your business to know what your next steps are. This could include knowing what business licenses or registrations you will need. Demonstrating that you’ve begun taking the necessary steps shows your IOI your level of commitment.
Wait for FFLC to issue your license
It’s time to wait for the FFLC to issue your license. During this time, it’s a smart idea to take steps in the meantime to set yourself up for success.
Typically, you can expect to wait 30 to 60 days. According to its website, the ATF will approve or deny an application within 60 days from the time the application is received at the FFLC. Bureau of Alcohol, Tobacco, Firearms, and Explosives. “How Long Does it Take to Approve or Disapprove a Federal Firearms Licensee (FFL) Application?“. Accessed March 11, 2022.
How Much Does an FFL Cost?
The cost to obtain an FFL depends on the type you’re looking to acquire. The sections below explore the application fees, renewal costs, and even some unforeseen costs you may encounter.
FFL application fee
The cost to obtain an FFL varies based on the type. The list of application fee for an FFL, based on type, are as follows:
- 01 FFL – $200 to apply
- 02 FFL – $200 to apply
- 03 FFL – $30 to apply
- 06 FFL – $30 to apply
- 07 FFL – $150 to apply
- 08 FFL – $150 to apply
- 09 FFL – $3,000 to apply
- T10 FFL – $3,000 to apply
- 11 FFL –$3,000 to apply
The renewal cost of an FFL also depends on the type. They are as follows:
- 01 FFL – Renewal fee is $90
- 02 FFL – Renewal fee is $90
- 03 FFL – Renewal fee is $30
- 06 FFL – Renewal fee is $30
- 07 FFL – Renewal fee is $150
- 08 FFL – Renewal fee is $150
- 09 FFL – Renewal fee is $3,000
- 10 FFL – Renewal fee is $3,000
- 11 FFL – Renewal fee is $3,000
There are various additional costs you may encounter when obtaining an FFL. One of which is an ITAR/DDTC registration. If you meet the State Department’s definition of a gun manufacturer, and manufacture products listed in the USML, you must register with the Directorate of Defense Trade Controls (DDTC) per the International Traffic in Arms Regulations (ITAR). The cost of this registration is $2,250 every year.
Another additional cost, and a sneaky one at that, is exercise tax payments. This is enforced if you’re a manufacturer and made 50 or more firearms in one year. This cost comes in the form of a 10 to 11 percent tax on the firearm’s value. To make such a steep tax worth it, manufacturers tend to either stop yearly production at 49 firearms or produce in such excess of 50 that the tax is worth it.
Fingerprinting is part of the process to obtain an FFL. However, there’s no requirement that fingerprinting must be done by law enforcement or other government professionals. That said, you can buy your own kit to take your fingerprints for the form.
The cost for fingerprinting varies on the method of execution.
The FBI does not charge a fee for NCIS checks. However, states acting as points of contact may charge a fee. The background check itself only takes about 30 seconds.
Required training courses
In 1999, the ATF implemented the National Firearms Examiner Academy (NFEA), which is currently the only national training program that provides a standardized curriculum in the firearm field.
Permit to purchase
State governments, not the federal government, regulate firearms. That said, gun laws vary from state to state. If you’re in a state that mandates a permit to purchase, your customer will have to obtain such before purchasing a firearm from you.
FFL cost per year
You pay upfront for an FFL, but that license is valid for three years. Thus, the cost of the license should be considered over a three-year period. For example, if you obtain a Type 01 FFL, you’ll pay a $200 fee to apply for the three-year license. The yearly cost of which is $67.
The renewal fee is $90, which also has a three-year lifespan. Thus, the cost per year for, say, years four through six is $30.
Federal Firearms License FAQs
When it comes to obtaining your Federal Firearms License, we know that you might have some questions. To offer some clarity on the process and how it applies to your situation, here’s a list of answers to the most commonly-asked questions.
How long does it take to obtain an FFL?
Generally, it takes two months to issue your FFL from the time the ATF receives your application.
How long is an FFL valid?
Your FFL will be valid for three years from the issuant date on the license. However, there are incidences in which an FFL can be closed or revoked before the expiration date.
Can I get an FFL without a business?
An FFL is only meant for business use. The only exception in which you can get an FFL without a business intent is with a Type 03 FFL. This is the only FFL that the FFLC issues to people without a business.
Can I get an FFL for personal use?
In short, yes, you’re able to get an FFL for personal use, however, you must first obtain an FFL with business intent. Once you have this, you can also use the same FFL for personal use.
How hard is it to get an FFL?
The process of getting an FFL is not difficult. Overall, the process consists of filling out paperwork, sending in your fingerprints and a current photo, and completing an interview.
Can I get a home-based FFL?
Yes, you can get an FFL that’s based out of your home. Home-based FFLs make up the majority of FFLs in the United States.
What are the requirements to get an FFL?
The requirements for getting an FFL are as follows:
- Ensure you’re lawfully allowed to have firearms
- Get the FFL in an allowed location
- Have a business intent
How many different FFL types are there?
There are nine different types of FFLs, as listed above. The type you choose varies based on the kind of business you want to do. By far, Type 01 is the most common type of FFL.
Can I carry a concealed weapon with an FFL?
No. To carry a concealed weapon, you need to get a carrying a concealed weapon (CCW) permit that’s valid in the state in which you’d like to carry it.
What does a valid FFL number look like?
A valid FFL number consists of a total of 14 numbers and one letter. For example, 1-99-889-77-6Y-55555.
This FFL number is divided into six sections, each containing information about the specific FFL. The first section denotes in which region of the U.S. the FFL was issued. The second indicates the IRS district where the FFL is located. The third is mainly for federal purposes.
The fourth section is the most important for a license holder. It tells you the type of FFL you have, which affects what kinds of activity you’re permitted to do, such as what you can sell or manufacture.
The fifth section marks the month and year when the FFL expires. Finally, the sixth section is a code that’s unique to you and your FFL.
While owning a gun shop or gun accessories business can be quite lucrative, it is a high-risk business. Therefore, it’s necessary to go the extra mile in becoming an FFL dealer.
After you become certified, you’ll be able to sell guns and firearms with a merchant account according to your license type and legislation in your state. The firearms industry is booming, therefore, it’s never been a better time to complete your FFL application and reap the benefits of providing firearms to the buyers.
- CBS News. “U.S. gun sales surge to record high in 2020”. Accessed March 11, 2022.
- Bureau of Alcohol, Tobacco, Firearms, and Explosives. “Who is eligible for a firearms license?“. Accessed March 11, 2022.
- Bureau of Alcohol, Tobacco, Firearms, and Explosives. “How Long Does it Take to Approve or Disapprove a Federal Firearms Licensee (FFL) Application?“. Accessed March 11, 2022.