Part 1: Getting a Home-Based FFL (Overview)

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After explaining that it would mean some extra income and getting me out of the house, I finally got approval from my wife to pursue an FFL. As I go through the process, I thought it would be beneficial to our readers to document my experiences and show that it will (hopefully) be a relatively easy process. The intent is getting a FFL (Type 01) with a SOT (03) for Class III NFA items.

Future TFB Class III reviews, anyone?

First and most important, a FFL is not to be solely for personal use. You must “intend on engag(ing) in a firearms business” (i.e., buying, selling, and doing transfers). If the BATFE finds that the licence was used contrary to this requirement, the FFL is immediately forfeited and you can be subject to fines or worse. It is even on the FFL application:

The Form 7 (FFL Application) is quite explicit. Do NOT submit an application if you do not intend to make a profit or only acquire personal firearms.

The Form 7 (FFL Application) is quite explicit. Do NOT submit an application if you do not intend to make a profit or only acquire personal firearms.

Given the above, it is critical to have a solid plan to satisfy BATFE requirements. In my case, my business plan is to sell to my extended network including friends, family, and do transfers for online purchases that others do through GunBroker, etc. Once I have the SOT, I plan on drawing upon my IT background and setting up a website for suppressor sales (Indiana just legalized hunting with suppressors). 

While my Google and Forum-Fu are quite good, I personally like having guides and checklists. It just helps keep things organized. Based on my research, I purchased the  FFL123.com guides and have been impressed with the content thus far.

Reasonably priced at $54.99 with a money-back guarantee, FFL123.com will serve as my guide through the process.

Reasonably priced at $54.99 with a money-back guarantee, FFL123.com will serve as my guide through the process.

Throughout this series, it is my intent to capture and illustrate the full process of getting a home-based FFL. During each section I will keep a running tab of my costs, how long it took, and note the challenges I faced. With the guide’s help, I expect to write on the following:

  1. The Right FFL Type for Me
  2. Creating My Company
  3. Zoning & Local Permits
  4. Submitting the Application
  5. ATF Interview
  6. Receiving the FFL
  7. Getting Registered in NICS
  8. Setting up Bank Accounts, Accepting Credit Cards & Processing
  9. First Customers & Transfers
  10. Applying for the SOT 3 – (Class III)

Current Running Total for FFL & SOT ($54.99):

With any luck, it was harder to convince my wife than will be to go through the FFL processes. Please e-mail me with any tips & tricks. I will make sure to share them in the relevant section.

Edit: Thanks to a few readers! They pointed out I had the wrong SOT number. Fixed. 



Nathan S.

One of TFB’s resident Jarheads, Nathan now works within the firearms industry. A consecutive Marine rifle and pistol expert, he enjoys local 3-gun, NFA, gunsmithing, MSR’s, & high-speed gear. Nathan has traveled to over 30 countries working with US DoD & foreign MoDs.

Nathan can be reached at Nathan.S@TheFirearmBlog.com

The above post is my opinion and does not reflect the views of any company or organization.


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  • guest

    So a legal workaround for the NFA. Why don’t the politicians just agree to have a specific FFL class to enable people to own what they want, given an agreeable amount of background checks, cavity searches etc, and just be done with it. If people are willing to go this far, or rob themselves for whatever ridiculous amount of money for a pre-ban item, then the point is self-evident.
    It is a rhetorical question but the “problems” here are obvious – something made illegal is legal just as long as you have that FFL “for transfer” loophole.

    • Suburban

      Not really a work-around. It requires more red-tape, insurance, and if you drop the Special Occupational Tax, you have to sell off your post-1986 machine guns.

      • guest

        That’s what I am saying. If people are willing to go trough all that red tape to get what they want, there should be a special FFL class for owning fullautos and supressors.

        • BryanS

          You want to ask the group of people that cannot understand “shall not be infringed” to add a layer of red tape?

  • rockstarartist

    What a strange world Nathan. Just 30 minutes ago I was talking to a close friend of mine on doing exactly this. The only difference being that we actually thought about setting up a small retail space.

  • I have had my application pending since October. Best of luck, but don’t be in a hurry!

    • samcolt

      That seems like an awful long time for just a regular FFL. Is this long wait for an SOT?

      I just received my FFL a few months ago and it only took 30 days from the time it was received at the ATF Licensing center in Virginia to the time I had my in-person interview with my local agent, from there it was another week and a half for the license to get printed and go through the mail.

      • I sent mine in a bit before the government shut down, and my interview was in December.

        • cawpin

          You need to call them then. There is a time limit which they are now well outside of, even with the shutdown.

          • Called last Friday. They said “your application is still processing”.

  • Lance

    What stae are you from??? May go see your shop I your west coast.

    • Blake

      FTFA: “Once I have the SOT, I plan on drawing upon my IT background and setting up a website for suppressor sales (Indiana just legalized hunting with suppressors).”

    • While Blake was kind enough to infer my origin, I am from NE Indiana.

  • Munkfish

    Awesome, I’m really looking forward to this.

    • Eric S

      As am I, I’ve had the paperwork in my filing cabinet for years, but the legal stuff has been putting me off.

  • xerodown

    Please do not take this as fact at all, just gun store BS. I
    was having a conversation with my lgs who are very knowledgeable about the ATF and
    they mentioned that the current administration has put a stop to approving home
    FFL? Anyone else hear this?

    • Not the case according to the ATF hotline I called a few days ago. Its all about making sure you have a real business plan and are not doing it for just personal reasons. Of note, they are being very critical on zoning. Many residential zones do not allow for home-based businesses. Fortunately, mine does.

      • Suburban

        One of my neighbors came to talk to me about a home business counseling teens. A couple of the other neighbors were trying to block her.

        Can neighbors really block you from starting a home business? I can surely see that as being a problem with getting a home-based FFL.

        • The questions depends largely on your local laws. In Indiana, which is very business friendly, so long as you follow zoning, state law preempts most local interference. My biggest struggle will be with my landlord (I am in a multi-family unit). My lease specifically disallows home business except those that are no-client visits. I can fun a FFL via mail, so no issues (in theory).

  • Blastattack

    What’s the whole point of the FFL system? In Canada if you buy a gun the seller ships it by Canada Post and it arrives at your doorstop or you pick it up at the Post Office. Having said that, you guys don’t have any licensing requirements to own firearms, therefore no way to prove you aren’t a 12 year-old ordering guns online.

    • gunslinger

      your last sentence about sums it up. Since the US doesn’t have a Federal Licensing system (thank you 2A) they do (as well as the states) have restrictions on the purchase of firearms. the FFL then acts as a “license check” system. they make sure you are of the proper age and are not a prohibited person (felon, domestic abuse, etc).

  • echelon

    I got mine a couple years ago, basically went the same route you’re going. The next hurdle you will find is with the distributors. There are still a few that will accept home FFLs but the majority won’t. Same goes with manufacturers. Along with your FFL license, business license and what not they make you include photos of your Retail location (house doesn’t count), your inventory (how can I have inventory if I’m trying to get a distributor agreement with you?) and they’ll Google Map your locations to make sure you aren’t just taking a photo of a bogus location.

    I have four distributors that I purchase from and several companies that I go direct with, but by and large I am rejected due to being home-based. You will find that LGS hate internet based companies because they can beat them on price due to low overhead.

    I literally had a well known organization contact me – they advertize and are affiliated with the NRA – about setting up an inventory distribution system on my website, but once they found out that I was web only and home-based they said sorry we can’t do business with you! What? Really?

    It’s staggering how anti-small business the gun industry is. If you aren’t a “big player” with a ton to invest right off the get go you will have a hard go of it.

    And the people you deal with are sheep. When I ask why they won’t do business with me – why my dollars aren’t as good as the guy with a retail shop – you won’t get an answer, just “that’s our policy” BS lines.

    Good luck with your endeavor. It is worth it, but it’s not as rosy as many people think or will lead you to believe.

    • If you could e-mail me, I would enjoy knowing which Distributors work with home-based FFLs. Thanks!

      • MrNebrot

        will you share them with TFB?

    • Dan Calloway

      Went through the exact same nightmare with distributors. Negotiated and down right begged to get net 30 terms along with minimum order amounts. You need serious amounts of cash (20K+) up-front to get any attention.

      In general, the industry is reluctant to deal with the small shop because of money on both ends scale, profit and liability. Speaking of liability, insurance is a necessity unless you want to loose your workplace A.K.A. home. You will find that a homeowner’s policy will reject business activity and a business policy will reject a living establishment. Just when you find a carrier that will flex on this issue they throw in a “no semi-automatic weapons” clause. Again, in today’s world YOU NEED INSURANCE! If a dirt bag buys a gun from you and does something terrible there is a very good chance that a team of lawyers will run the entire supply chain through the wringer

      The only silver lining in all of this selling optics, the only product with a decent margin. And, you will still need an FFL to purchase optics from most distributors.

  • Seth Hill

    I have been looking at FFL123 for a while and even reached out to them with a couple of questions regarding what FFLs that they cover. I am thinking about the 07 along with the 01 and 03 (maybe an 08 also?), but we are a little cramped for space at home so I have been putting it off.

    • Phil Hsueh

      The 07 would be good since I believe that it would allow you to do SSE work for those of us in CA who’d want an off roster pistol and most pistols don’t take up all that much room.

  • Phil Hsueh

    Good luck with the FFL, I toyed with the idea myself recently, I pondering if it would be worthwhile/profitable to start a business building custom ARs for people and by custom I mean just using OTS components for those people who may want an AR with specific parts but don’t (think they) have the skills to do it themselves. But since I live in CA I figured that it would probably a lot more trouble than it’s worth and I’m not sure there really is a market for this type of work since putting an AR together is not all that hard.

    • You would be amazed at what people will pay for. Many AR owners out there claim to be a subject matter expert, and know everything there is about the platform, only to find out they don’t even know how to take their barrel off. That is where someone like you can make some money. There is also those that do not have a lot of room for a shop and all the tools needed to do some of the more complex work.

      I know a few people that do OK playing LEGO with AR’s and doing nothing but custom builds for customers from OTS components. The real problem becomes that with “custom build” comes custom paint, which you may or may not have the space for a paint booth or oven.

      • Phil Hsueh

        Thanks for the response, I might have to look into this a little more seriously, it would certainly give me the excuse I need to get a proper work bench like I’ve been wanting to. As far as paint goes, if I were to go that far I’d probably only do Duracoating which, I think, wouldn’t require me to have anything more than a clean, well ventilated place to spray. Far simpler would be to just not offer any form of painting and just stick to assembly.

        • Griz19

          There is definitely money to be made assembling AR’s for others. I have quite a few builds under my belt, and was making a decent profit margin. Then the big gun scare hit. I gave up after it took me almost a year to find a barrel for a customer. Thanks to that experience I’ve been really hesitant to get back into it. Availability and prices are getting better though.

      • Suburban

        Painting isn’t hard. You can do that in your garage with an airbrush. It gets expensive when you need equipment to abrasive blast and Parkerize.

        • Mr backhand

          Harbor freight has great deals on blast cabinets and most automotive magazines have 20-25% off coupons. I have had there blast cabinet and powder coating system for 3 years now and have had nothing but great success with the equipment .

          • Suburban

            Blast cabinet is not so bad, it’s the compressor that can put out a constant 9 or 10CFM for blasting that’s really tough on the credit card.

  • 13

    So if you are required to try to make a profit, Does that mean that no non-profit organization can also be an FFL?….seems kind of strange.

    • Suburban

      Hmm. I believe that the Brady Campaign has an FFL, so they can hold up evil black guns in press releases.

  • joethefatman

    I saw that the FFL couldn’t be a personal thing, so I’ve just been looking into getting a C&R license. The older guns are what I’m primarily interested in anyway.

  • patrickiv

    SERIOUSLY looking forward to this!

  • Jesse Sampson

    I don’t have any tops regarding this process, but I do have 8 years of experience in sales, operations, sales/operations liason, program manager, running multiple inside, outside and independent sales teams, setting up the telemarketing department, etc… in the credit card processing industry. There is ALOT to know about, be aware of, stay away from and how to conduct your business depending while using credit cards/debit cards/checks. A good rate for swiped, non-rewards, credit cards is 1.69% & .25. There are several ways a company can price it, such as a busiess who does low ticket items should be priced with a lower transaction fee with a higher percentage and vice versa. Say your average ticket (what you are charging the customer) $20, something like a 1.69-1.79% and a $.15 transaction fee will cost you less than doing a low rate such as 1.59% & $.35. I know Visa/Mastercard changes their fees often, about once to twice a year, often more times than not, increasing their rates, but 95% of the time, it doesn’t reflect on you and your rates won’t increase, but ONLY if you go with a reputable company. Now if you will be selling guns and your average ticket, with doing FFL transfers, is $600, then you will want a lower % rate and a higher transaction fees. There are other things such as knowing when to ask a customer if they have a debit card depending on how much the ticket is. If it’s a high ticket amount, you’ll want them to use their debit pin as it’s a flat transaction rate, where as if you have a low ticket, it’s best to swipe the debit card as a credit card to sign as it’s a percentage, around 1.29% and a transaction fee. Make sure to ask about their cancellation policy. You will be asked to sign a contract which is usually for 2 years and I have seen cancellation fees ranging from $500-$1000! That’s outrageous! Alot of companies will let you out of the fee, unless they bought out a previous contract for you, if you provide proof that you are closing your busiess. Basically, it’s best to find a company with good morals and values as a company can really take profit out from you, keep you in that bind for a while and even make it to where you’ll stop taking credit cards. There are fees you can negotiate to not have or reduce on your contract such as the monthly maintence fee (montly account fee), monthly minimum (typically $25. meaning your processing fees must total atleast $25 or a $25 fee will be accessed), paper statement fee, etc… They can also get you with their free terminal program and even worse, leasing a terminal, where a terminal cash price is around $600 for the lower end models. Just be wary of getting a terminal off Ebay. Terminals like the FD50 and the FD100 are proprietary with First Data and can only be programmed to work with First Data. That’s how First Data gets you with locking you in a high rate/high fee contract.

    I worked at my first credit card processing company for 4 years. A great company with morals and values that were fair to their clients and had great customer service. I made the mistake of leaving there for a rival for a Sales Manager position. Green was not greener on the other side. They hid transaction fees by saying it was a $.15 transaction fee by stacking a $.30 transaction fee on top of it and saying your transaction rate was 1.49% when it wasnt. Then their cancellation fee was $500. Insane. Left there quickly after the National Sales Manager told me to use whiteout on some contracts for fees. Went to a company and they were closed down by the FTC, because they were debiting clients’ accounts without them knowing. Left there and went to a company as a Program Manager managing their Independent Sales Organization Program that was so unorganized, didn’t know what they were doing, wouldn’t change with the industry, uneducated, and the program was already tanking so bad, I couldn’t get it out of the hole. This was after I took the the ISO Department, from my first job, from 5 ISO’s to over 50 ISO’s and sub agents, turning 100 clients in a month from 12-15 a month, getting us out of the red a year ahead of schedule. I wished I would have never left my first job. They were like family to me. I’m out of the undustry now, as I’m 28, looking for an industry for something that isn’t so saturated as it did have a boom, like the oil field, as there are many people getting ripped off and business is so spread out, that sales are down. Now I probably just undercut one of my personal friends at Encore by telling you not to lease a terminal above, but hey, I’m just trying to help. Leasing a terminal typically runs for 48 months and depending on the terminal, will run $40-$50 a month. You can do the math. You can talk to Kevin Muldrow at Encore Payment Systems at 214-442-1700. I forgot his extension, but that will get you to the receptionist. Just ask for him and tell him Jesse Sampson sent you and he will hook you up with the Friends and Family Pricing. His email address is kmuldow@encoreps.com.

    Let me know if you need any help with it!

    So if you’d like for me to get you in contact with one of my guys there at Encore Payment System, just let me know. I have a little pull over there still, even after 4 years, although I don’t get any commission out of it. I ran 1 of the 2 inside sales teams and helped with the 2nd. You save money by going with inside vs outside sales reps. They have to pay out of pocket for gas and the outside sales reps have team leaders on the phone with them, that are good at what they do, making sure they get the sale at a decent price. The inside sales reps, the veterans, do their own pricing. There’s alot to this industry and I have set many people up and referred, including my friends’ who have businesses and I wouldn’t steer them wrong.

    Sorry for the long post! My hand is now asleep as I typed out this book of “Credit Card Proccessing 101” all on my phone. Atleast I have a Droid 4 with a slide out keyboard 🙂

    • MrNebrot

      great info, thanks

  • Matthew Peaslee

    I am really looking forward to reading this hat is off to you for doing this

  • BryanS

    Will be checking this out soon as well. A friend and i are wanting to get itno the firearms customization business, and need to be able to recieve guns in order to work on them.

  • cawpin

    Not trying to be a pain, but you should probably learn that there are no “Class III items” before writing about such things. Class III is a tax class, not an item type.

    • Not a pain. last thing I want to do is get myself on the wrong side of our readers or the law.

      Being technical, you are correct, but “Class III items” in vernacular refers to any items that are typically transferred by Class III dealers.

      If you know of a better way to phrase it, I am all ears (use my e-mail address to reach me faster).

      • cawpin

        I would call them NFA items being sold by an SOT dealer.