If you are planning to engage in firearms business such as manufacturing, selling or importation of firearms, ammunition, NFA items, and/or destructive devices within the United States, you will need a license called federal firearms license (FFL) to operate legally.
Unlike most other business-related permits and licenses, getting a federal firearms license can be a stressful process that can take considerable time before you secure your license. Since firearms can be used for criminal and terrorist activities, the government wants to make sure that people seeking federal firearms licenses come from a clean background.
What is an FFL or federal firearms license?
As we discussed above, it is a license that allows you to engage in the business activities such as manufacturing, selling, importing, etc. of firearms, ammunition, and/or destructive devices. In order to operate legally in the firearms industry, the organization whether it is a manufacturer, an importer, or a seller of firearms, must be licensed. Once granted, the FFL is valid for a period of three years and expires on the first of the month following that three-year term.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), also referred to as BATFE is the law enforcement agency within the U.S. Department of Justice responsible for issuing a federal firearms license.
How to get a federal firearms license?
Before applying for an FFL, you will first need to decide which FFL you need, because there are several types of FFLs that allow you to engage in certain activities in the firearm industry. For example, if your business depends on firearm imports, you will need a different FFL than a manufacturer that makes them locally. So it would be prudent to first learn about different FFL types before we jump into the application process.
Types of federal firearms licenses
There are different types of FFLs. It is important to understand which FFL type would encompass all your business operations related. You should go for a federal firearms license type that includes all the business activities that you will be performing or may start to perform in near future. For example, if you only want to sell guns, you do not need a manufacturer’s license. People can add SOT (Special Occupation Tax) to some SSLs including “class” type SOTs.
FFL Type 1 (Dealer in Firearms or Gunsmith)
A type one FFL is issued to individuals or entities who are engaged in the business of dealing in firearms other than destructive devices. This would account for a large majority of gun shops and kitchen table FFLs. These FFLs can buy and sell Title I firearms such as ordinary rifles, pistols, revolvers, and shotguns to customers take firearms in on consignment, and perform gunsmithing services.
Federal firearms license application cost for Type 1is $200. It comes with 3-year validity and the renewal fee will cost you $90 every three years.
FFL Type 2 (Pawnbroker)
FFL Type 2 license is more or less similar to FFL Type 1 except that FFL Type 2 is specifically designed for pawnbrokers as they have a different business type. FFL Type 2 licensed pawnbrokers can accept guns as security for disbursing loans.
While it allows for the pawnbroker to do exactly what a Type 1 FFL can do, it does have another advantage to those that are operating as pawnbrokers, unlike a Type 1 FFL who cannot dispose of a handgun to a non-resident of a state where the license is located.
A Type 2 FFL can return a handgun to a non-resident who pawned it there. For example, if you take a trip to another state carrying your firearm and urgently need money, you can pawn it there, unlike a Type 1 FFL where you would have had to sell it to the dealer and rebuy it.
Federal firearms license cost for Type 2is $200. It comes with 3-year validity and the renewal fee will cost you $90 every three years.
FFL Type 3 (Collector of Curios and Relics)
A Type 3 FFL is for a collector of curios and relics. If you do not intend to acquire and resale guns and just want to collect old guns, FFLType 3 will suit you. As a rule of thumb, a gun should be older than 50 years to be considered as Curio and Relic. However, there are exceptions for some types of guns that ATF can allow as collectibles. Type 3 Federal Firearm Licence does not allow you to engage in the sale, resale, or any kind of manufacturing of firearms. It is just a license for collecting old guns for your personal use.
Federal firearms license application cost for Type 3is $30. It comes with 3-year validity and the renewal fee will cost you $90 every three years.
FFL Type 6 (Manufacturer of Ammunition for Firearms)
If your firearm business is about manufacturing ammunition for small arms, this is the license type to obtain. A Type 6 FFL is issued to a manufacturer of ammunition for firearms other than destructive devices, or armor-piercing ammunition. These licensees can produce ammunition that’s commercially available for you to purchase.
Federal firearms license application cost for Type 6is $30. It comes with 3-year validity and the renewal fee will cost you $30 every three years.
FFL Type 7 (Manufacturer of firearms other than destructive devices)
Type 7 FFL is issued to manufacture firearms other than destructive devices. A Type 7 FFL can do everything that Type 1 can, in addition to actually manufacturing guns. While not necessarily intuitive, ATF considers the mere assembling of parts to constitute manufacturing, if those parts are owned by the licensee.
This license specifies that you cannot manufacture a destructive device. Speaking of destructive devices, it covers a broad category of items, but you can mostly think of them as anything that explodes, such as a grenade. It does also include anything with a bore diameter greater than half an inch.
This is the most popular as well as comprehensive license type that allows you to manufacture, repair, buy and sell firearms. It also allows you to manufacture ammunition. You can further enable its scope by adding a class 3 SOT to this license, which will allow you to manufacture NFA items such as silencers, short barrel rifles, shotguns, etc. as well.
The application fee of Type 7 FFL is $150 and it comes with 3-year validity. Renewals will cost you $150 every three years.
FFL Type 8 (Importer of Firearms/Ammunition)
A type 8 federal firearm license application cost is $150 and it comes with 3-year validity. Renewals will cost you $150 every three years.
If you are setting up a firearm business that will include importing firearms and ammunition, this is the FFL type for you. Type 8 FFL allows you to import firearms other than destructive devices or ammunition for firearms other than destructive devices or ammunition other than armor-piercing ammunition.
FFL Type 9 (Dealer in Destructive Devices)
A type 9 federal firearm license application cost is $3,000 and it comes with 3-year validity. Renewals will cost you $3,000 every three years.
This is the license type you would need if your firearm business is going to include exploding ammo, grenades, artillery certain types of semi-auto shotguns, etc. It also includes non-sporting guns with a bore over half an inch.
FFL Type 10 (Manufacturer of Destructive Devices, Ammunition for Destructive Devices, or Armour Piercing Ammunition)
A type 10 federal firearm license application cost is $3,000 and it comes with 3-year validity. Renewals will cost you $3,000 every three years.
If your firearm business constitutes of manufacturing Destructive Devices, Ammunition for Destructive Devices, or Armor Piercing Ammunition, this is the FFL type you should apply for. Type 10 FFL is generally sought by manufacturers of destructive devices or its ammunition that supply these items to the government (for military, law enforcement, etc. purposes).
Type 11 FFL (Importer of Destructive Devices, Ammunition for Destructive Devices, or Armour Piercing Ammunition)
A type 11 federal firearm license application cost is $3,000 and it comes with 3-year validity. Renewals will cost you $3,000 every three years.
This is the license type a firearm business should apply for if it intends to import destructive devices, ammunition for destructive devices, or armor piercing ammunition instead of manufacturing them.
Federal firearms license application process
Complete the federal firearms license application
Complete the FFL application and mail it to the ATF address listed on the FFL application form – ATF Form 7. The application must be accompanied by the proper fee and any required documentation such as fingerprint cards (Bayometric’s NFA Live Scan Fingerprinting system can help your customers with firearms licensing and background checks), photos, a list of responsible persons, and a completed certification of compliance, ATF Form 5330.20. The Federal Firearms licensing center will review the submitted application and conduct an electronic background check on all persons identified on the application.
According to the ATF responsible person is defined as a sole proprietor partner or anyone having the power to direct the management policies and practices of the business as it pertains to firearms or explosives. Changes to the list of responsible persons should be sent to the ATF within 30 days of the change. The FFLC will then send the applications for new licenses to the areas designated ATF field office.
In person interview with IOI
The field office supervisor issues an assignment to an Industry Operations Investigator IOI who conducts an in-person interview with the applicant. The IOI will review the application and discuss federal, state, and local requirements with the applicant to ensure the information is correct, current and that the applicant understands the legal requirements. The IOI will then prepare a report of his/her interview and inspection to make a recommendation to either issue the license or deny the application.
What does my FFL number signify?
Your FFL is more than just a unique string and it contains a lot of information within it. The FFL designation is composed of a 15 character string; the following is a sample FFL, for example, 5-06-014-06-1D-02142.
- 05 – Region pertaining to your business
- 06 – District pertaining to your business
- 014 – County pertaining to your business
- 08 – Type of the business (dealer/manufacturer/importer)
- 1D – Expiration date of your license
- 01644 – Sequence
For license, expiration dates there are two digits that create the month and year and the FFL number, for example, 1D would be equivalent to 2011 April. It goes as follows: A means January, B February, C March, D April, and so on. Prior to expiration, each FFL licensee must submit an application for renewal. If the renewal is not processed by the expiration date, the ATF may send a letter of authorization LoA, extending the valid date by a six-month period. It is also possible that the lack of timely renewal will require a new application.
Closure of the business
FFL license holders must inform the ATF within 30 days of closing a business entity and must turn over all records to the ATF Out of Business or OOB center within 30 days thereafter. The ATF will provide specific instructions for the format and method for submitting such records. At a minimum, the ATF will require submission of the following records: Records of the manufacturer, Records of import, Book of acquisition and disposition and official transfer forms, Form 4473, and multiple sales records amongst others.
Federal firearms license cost
We have covered individual firearm license costs while describing each type. Here is a table for making a quick comparison between different federal firearm license costs, application cost (fee), renewal cost, validity (the years the license/renewals will be valid for and how they allow you to operate your firearm business (as a dealer, manufacturer and/or importer). All the information is updated as of January 2022.
Running a firearm business offers lucrative returns, provided you can successfully get a federal firearm license and overcome teething troubles. Firearm businesses may range from small-scale gun dealers to large-scale firearms, destructive devices, and annunciation manufacturers, who bag billions of dollars of contracts from the government agencies and U.S. military every year.
Since getting an FFL is the first step towards setting up your firearm business, it is important that you do it correctly right from the beginning. We have tried our best to provide information that can be crucial before you apply for your FFL and hope it improves your chances of securing your license.