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Old 06-27-2012, 11:25 AM
dychen dychen is offline
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Default FFL 06 or FFL 07?

Hello All. I've been researching for quite awhile now, and I've been thinking about starting a part time business reloading/manufacturing ammunition out of my garage/home while I go to school. I know I'm not going to get rich doing this, but I had a couple of questions I'm hoping you guys can help out with.

First, my county will not issue a business license that states "Valid for the retail resale of firearms" to my address since its a residence (although I have one for retail resale of agricultural goods). They will, however, issue a business license that allows for "manufacturing of ammunition/firearms excluding the use of CNC mills and fabrication". Basically the county is saying I cant perform resale from my residents, but I can do all the online/shipping/gunshow/offsite business I want.

So my question is, does it make since to get a Class 7, and if I do, would I be able to wholesale/online/gunshow a couple guns every now and then, or am I better served getting a FFL 06 and sticking to reloading? My main focus is to reload/manufacture ammunition, but figured if I was going to go through all the hell to get this thing setup i might as well be able to sale a few guns in the process.

Any pointers would be greatly appreciated.
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Old 06-27-2012, 12:47 PM
efillc efillc is offline
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How are you going to cover ITAR fees and liability insurance cranking out ammo part-time?
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  #3  
Old 06-27-2012, 1:55 PM
dychen dychen is offline
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I planned on requesting an exception from the ITAR as freakshow10mm recommended in one of his post and, like all other businesses, build the liability insurance into the cost of my product
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Old 06-27-2012, 9:56 PM
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Quiet Quiet is offline
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Quote:
Originally Posted by dychen View Post
So my question is, does it make since to get a Class 7, and if I do, would I be able to wholesale/online/gunshow a couple guns every now and then, or am I better served getting a FFL 06 and sticking to reloading? My main focus is to reload/manufacture ammunition, but figured if I was going to go through all the hell to get this thing setup i might as well be able to sale a few guns in the process.
No such thing as a "Class 7".

Type 01-FFL = dealer or gunsmith of firearms. can be a Class 3 SOT.
Type 02-FFL = pawnbroker. can be a Class 3 SOT.
Type 03-FFL = C&R FFL
Type 06-FFL = manufacturer of ammo.
Type 07-FFL = manufacturer & dealer of firearms & ammo. can be a Class 2 or 3 SOT.
Type 08-FFL = importer of ammo. can be a Class 1 or 3 SOT.
Type 09-FFL = dealer of destructive devices, firearms & ammo. can be a Class 3 SOT.
Type 10-FFL = manufacturer & dealer of destructive devices, firearms & ammo. can be a Class 2 or 3 SOT.
Type 11-FFL = importer of destructive devices, firearms & ammo. can be a Class 1 or 3 SOT.

Class 1-SOT = importer of Title 2 firearms
Class 2-SOT = manufacturer of Title 2 firearms
Class 3-SOT = dealer of Title 2 firearms
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Last edited by Quiet; 06-27-2012 at 10:09 PM.. Reason: spelling
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Old 06-29-2012, 9:39 AM
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echoarms echoarms is offline
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Quote:
Originally Posted by dychen View Post
I planned on requesting an exception from the ITAR as freakshow10mm recommended in one of his post and, like all other businesses, build the liability insurance into the cost of my product
Any background on this? I might want to do the same.
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Old 06-29-2012, 9:40 AM
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Quote:
Originally Posted by Quiet View Post
No such thing as a "Class 7".

Type 01-FFL = dealer or gunsmith of firearms. can be a Class 3 SOT.
Type 02-FFL = pawnbroker. can be a Class 3 SOT.
Type 03-FFL = C&R FFL
Type 06-FFL = manufacturer of ammo.
Type 07-FFL = manufacturer & dealer of firearms & ammo. can be a Class 2 or 3 SOT.
Type 08-FFL = importer of ammo. can be a Class 1 or 3 SOT.
Type 09-FFL = dealer of destructive devices, firearms & ammo. can be a Class 3 SOT.
Type 10-FFL = manufacturer & dealer of destructive devices, firearms & ammo. can be a Class 2 or 3 SOT.
Type 11-FFL = importer of destructive devices, firearms & ammo. can be a Class 1 or 3 SOT.

Class 1-SOT = importer of Title 2 firearms
Class 2-SOT = manufacturer of Title 2 firearms
Class 3-SOT = dealer of Title 2 firearms
Grammer Police......very helpful.
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Old 06-29-2012, 2:11 PM
dychen dychen is offline
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From http://www.thehighroad.org/archive/i...p/t-67766.html

freakshow10mm
December 29, 2009, 03:23 AM
You will need
to comply with local zoning for a firearms and manufacturing business
Type 06 FFL $30 for 3 years
ITAR registration* for $2250 per year


*ITAR is the International Trade in Arms Regulations and is the US State Department's jurisdiction (ie the ATF can't and doesn't enforce it directly). Basically in a nutshell everything firearms related including ammunition and components is a "defensive article" and the manufacturers must be register and pay that stupid fee. I have found an exception and will share it, but will not hold anyone's hand during the process or offer any additional advice beyond what's posted here.

If you are a manufacturer of "whatever" and intend on solely selling it to
Domestic civilains
Domestic dealers or distributors or wholesalers
Domestic civilian law enforcement agencies (ie cops)

you can submit a Commodity Jurisdiction Request to the US State Department requesting determination of whether your products are "defensive articles" having a military application. This must be a letter from scratch (no form letter is provided or "out there") detailing what you make, whom you sell to, and whom the end user is. You will need to submit drawings, blueprints, techinical documents, etc. If they determine you are not manufacturing for any military or paramilitary force, they will not make you pay ITAR.

That's it for the licensing BS.

Now the business aspect.

Marketing is fun and a PITA all at the same time. Buy the book "Guerrilla Marketing" and read it cover to cover. Not the gospel but gives a different perspective than "buy a magazine ad and wait for the phone to ring" mentality of marketing. The book explains it all but here's my perspective:

Marketing isn't about getting a sale. It's about setting up a client relationship. The last thing you want is a customer. A customer comes in, buys some ****, and leaves. That's not good. You want a client. You want long term, loyal, repeat business. Marketing is showing them your product/service, informing them of the value, and showing how you will be there to support them after the sale.

OK, now insurance. If you think you can form a fancy corporation and be protected you are dead wrong and I just saved you millions of dollars. GET LIABILITY INSURANCE!!! It's a couple thousand dollars a year (as in less than $200 per month) for a basic $1 million policy. If $2,000 a year is too much, STOP. You are not cut out for this business. Operating without liability insurance is simply retarded for any business. That's settled. Get insured or go flip burgers.

Equipment. Have to go blue here. Dillon is your brand. Learn it, love it, live it. For the type of loading you are doing, you will need volume but not primer pocket swaging. Get at least one Dillon 650 press with case feeder for each press. Get one set up for small primer and large primer. Then change out the other stuff for caliber changes. This will give you 800-1000 rounds per hour production. That's a good start. If you can't load at least 500,000 rounds annually, it will be a hard living, even as a part time retirement income source.

Then there's the FET or Federal Excise Tax (I don't care if it helps wildlife crap, it's retarded and a burden to my business and you end up paying the tax anyway because me and every other manufacturer rolls it into the cost of the ammunition). Tax is 11% on the sale price of ammunition you load. Exceptions are
Local (non-federal) law enforcement agencies
Department of Defense including the Coast Guard
Reloading customer brass

Hit up www.ttb.gov for more info. Basically if you buy brass, load it, and sell it as ammo, FET is due. If you sell to law enforcement other than federal or DOD, no tax due. If you reload customer brass and you ship it as ammo (no substituting your brass for their brass or replacing worn brass with your brass to make even count), no tax due. Tax on ammunition is 11%.

That's about it. The rest is on your own just like I learned the hard way. Give 'em hell!
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