Firearm sales are heavily regulated and carefully tracked, making many people believe that only a commercial gun shop can sell guns. Surprisingly, 64 percent of all federal firearms licenses (FFLs) use home addresses as their business locations. Here’s what you need to know about home-based FFL requirements and home-based FFL zoning if you’re considering starting a firearms business.
Table of Contents
- Can I Run an FFL out of My Home?
- Types of FFLs
- Home-Based FFL Requirements
- How to Apply for an FFL
- Home-Based FFL Zoning
- Do You Need a Business to Obtain a Home-Based FFL?
- Is Being an FFL Profitable?
- What States Are FFLs Required In?
- Maintaining Compliance As a Home-Based FFL License Holder
- Get Started As a Home-Based FFL With a Zenti Merchant Account
Can I Run an FFL out of My Home?
The simple answer to this question is yes. The Bureau of Alcohol, Tobacco and Firearms allows FFL businesses to operate from private homes. The form required to file an FFL application enables applicants to select a residential property as their place of business. You can even run an FFL business from a rented property, provided your lease agreement allows it.
Despite all that, the answer is slightly more complex. When setting up a home-based firearms business, you’ll have to deal with state and local laws. FFL zoning requirements are especially tricky, as each municipality has its own laws and regulations. You may or may not be able to operate an FFL business from home, depending on the local laws that apply to your property.
Types of FFLs
Before looking at home-based FFL requirements, it’s essential to understand that there are several different types of FFLs. The FFL type you have determines what activities you can engage in concerning gun sales.
For a home-based FFL business, a Type 01 FFL is most likely the best fit. This license allows you to sell firearms, ammunition and firearm accessories as a dealer. A Type 01 license extends beyond your home, allowing you to sell at legally qualified gun shows and conduct online sales.
Home-Based FFL Requirements
The basic requirements to obtain an FFL are relatively easy to meet. To get any form of FFL, you must:
- Be 21 or older
- Be a US citizen or legally recognized permanent resident
- Meet all requirements to own firearms and ammunition personally
- Have a location from which to conduct business that isn’t otherwise constrained by local or state laws
- Have no history of violating the Gun Control Act or other firearm-related regulations
The need for a business location often leads to confusion from would-be FFL holders. While the ATF requires you to use your FFL for business purposes, you don’t need a physical storefront. Assuming local laws allow you to operate as an FFL from your home, the ATF will allow you to use a private residence as your place of business.
As a firearms dealer, you’ll also need to certify that you have proper gun storage on your premises. The ATF publishes and maintains a set of rules for safe storage that FFL dealers must abide by. Before submitting your FFL application, review the most recent version of these rules and ensure you can meet the requirements.
If the ATF approves your application, you’ll also need to follow the same record-keeping guidelines as a commercial gun retailer. As a Type 01 dealer, you must keep records of acquisitions and dispositions for a minimum of 20 years. If you go out of business or surrender your FFL, you must submit your current records to the ATF’s Out of Business Records Center.
How to Apply for an FFL
To apply for an FFL, you must fill out and file ATF Form 7/7CR. The ATF uses the same form for all FFL applications, but the application fee varies based on the type of FFL. For a Type 01 FFL, the application fee is 200 USD.
In Part B of Form 7/7CR, you’ll have to complete a questionnaire about your background, citizenship status and any prior FFL history. Once you submit your application, the ATF will use this information to conduct an electronic background check.
You’ll also have to include a fingerprint card and photograph. The ATF uses these supporting materials in the background check process. Before filing, you’ll also have to certify that you’ve sent a copy of your application to your chief local law enforcement officer.
After the ATF has reviewed your application, it will send your information to the field office responsible for your area. An ATF officer will visit your home for an on-site inspection and an in-person interview. During this interview, the field officer will verify the information listed on your application and ensure that your FFL business complies with state and local laws.
Afterward, the ATF field officer prepares a report and recommends approving or denying your application. The officer may recommend denying your FFL if they believe you’ve falsified your application, failed to comply with state and local laws or don’t meet the basic home-based FFL requirements.
Home-Based FFL Zoning
While the ATF allows FFL dealers to operate from private residences, local home-based FFL zoning laws may obstruct your ability to sell guns from your home. Some cities have prohibitive ordinances regarding guns. You’ll have little difficulty getting your home business past the local zoning authority in other areas. Check the laws in your area and follow them carefully, as failure to do so could result in steep fines.
Failure to comply with local home-based FFL zoning ordinances will also cause the ATF to deny your FFL application. In section 20 of Form 7/7CR, applicants must verify that they can legally conduct business from the address listed on their FFL application. If FFL zoning requirements prohibit gun sales from residential homes in your area, the ATF will not grant your FFL.
Navigating home-based FFL zoning laws can be somewhat tricky. Many cities restrict FFL businesses from opening near sensitive areas, such as parks and healthcare facilities. FFL zoning requirements are becoming increasingly complex as municipalities attempt to curtail access to firearms. Home-based FFL zoning, however, doesn’t always involve the same stringent rules applied to commercial gun stores. Meeting local FFL zoning requirements may be easier for a home-based business, depending on where you live.
You’ll also need to check the terms of your lease if you rent the location where you plan to conduct business. Many leases include clauses prohibiting business activities in residential homes or apartments. Be sure to check with your landlord or property manager to be sure that operating a home-based FFL business won’t violate your lease agreement.
You’ll also need to follow all state gun sales laws carefully. As with local FFL zoning requirements, the ATF will deny your application for failure to comply with state-level firearm sales laws. Home-based FFL zoning laws in your city may also be informed by state laws restricting where FFL businesses can operate.
If you need help determining whether you meet local FFL zoning requirements, check with the zoning office in your area. Your local zoning office can help you navigate applications and answer questions about specific requirements. Once you have your home-based FFL zoning figured out, you can continue applying for your license.
Do You Need a Business to Obtain a Home-Based FFL?
Federal law doesn’t require you to form a business entity to apply for or obtain an FFL. Business intent, however, is one of the ATF’s homed-based FFL requirements. You can easily satisfy this requirement by charging for FFL transfers, making it relatively easy for sole proprietors to get home-based FFLs.
Although you don’t have to have an LLC or other business entity to get an FFL, forming one may still be a good idea. Creating a business entity can separate your personal assets from those of your business. If legal action is taken against your business, an LLC may limit your personal liabilities.
Forming an actual business may also help your chances of being approved for an FFL. The agency will reject your application if the ATF believes you’re applying for an FFL just to purchase personal use firearms at wholesale prices. Forming an LLC or other business entity helps to demonstrate legitimate business intent.
At the local level, a business entity may also help you meet FFL zoning requirements. If you need a home-based FFL zoning permit, your town or city will likely require you to register as a business. A simple LLC will satisfy most FFL zoning requirements.
Starting a business as a home-based FFL dealer will also make it easier to access business services. For instance, if you want to accept payment by credit card, you’ll likely need a high-risk merchant account to facilitate payment processing. Zenti’s high-risk merchant accounts are a good solution for small firearm dealers. A Zenti merchant account can help you grow your home-based FFL business by making it easy to accept card payments.
Is Being an FFL Profitable?
Selling firearms is a fairly low-margin business. Depending on the model you’re selling, you can expect to charge 12-20 percent more than your wholesale cost on a new gun. These low margins make it difficult to run a retail gun store profitably. However, a home-based FFL business has much lower maintenance and labor costs to cover by selling guns.
Selling firearm accessories can also be quite profitable. Margins on accessories run as high as 40 percent, allowing dealers to pocket a healthy profit on their sales. These high-margin sales are especially helpful for home-based FFL dealers operating at small volumes.
You can also increase your margins by bundling guns and accessories together. For example, selling a handgun with spare magazines, a holster and a sight will give you a higher margin on the total sale. Getting creative with packages is also an excellent way to offer more value to your customers and set yourself apart in the highly competitive firearms industry.
Ultimately, being an FFL is a profitable business if you’re prepared to put in the work and sell enough products. As a home-based FFL, you’ll have the advantage of low overhead costs, making it easier to turn a profit. The ATF also doesn’t require you to make a profit to keep your business license.
What States Are FFLs Required In?
While states can place separate restrictions on firearm sales, all 50 states require an FFL to sell guns. The ATF is a federal agency whose authority supersedes state laws. All commercial firearm sales in the United States must go through a licensed dealer.
For state-by-state specific regulations for getting your FFL check out our state guides to starting a gun business:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
Maintaining Compliance As a Home-Based FFL License Holder
While most FFLs are home-based businesses, small sellers are also more likely to receive fines from the ATF for non-compliance. Small sellers are subject to the same legal requirements as large gun retailers, and it’s essential to follow all regulations when conducting firearm sales.
One of the most common violations among small FFL dealers is failure to keep appropriate records. FFL holders are responsible for keeping A&D records for 20 years. Keeping spotty or falsified records is one of the fastest ways to lose your FFL in the event of an ATF audit.
Securing your records is another crucial aspect of staying compliant with the ATF’s guidelines. Storing sales records on a computer that others can access makes it possible to alter them illegally. Failure to secure documents can lead to penalties or the revocation of your license.
You can also get into trouble as a small dealer for failure to comply with a background check or waiting period requirements. Many states require an electronic background check before completing a firearm transfer. A waiting period before receiving a gun is also a regulatory standard in many states. Failure to abide by either of these rules may cause the ATF to revoke your license.
You may be subject to one ATF inspection per 12 months as an FFL holder. The bureau may or may not choose to conduct this inspection every year. The ATF can also audit your records for irregularities. Maintaining strict record-keeping and storage practices can make inspections and audits much less cumbersome and keep you in good standing as a dealer.
Your home may also be subject to local inspections as part of your home-based FFL zoning. The local zoning board, law enforcement or other entities may be entitled to perform periodic inspections to ensure compliance. If FFL zoning requirements in your area include such inspections, be sure to understand and follow all local regulations.
Get Started As a Home-Based FFL With a Zenti Merchant Account
Once you’ve done your homework, met local FFL zoning requirements and secured your license, you can begin selling firearms, ammunition and accessories as a profitable home business. Zenti’s high-risk payment processing services can help you easily accept payments for your firearms business. Reach out to Zenti today to learn more about merchant accounts for firearm dealers.