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Posted: 7/23/2014 7:56:01 AM EDT
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Need your help
Live in Illinois looking to start a shop but want to get access to NFA items such as Suppressors and Full Auto for LE sales considering to get a Type 1 dealer FFL plus a Class 3 SOT looking to build custom rifles for customers from different manufacturers such as Mega Arms or Seekins etc Would assembling firearms parts considered to be manufacturing a rifle? like upper and lowers receivers, hand guards lower parts kits and so on DO I need to get a FFL type 7 Manufacturer/Dealer with a class 2 SOT to assemble firearms? The ITAR fee is insane every year I would appreciate this |
| Something as simple as taking a lower and then slapping an upper on it (then placing it out for sale) would be considered manufacturing. You'd need a Type 07 for that. Building custom rifles would be considered manufacturing as well. You'd need a Class 2 SOT in addition to the 07 if you plan on manufacturing NFA firearms, if you only want to sell them you'd need a Class 3 SOT. |
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Get an 07, pay the SOT (reduced) the first year for July to July. Build away.
Do not expect to sell any post samples to LEOs. Some of the manufacturers will deal direct at a lower price point than you can get them for. Expect to pay ITAR. If it seems like too much money then you shouldn't be setting up an 07. Much bigger expenses will be coming along as you progress. |
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Quoted:
Something as simple as taking a lower and then slapping an upper on it (then placing it out for sale) would be considered manufacturing. You'd need a Type 07 for that. Building custom rifles would be considered manufacturing as well. You'd need a Class 2 SOT in addition to the 07 if you plan on manufacturing NFA firearms, if you only want to sell them you'd need a Class 3 SOT. Another point to remember, if you do manufacture firearms, even if it is as simple as slapping an already existing upper onto an already existing lower, as a business, you are required to engrave your information on the firearm. If you do decide to go through with it, there are lower manufacturers who will sell you lowers with your information engraved on it, in lieu of their own. In order to buy them, you have to have a variance letter from BATFE. The various manufacturers have different order size requirements, though, with some of them being 1,000+ lowers. |
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LE can have cans in Illinois we have them at our PD, but is not all that I do not care for cans so much I care for SBRS and select fire guns
I do not get this that people with money and full blown shops have no clue as to what they manufacturing and how their products ergonomics impacting the user/shooter so SOT 2 $500 per year ITAR is around $2250 year Type 7 is around $150 Looking around $3000 a year to keep these license Jeez that ITAR is a killer and retarded thanks for all responses |
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thanks for the info I am looking to do deal with higher end products like Seekins, Mega arms and so on.
no forged crap upper and lowers, I live right next door to DSArms in Lake Barrington IL what a sad story, full blown shop with millions worth of Equipment with very low QC, BCM smaller shop got them hands down I wish I had the money that Owner of DSA has |
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Quoted:
Do you have a business plan, or do you just want to play with NFA weapons? How much business do you plan on generating with this limited market in IL? When the BATFE IOI does your pre-license interview, they're going to ask about your business plan. They do so to ensure you're not just getting the license for personal use and that your intentions fit within the license for which you've applied. (For example, if you've applied for a Type 01 FFL, but tell them you plan to assemble uppers and lowers for resale, they'll tell you to apply for a Type 07, instead.) In a round-about way, you've stated that you don't have a lot of money. If you are truly doing this to make a profit, you need to reconsider your initial capital investment, especially if you really want to get into Title II sales to LE agencies. You're going to be a new entrant into an already existing, heavily populated market; a market which is served largely by a bunch of folks who've been in the business for quite some time, have significant relationships already established, have massive capital reserves, and have buying power you can only dream of having. It's not like you're entering into an unlimited market. You're entering into a very niche market, in a State which is historically very much skewed against your product. You're a cop, and I understand your department issues you suppressors. But, think of how many IL chief LEO's or administrators are vehemently anti-gun or anti-change. Your first challenge is going to convince them that they need Title II guns. Then, you have to educate them as to which product will best suit their needs. If they're like most bureaucrats, they're going to research the purchase to death and will be looking to spend as little of their budget as possible. If, during their research, they discover one of your competitors, especially a manufacturer, who can provide the same product, or a comparable one, for even the least bit cheaper than you, you'll have wasted your time and effort, which could have been spent doing other things. As an example, about 7 years ago, I was asked by a cop on a small PD to price some HK UMP's, for him to take the numbers to his boss, hoping to get him to buy the HRT a couple. If I would have brokered the deal, the guns would go directly from HK to the PD, and I would have made $50 per gun. They were considering ordering no more than two guns. That $100 profit would have quickly been eaten up in gas and time driving to and from the PD to work out details or to help convince the Chief to buy them. Oh,and if he would have requested a demo before purchasing, I would have had to drop a little over $1,000 for a post-sample gun, not to mention the cost of any ammo or targets for the demo. Granted, I could have sold the gun later, but if the Chief decided he didn't want to buy any, I would have lost money reselling the used UMP post-sample. I have no idea if they ended up getting any, as the potential sale wasn't worth my time and effort, so I didn't pursue it any further. The best, truest, advice I got about the gun business is this: If you want to make $1,000,000, you better start with $2,000,000. |
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yes I have a business plan, civilian market is huge, and lots of folks like Doctors, Engineers and high earners are getting into the gun business and wants to shoot.
I understand IL is not the best state to deal guns but all that crap applies to Cook county only the rest of the state is pretty good you can have SBRs high cap magazines here in the rest of the state. I live by the border of Wisconsin, worse case scenario I can just start my business in Wisconsin that's no an issue were I can deal and wheel everything. |
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thanks that's pretty good advise
I am not just looking to wheel and deal guns, I have access to a range as well to train these folks. your story about the HK was informative, but I would never sell anyone those European SMGs they have no use for LE purpose you got to have a Multi Roll weapon starting with 5.56 and off course American Made No weapon system in the world stands up the ergonomics of the M4 platform you are so right you have to have money to make money. I appreciate all the advise guys keep it coming 
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| I wish you all the best, but it sounds like you have a very limited business scope in mind. You say claim you want to sell to doctors, but what NFA weapons do you plan on selling them? If you sell SBRs or SBSs, well you're going to have to wait almost a year before the first transfer goes through. And that's after the Form 3s have been approved from another SOT. No plans for Title 1 sales? |
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Quoted:
I wish you all the best, but it sounds like you have a very limited business scope in mind. You say claim you want to sell to doctors, but what NFA weapons do you plan on selling them? If you sell SBRs or SBSs, well you're going to have to wait almost a year before the first transfer goes through. And that's after the Form 3s have been approved from another SOT. No plans for Title 1 sales? And, with the AR being the most commonly SBR'd rifle in America, and the ease with which someone can assemble their own, not to mention the fact that it's cheaper to build yourself (even with engraving costs) than to buy a factory gun, your market of SBR customers is very small. Honestly, the same goes for SBS, especially with things like SBS 870'sand the like, which are really just a matter of swapping parts. More people are inclined to set up a Title I gun, file the Form 1, and shoot the gun while they wait, rather than having their gun sitting in your safe for a year, or more. That's another thing-storing guns which are pending transfer. Those things take up space, for a long time, space for which you are paying monthly rent. Oh, and you better have a good insurance policy, because if your building catches fire and a bunch of customers' NFA guns get melted, or someone breaks in and steal them, you're going to have to reimburse them. Think about the monthly cost of storing those guns for a year. Let's say you rent a space at $3/sq ft/month. A good safe (fireproof, can hold 20+ long guns plus shelves for handguns, cans, etc) is going to take up at least 10 sq feet. That's $30/month you're paying just to house the safe with which you're storing someone else's guns. In the course of a year, you're paying $360 just for the room to store them, without even getting into the cost of the safe. To that $360 you're paying for storage space, we'll add $500 per year for your SOT, and $2250 for your ITAR fee. Let's say you splurge and spend $5,000 on a good safe. For accounting and tax purposes, we'll say you elect to use straight-line depreciation, without taking any Section 179 special depreciation for taxes. That means you write-off the safe at $1,000 per year. You're now at $4,110, per year, just so you can transfer NFA firearms and store them for your customers. We'll add in $890/year ($74/month) for insurance against loss or theft of stored guns). That brings it to $5,000 just to be able to sell or transfer NFA guns. Let's say you charge $50 for each NFA Title II transfer (that's kind of low, many places charge $100, or more; but, you're new and want to earn some business, so you start out low). We'll also stipulate that you make an average of $100 profit on each NFA Title II gun you sell, as opposed to transfer (that number seems low, but it's not completely unreasonable, given the low margins and competitive nature of the market). In order to just break-even on your costs to do business in Title II guns, you need to do 100 Title II transfers, 50 Title II sales, or a combination of the two, each of the first five years. After that, your safe holds no book value, so your overhead is reduced that much, thankfully. Even if you double the price of your transfers, to $100, each, you need to do 50 transfers, 50 sales, or a mixture of the two, each year, just to break even. That's an average of four a month, or one a week. Is the NFA Title II market in your area strong enough to support you at those levels? Oh, and with that many transfers, you're probably going to need a bigger safe, or a second one. Guess what? That just shot your overhead up, along with the number of transfers you need to do to cover it. And, since you won't be doing many, if any, suppressors (which don't take up much room), you're really going to need a few safes. And, those numbers don't include other costs associated with doing transfers; such as the printer on which you print the Form 4's, the ink you use, the envelopes and postage to mail them (unless you have the customers mail them, but doing so allows the customer to sit on the paperwork for months, lengthening the time you're storing their guns and the amount you're into for storing it), an ink pad from Office Max for fingerprints, gas to and from the Sheriff's office (if he'll sign, in IL, I'm betting most transfers would be trusts), your time, your fax line for sending FFL's and SOT's to shipping FFL's, and more. That's why you need $2,000,000 to make $1,000,000 in the gun business, especially in a niche market like NFA Title II guns. |
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I'm going to offer another piece of advice and I hope you take it in the helpful vein in which it is intended.
Granted, this is the internet, so many people don't pay close attention to detail when it comes to spelling, punctuation, grammar, etc. As you're a cop, I'm hopeful your arrest reports are written much better than your internet posts. If, however, your posts here are indicative of your usual level of attention to detail when writing, I would strongly advise you to not get involved with NFA Title II weapons, or the BATFE, in general. The BATFE are sticklers for detail and they expect perfection in your record keeping. If you transpose the digits in a gun's serial number or an FFL's license number, it could mean a fine. Do it enough, and it could easily mean your license. If you put the wrong info on a Form 2, 3, or 4, or on a 4473, it could mean a lot of problems, for you, your customer, and for your ATF Inspector. As an example, I had a Colt 1921AC Thompson SMG come into the shop, as a transfer for a customer. The gun was pretty special, as it was originally sold by von Frantzius Sporting Goods of Chicago in 1928 to a Capone associate and was mentioned, by serial number, in the coroner's inquest into the St. Valentine's Day Massacre. Unfortunately, when the gun came to us, the Form 3 said it was an M1A1 Thompson. The 1921AC was a civilian version, while the M1A1 was a military version. There are a number of differences, both internally and externally. Anybody who knows Thompsons could look at one and tell instantly it wasn't the other. Further compounding the issue, the original serial number from the side of the receiver had been removed at the time of original purchase (von F. would do it for $4, and it was legal to do at the time) and an amnesty serial number had been stamped onto the gun when it was registered in 1968. (Thompson's have a serial number on the barrel trunnion, which is how the gun was able to be traced to the inquest.) When I filed the Form 4 for the customer, I filed it with the correct model number, 1921AC. BATFE rejected it, as their records showed it to be an M1A1. So, I called NFA Branch and asked for guidance. They took forever and the gun was eventually handed over to the local ATF office, so that they could straighten out the paperwork SNAFU and get it transferred to the owner. Imagine, if you will, if I had left the model number as M1A1 and the customer later got questioned at the range by a cop knowledgeable about Thompsons. His paperwork says it's a completely different gun, the serial number is the same, but the original serial is obviously missing and a new number is stamped into the gun. For all intents and purposes, it would look like he got hold of a stamp for a different gun (which is easy to do, old tax stamps are bought and sold just like postage stamps), removed the serial number from an unregistered Thompson, and stamped it with the serial number on the paperwork. And, had the BATFE confiscated it and pulled the barrel, they would have found the serial number for a Colt 1921AC, which is what the gun was, not the M1A1 listed on the paperwork. The customer could have very easily been charged with being in possession of an unregistered machine gun, lost his $24,000 investment, gone to jail for 10 years, and paid a fine of up to $250,000. |
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I can tell from reading your posts pretty exprienced guy in the field
Me I have very little time keep the good stugg coming and thanks for your time working 7 days a week now and have 2 min to login and type a question there is no time here to check punctuation. Sorry 
I appreciate the advise and kindness + forgiveness I am sure I am not "in the check my english blog"  I just need advise from folks like you involved in the business now
I am sure you sit in the nice cool office filling out your Form 1 -4 Me NO, as I am typing few of the words I have to log off and respond to shots fired. Yes CHIRAQ IL thats where I work I have had so much time with FULL auto guns, I can shoot my intials on the paper target bu tno expereince on with business. we all have to start somewhere so forgive my grammer and punctuation and help me if you can please thanks |
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