Getting Your Own FFL – The Pros and Cons

 

By Brandon L. Maddox

Articles on the subject of getting your own FFL license have been generated a lot of discussion, but there seems to be a lot of confusion out there as to the process. So let’s start with answering some of the FAQs.

Q:Can I get a Federal Firearms License for only personal usage?

A: No, the ATF will not issue an FFL for 100% personal usage. Do you have friends you can help with FFL transfers from gunbroker.com purchases, etc? If so, your FFL wouldn’t be 100% personal usage . . .

Q: If I have an FFL, can the ATF show up day or night and harass me?

A: Per federal law, ATF can only inspect your location once every 12 months and can only do that during your hours of operation. ATF can only look at your ATF paperwork for record keeping. And they can only inspect FFL firearms inventory, not personal firearms. Selecting appointment-only for hours of operation is possible in some situations, which would require a phone call before a compliance inspection.

Q: Do I need a storefront to get an FFL License?

A: Our research shows that over 64% of all FFL locations are from home or residential addresses. Federal laws do not have conflicts with residential addresses. Massachusetts has a state law about residential addresses, but a work-around exists for online-only FFL dealers. Home is a viable option. Nothing has changed as you may have read online from forums, etc.

Before you enter into any new adventure, it’s always good to create a list of pros and cons.

PROS of getting a home based FFL

  • Low cost and overhead to start. No safe or alarm system is required.
  • Access to manufacturer direct and wholesaler pricing; ordering online 24 X 7.
  • Part time, hobby income; money wife does not know about.
  • Many part-time niche adventures possible with gunsmithing, Dura coating, Internet transfers, hydro-graphics, class 3 silencer sales, auction sales, Internet sales, etc.
  • Market demand is at all-time record highs; Hillary in the background only helps.
  • Help friends get good prices on hard to find firearms.
  • No background checks or hassles to get firearms mailed to you directly.
  • You can also work gunshows to gain exposure.
  • All activities with this new adventure are often tax deductible; reduce your taxes.
  • Often state gun control laws do not apply to FFL holders. No waiting periods, background checks; able to often purchase items prohibited to non-FFL’s.

CONS of getting a home based FFL

  • Security – You need to only invite those you know and trust.
  • Paperwork needs to be kept for 20 years and kept well-organized.
  • Renewal is $90 every 3 years.
  • ATF does make FFL list public.
  • To make largest profits, eventually you will need to focus on a niche market or grow volume.
  • Inventory can sometimes be hard to find quickly with demand being so high.
  • Shipping to home address can be tricky with a day job. ATF allows offsite storage and alternate mailing addresses, which helps.
  • ATF can inspect your records every 12 months. Industry average for a non-pawnshop home based ffl dealer is once every 30 years.

A large number of FFL holders initially started small, operating from home. And there are those predicting that the demand for firearms is head only one way – up. So your very own FFL might be more than just a huge convenience. It can also be a good business opportunity.

Brandon Maddox is CEO of ffl123.com.

comments

  1. avatar Anmut says:

    Here’s a question for the POTG – would you trade “universal background checks” for “FFL’s are now the universal background check and once you have done yours, you can order anything, from anyone, from anywhere?”

    1. avatar Paranoid Android says:

      In a hampster’s heart beat. Though it would ruin me in a night: “ohh, neat! *click*”

      1. avatar Ed says:

        Indeed. The damage I might do to my bank account in a single evening, with an FFL in my pocket…I shudder at the thought. However, I may just do it. I could try to sell enough, or do enough transfers, to cover my “losses.”

    2. avatar Totenglocke says:

      If that included a repeal of the NFA, I’d take that deal…then a few years down the road push to eliminate the background checks.

    3. avatar disthunder says:

      Yeah, if class 3 is included, id be on that like stink on a monkey.
      And people would say “oh, but then they’d know exactly what you own,” to which I would say “I’m counting on it.” one look at my shopping list would have me moved off the “no knock swat raid” list and onto the pics”AC-130 howitzer/nuke from orbit” list.

      1. avatar That_Guy says:

        Class 3 is a tax classification. The guns are Title 2 firearms.

      2. avatar Anmut says:

        That’s what I’m talking about. When I, and every other person I know, all have a dozen suppressed and giggle-switch equipped firearms that we paid a few hundred a piece for, then MOLON LABE all day long…

    4. avatar Jonathan - Houston says:

      No.

      First, the government cannot be trusted. They’ll get that, then renege and demand checks for every transaction every time.

      More sinister, once every transaction must go through an FFL, at any poiny, then the government will throttle FFL’s virtually out of existence. There would be exorbitant fees, ultra invasive inspections and other draconian regulations. That’s all if you could even get a license, anymore, which would suddenly become more difficult to get than any class 3 item.

  2. avatar Sixpack70 says:

    I think Red Box style FFLs systems would be neat.

  3. avatar MMinSC says:

    Hmm, so if I get an FFL can I then write articles bitching about customer service, how pricing is a science, doing paperwork sucks, and how much I love to help the ATF?

    1. avatar disthunder says:

      As if I needed another reason! I think I’m sold!

    2. avatar Ralph says:

      And don’t forget the part about customers being stupid. I thought that only BMW hated it’s own customers, but nooooo.

  4. avatar KMc says:

    ◾Inventory can sometimes be hard to find quickly with demand being so high. Uh, Brandon, it’s not sometimes, it’s virtually all of the time. Coming up on 2 year anniversary of getting our FFL, obtaining the FFL was the easy part of starting a LGS. We search every day to keep up with demand, a good problem but frustrating. And building an indoor range to boot, that has been a struggle as well.

    1. avatar Glimmer Twin says:

      KMc, just curious about building the range. What kind of cost are you looking at above the building and what’s the paper work like? I know that probably varies from place to place and it sounds like its been a pain for you. Got any good interweb links that you found helpful?

      1. avatar KMc says:

        We hired a Range Designer last August and are still finalizing the building plans. So that gives you an idea of how long we have been at it. hardly any help found on the web. Using Action Target and Carey’s Range ventilation for our 6 lane 25 yard set up. Also using a local builder to construct the attached retail building and help with concrete work. With a decent-$200-250K in inventory and merchandise we are nearing a million. Shooting for a 1 June official opening but a wet Iowa Spring can screw that up. Paperwork has been easy, if you are referring to Zoning and Permits. Rural Iowa has it’s advantages! I could keep you personally updated as we progress, don’t mind sharing financials, etc. That was one thing we noticed, LGS owners are very tight lipped with any info.

        1. avatar brian says:

          where at in iowa is this range being built

  5. avatar Tom in Oregon says:

    ATF would not renew my license because I could not predict or guess at how many sales I would have over the 3 year renewal.
    Therefore, I did not fit the definition of a federal firearms licensee.
    At least they gave me my 90 bucks back.
    Now I have to pay retail for scopes, mounts, parts, mags, etc…

    1. avatar Anmut says:

      When did you get yours and how much of a hassle was it at the time?

      1. avatar Tom in Oregon says:

        I got my first one in the mid 80’s. Then kept renewing every 3 years.
        It was pretty easy, really. Just a bunch of paperwork and a check.
        Just make sure you keep excellent records. I got spot checked once in the 18 years I had it. No big deal. We sat around my kitchen table, drinking coffee, going over receipts.

    2. avatar peirsonb says:

      The answer is always 42.

      1. avatar Gov. William J. Le Petomane says:

        What was the question?

        1. avatar jdb says:

          Usually, when you know that the answer if 42 you no longer know what the question is.

        2. avatar Gov. William J. Le Petomane says:

          Perhaps we should build a super-computer to figure out what the question was.

        3. avatar peirsonb says:

          Gov: I didn’t get a chance to reply last night….the subtlety of your response gave me a good guffaw.

        4. avatar Jonathan - Houston says:

          Couldn’t tell you, Gov. I’m just a hitchhiker, myself, just passing through. Super computer or not, you’d think they’d have an app for that.

      2. avatar Stuart west says:

        Here I am, brain the size of a planet and they ask me to take you down to the bridge. Call that job satisfaction? ‘Cos I don’t.

      3. avatar Avid Reader says:

        Don’t forget your towel.

        1. avatar Rad Man says:

          A mere abacus, mention it not.

  6. avatar Linus Oertle says:

    So, I live in Missouri. What does it cost to get an FFL? I see that it is $90 to renew every 3 years.

  7. avatar CK in CA says:

    “FFL license.”

    Federal Firearms License License.

    1. avatar MMinSC says:

      Good point.
      ATM machine?

      1. avatar jdb says:

        PIN Number.

        1. avatar Accur81 says:

          VIN Number.

    2. avatar WI Patriot says:

      Hot Water Heater…

      1. avatar LbH says:

        Why would you need to heat hot water?

        1. avatar mrvco says:

          Hotter Water Heater

        2. avatar NickSim says:

          So that he may receive Perpetual Motion.

  8. avatar Ben There says:

    “they can only inspect FFL firearms inventory”. Don’t count on it. Check the regs. They can “deem” your personal collection as part of your inventory and force you to produce it under threat of revocation.

    ATF HQ will tell you one thing, and the individual doing the annual inspection will tell you something entirely different – and write you up for a violation for what you did.

    Personal advice. Do not, under any circumstances, get an FFL for your home. You never want ATF in your home without a warrant (or with a warrant!). Rent a broom closet office in a commercial building somewhere and hang your licenses there.

    There are some good ATF people who will treat you with respect, but there are many others who will make it a mission in life to make your life miserable – just because you deal in guns.

    Carefully read (and heed) the following document by Richard Gardiner: http://www.nraila.org/news-issues/articles/2008/know-your-rights.aspx

    Remember…. It’s your life they can easily ruin – and it can cost you your life savings….. and far more.

    1. avatar Rad Man says:

      That’s not true. The regs are quite clear that if you wish to transfer from your inventory to your personal collection, your bound book must reflect that. Secondarily though, you have to maintain a personal collection bound book as well.

    2. Your comment doesn’t square with the earlier tid bit that ATF checks a home FFL every 30 years on average. Wondering from where your concern stems, or is it strictly hypothetical?

      Thanks for the reply,

  9. avatar peirsonb says:

    I actually considered this living in the Cadillac area. It would likely have been a very good business move. There are only three options in town: Wally-World, Dunhams, and one LGS (owned by a guy who the locals mostly wrote off as a cantankerous old fvcker. But I’m a cantankerous young fvcker, so we got along the few times I visited).

    On top of that, there was NO ONE in the area hanging a shingle as a smith. A lot of garage smiths, but not one gunsmith business that I recall.

    Now that I’ve decided to move to freaking Dayton, I really don’t see the ROI being very good….

  10. avatar Frank Masotti says:

    I love the idea of having an ffl. However I am to paranoid about the feds knowing A:What firearms I have purchased for any reason, and B: The feds even knowing that I exist, yet alone my firearm purchases. Even as a business. IMHO and according to the constitution, where no power is given to the feds to know, it’s none of their damn business.

    1. avatar KMc says:

      I don’t disagree, but it’s their ball and their rules. Our Field Agent has been a great help with phone questions.

      1. avatar Evan says:

        that’s a non issue to me. Mainly because if this stupid yellow Star of David..I mean FPID.. They already know absolutely everything I do,not to mention no private transfers here and the 4473 in the gun store.

    2. avatar Tim U says:

      Frank,

      Have you ever bought ammunition and paid for it with a credit or debit card?

      What about magazines, holsters, or other gun related items?

      Do you have a Permit to Carry or other state level firearm card?

      Ever fill out a 4473?

      If you answered “yes” to any of these questions, they already know. There is little point in trying to hide from them.

      1. avatar Andy says:

        Excalty what I feel too. Told a friend of mine I was getting a FFL and he said well “your Marked now”. I said your marked in many ways also, if they want to get you that will! I will play by thier rules and I won’t have nothing to hide!

  11. Thanks for this great post addressing a commonly asked question. I’ll be linking to this for clients. I often say step one for an FFL should address whether local rules permit a home-based gun business–whether it’s zoning, HOA rules, etc. Of course, the online, appointment-only angle could create opportunities for many people, but it’s best to be careful. Overall we should all remember the reason we might pay retail prices for guns. The FFL is assuming all these risks, problems, and burdens, and it’s often fair, IMHO, to pay the dealer for that service. That said, there’s nothing like a private purchase, where legal, to make you feel like a free man.

    1. avatar peirsonb says:

      One question that would come into my mind would be: what happens if you don’t show a profit in 3 years?

      As far as I know the IRS only lets you claim a loss for 3 years before you can no longer take the deductions, at that point they consider your enterprise a hobby.

      If you don’t show a profit in 3 years, the IRS considers it a hobby, would the ATF then deny a renewal based on the fact that it’s not a business?

      1. avatar Jon Wheeler says:

        My father ran a business in Tenn and did not show an “accounting profit” many years. He kept immaculate books, separate work space, everything to the T. So when the IRS auditor asked him why he wasn’t making a profit (referencing the 3 years of profit out of every 5), all he had to say was, “I’m trying!” At that, the auditor just smiled and made a comment about how those were the magic words. If your paperwork isn’t up to snuff and you are mingling your business with your private finances, etc., it is just a hobby, not a business.

  12. avatar Gov. William J. Le Petomane says:

    I thought about getting an FFL for a side/retirement business. I was just wondering what happens with your records when your dead. To you have to set up a trust or something? Or for that matter if you LGS goes out of business, what do they do?

    1. avatar Chris says:

      Your logbook and records go to the ATF.

      1. avatar Totenglocke says:

        For their registry that’s already illegal, but they don’t care.

      2. avatar Gov. William J. Le Petomane says:

        That’s kind of what I was thinking. I guess if I get an FFL and I see the end coming I’ll burn my books. What are they going to do, throw my corpse in jail?

        1. avatar Evan says:

          No. Just shoot your dog.

        2. avatar mrvco says:

          They’ll shoot the dog regardless.

  13. avatar full.tang.halo says:

    Please correct:

    “Many part-time niche adventures possible with gunsmithing, Dura coating, Internet transfers, hydro-graphics, class 3 silencer sales, auction sales, Internet sales, etc.”

    Class 3 is a tax bracket, it is not the only tax bracket for a FFL. You are, generally, either an 07/02 or an 01/03 SOT, this is not to say that a 01 without a SOT can’t deal in NFA items, you just have to do everything on a F4. If you are in the business of doing work on firearms you better have a 07 Manufacture license. ATF considers the assembly of a lower and upper receiver, even those fully assembled by other parties, into a working firearm to be manufacturing. In relation to this, the cost for a SOT is an additional $500 for an 03 or an 02 with less than $500,000 gross receipts per year, else $1000. Also not addressed is that an 07/02 is required to pay ITAR of $2250 each year to remain compliant.

  14. avatar JasonM says:

    Can the standard home FFL do SOT transfers? I believe that’s the golden ticket for getting suppressors in under 12 months (still waiting on my March 2013 purchase…). If so, I’d definitely be interested.

    1. avatar Paul says:

      Yes, if you have a SOT…

  15. avatar Handgun Dad says:

    Something people should look into if they’d like to dip their toe into the FFL pool to see if they like it is the C&R (Curios and Relics) FFL. Generally speaking, it’s a non-transferrable (personal use only) FFL that applies only to older (50 years) semi-automatic weapons. Think Nagants, SKS’s, Makarovs, stuff like that.

    Same general idea. You can get these guns shipped to your house directly, there’s minimal paperwork involved, and since it’s by definition for a personal collection having it out of the home is expected.

    The nice thing about getting a C&R now is that we’re starting to get to Vietnam War-era firearms, the bad news is that since the ATF is being administered by largely anti-gun crazy people they are really dragging their feet adding newly eligible guns to the list of approved C&R firearms.

    Still, it’s an option.

  16. avatar Andy says:

    I am in the process of getting my FFL and waiting for the interview. I like the Pros but all I ever hear is the Cons!

    Can anyone that has a FFL can share there Pro story of how long you have been in the industry and what you have gotten out of it so far? Did you think you would be were you are today when you got started?

    I know that I wont get rich, but My cause is to help anyone in my community practice there 2nd Amendemnt Right and have the ability to leverage that Right as long as I can…God Bless

    1. avatar Linus Oertle says:

      let me know too. What does it cost?

      1. avatar Steve Truffer says:

        Check the Bureau of All Things Fun & Exciting’s website. different prices for different FFLs

    2. avatar Beau Brady says:

      I just ordered a small hand gun for protection at my housethat has been broken into before, in a bad neighborhood, I didnt know i was going to need a FFL , yould you please let me use yours, they will ship it to you and i will pay you for the service when i come to pick it up… call me 415 400 9430

  17. avatar Wes says:

    I’ve been wanting to do this, but I will be moving in the next year or two. I currently live in Oklahoma but will be moving to Texas in 2015.

    Would this be a problem? What would I need to do in this situation if I received my FFL while I was living in OK?

  18. avatar Steve B says:

    I read this entire thread. My question than remains unclear is regarding class 3 purchases. How would having an FFL effect the process of obtaining NFA items for my personal use in a more reasonable timeframe? I am mainly asking about suppressor purchases and SBRs. NO full autos. In addition, I could help my fellow legal gun owner friends.

    1. avatar Pro-Liberty says:

      Well, if you were an FFL and an SOT, you would be getting transfers from other SOTs on a Form 3 tax free. The Form 3 processing time is substantially faster than the time to turn around a Form 4.

    2. avatar FirearmConcierge says:

      You can’t buy class 3 – it’s a tax rate.

    3. avatar rblaut says:

      I would tend to lean toward the it won’t help as much as wanted answer. The ATF website says the bound book, or records, for the FFL must show that the FFL holder pulled the firearm from inventory for personal use. Quite frankly, I would just do a 4473 and have the firearm transferred to me so all the records were as clear and concise as possible. I did not see whether that rule was the same for NFA firearms. However, I could see a judge saying that using an inventoried NFA item for personal use instead of doing the full transfer is tax evasion, and now you are going to prison and losing your business.

  19. avatar CBI says:

    My wife and I got an FFL for a home-based business a couple of years ago. Comments.

    1. We are very careful to be a *business* and not just for personal use. Not a lot of money — we’re talking about profit/loss in the very low 4-digit range each year. If you’re only running it for your own (and a few friend’s) use, then it probably won’t work and likely is not worth the hassle.

    2. The BATFE *investigator*’s we and other small FFLs have dealt with have generally been good. None have been in an “out to getcha” mode. YMMV, and it likely varies from location to location.

    3. The surprise “Pro”: we’ve met many nice people whom we’ve done transfers for, some of whom have become personal friends. (We are fortunate in living in a fairly firearms-friendly state.) To date, we’ve met no “scary” individuals, and only two or so whom we’d be just as happy not to ever see again.

    4. To do it right, it must be a *business* — with all the problems a small, mom-and-pop small business might have. If you’re thinking of an FFL for just personal use, it really won’t be worth it.

    5. The record-keeping *is* onerous, but is necessary to keep on the right side of the law.

  20. avatar Steve B says:

    If I get a home FFL, my question also is, how would it help me obtain NFA items in a more reasonable timeframe. Do I also need an SOT? How does one obtain an SOT? I know that the transfer process from MFG to dealer has been approximately 30 days, so that is good, but to remain legal, I would want to do the form 1 or form 4 to pay the tax and legally transfer the item from my home FFL to myself as an individual. During the 9+ month transfer wait, can I still use the NFA item? I know currently that I can go to my Class3 dealer and use my pending cans on their range, but then have to leave them there when I leave. I am interested in finding out if any of this can make the NFA process easier and smoother.

  21. avatar Fred says:

    What you failed to mention is the state laws you have to comply with when you run a business. The ATF requires the FFL holder to comply with all city, county, and state laws and permits. I gave up my FFL because I could not afford my city business license fee of $125.00 a quater and I could not have anyone coming to my home to pick up merchandise. I had to either send it out or deliver it. I was a hobby FFL dealer which the feds and big time FFL dealers were trying to elimate.

    Before you apply for the FFL check out the zoning and business license fees of your city, county and state. If possible set up your home business outside your home. Regardless of what the experts tell you the ATF can screw with you when ever they want..

  22. avatar Karen says:

    I am a track and field official. In researching buying blank shells for our organization to use at track meets, it seems that they are requiring an FFL to ship them to me. I didn’t need it before. Is this because of the new gun laws in NY state? If so, then there are going to be track meets run without using a starting gun very shortly when we run out of blank shells.

    1. avatar Rob says:

      Im not sure of the problems with buying blanks, I am however an experiance metalic cartrage reloader. If you use a .22cal pistol for your starting gun then you might want to look at your local Home Depot, they sell .22cal blanks for nail guns. If your looking and cant find it or you use a larger caliber pistol you can pick up a reload kit for very in expenive and just reprime your shells. A primer only shell fired out of a pistol is loud enough to be hear for several hundred yards away, it does not affect your pistol negitively (other then not cycling Auto pistols), and the spent casings will not become altered do to firing. I hope this helps

  23. Leave some space between the various perennials you choose for more impact.

    Perhaps you want to do landscaping on the side and go
    full-time when you already have a steady list of clients.
    Chances are you rent or lease the property upon which your business is located,
    and really have no idea about the types of trees and shrubs that are planted and why they are planted where
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    1. avatar NickSim says:

      Has anyone completely deciphered this yet?

      Best I get is that he wants an FFL so that he can buy a Ham and Cheese sandwich therefore he may eat a Smith and Wesson.

  24. avatar Sally says:

    My dad has been reloading his own ammo for quite some time. We were thinking of starting a small reloading business and getting our type 06 FFL. Anyone have any suggestion or advice on that? We have a lot of questions and very few people in the business are willing to answer them. Thanks.

  25. avatar WillieNAz says:

    So at my workplace my employer gets me an employee possessor explosives permit. Can I use it to buy a handgun online without going through an FFL dealer? Is my FEL as good as an FFL for getting guns or is it only for getting explosives (boring).

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