Becoming and Operating as an FFL Dealer: A Comprehensive Guide
Becoming a Federal Firearms Licensee (FFL) is one of the most significant steps a firearms enthusiast or entrepreneur can take. An FFL opens the door to buying firearms at wholesale prices, conducting transfers for customers, engaging in gunsmithing, and running a legitimate firearms business. But it also comes with serious legal obligations and ongoing compliance requirements. This comprehensive guide walks you through everything you need to know about becoming and operating as an FFL dealer in 2026 — from the initial application to day-to-day recordkeeping and ATF compliance.
What Is a Federal Firearms License (FFL)?
A Federal Firearms License is a license issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) that allows individuals and businesses to engage in the manufacture, importation, or dealing of firearms and ammunition. Under the Gun Control Act of 1968, anyone who engages in the business of buying and selling firearms must be licensed. FFL licenses are renewed every three years and are tied to a specific licensed premises. There are multiple FFL types, but the most common for retail dealers is the Type 01 (Dealer in Firearms Other Than Destructive Devices).
Types of FFL Licenses
The ATF issues several categories of FFL licenses depending on the intended business activity:
Type 01 — Dealer in Firearms (most common for gun shops and retail dealers), application fee $200. Type 02 — Pawnbroker in Firearms, application fee $200. Type 03 — Collector of Curios and Relics (C&R), application fee $30 — does not require fingerprints or photos. Type 06 — Manufacturer of Ammunition for Firearms, application fee $30. Type 07 — Manufacturer of Firearms and Ammunition, application fee $150. Type 08 — Importer of Firearms, application fee $150. Type 09 — Dealer in Destructive Devices, application fee $3,000. Type 10 — Manufacturer of Destructive Devices, application fee $3,000.
Most aspiring dealers apply for a Type 01 FFL. Gunsmiths typically apply for a Type 01 or Type 07 depending on whether they will be manufacturing firearms in addition to servicing them.
Eligibility Requirements
Before applying for an FFL, you must meet the following federal eligibility requirements:
Be at least 21 years of age. Be a U.S. citizen or lawful permanent resident. Have no felony convictions or disqualifying misdemeanor domestic violence offenses. Have no adjudication of mental defectiveness or involuntary mental health commitment. Not be an unlawful user of or addicted to any controlled substance. Not be under a domestic violence restraining order. Have a licensed premises (physical location) where business will be conducted. Comply with all applicable state and local laws regarding firearms businesses. Have a clean record with no prior FFL violations or license revocations.
Every Responsible Person listed on the application — meaning anyone with the authority to direct management or policy related to firearms operations — must also meet these same eligibility standards.
The FFL Application Process: Step by Step
Step 1: Determine Your FFL Type. Decide which FFL type matches your intended business activity. For most retail gun dealers, Type 01 is the appropriate choice.
Step 2: Obtain ATF Form 7. Download ATF Form 7 (Application for Federal Firearms License) from the ATF website at atf.gov. This is the primary application form for all new FFL applications.
Step 3: Complete the Application. Fill out all required information accurately, including your name, business name, licensed premises address, FFL type, and details of all Responsible Persons. Each Responsible Person must also complete the Responsible Person Questionnaire Supplement (ATF Form 7CR Part B).
Step 4: Submit Fingerprints and Photos. Each Responsible Person (except Type 03 applicants) must submit fingerprint cards (FD-258) and recent 2x2 passport-style photos with the application.
Step 5: Pay the Application Fee. Mail the completed application with the appropriate fee to the ATF. For a Type 01 dealer license, the fee is $200 for a three-year license.
Step 6: ATF Background Check and IOI Interview. The ATF will conduct a thorough background check on all Responsible Persons. Once the background check clears, an Industry Operations Investigator (IOI) from your local ATF field office will contact you to schedule an in-person interview. This interview covers your understanding of applicable laws, your business premises, recordkeeping plans, and storage facilities.
Step 7: Premises Inspection. The IOI will inspect your licensed premises to verify that you have a suitable location for conducting firearms business and that your security measures are adequate. The ATF typically acts on applications within 60 days of receipt, though processing can extend to 90 days due to scheduling.
Step 8: Receive Your License. If approved, your FFL will be mailed to you. Keep it posted or readily available at your licensed premises at all times.
Operating as an FFL Dealer: Ongoing Compliance Requirements
Obtaining your FFL is only the beginning. Operating a lawful firearms business requires strict, ongoing compliance with ATF regulations. Compliance failures — even administrative ones — can result in warnings, civil fines, or license revocation.
Recordkeeping: The Bound Book and ATF Form 4473
Every FFL must maintain a Bound Book (also called an Acquisition and Disposition log) that records every firearm that enters and leaves your inventory by serial number, make, model, caliber, and date. This record must be kept in chronological order and made available to ATF inspectors at any time during business hours.
For every firearm transfer to a non-licensed buyer, you must complete ATF Form 4473 (Firearms Transaction Record). The current mandatory version has been in effect since February 2024 following updates required by the Bipartisan Safer Communities Act. The 4473 records the buyer's personal information, certifies eligibility, and documents the NICS background check result. ATF inspectors cite Form 4473 errors as some of the most common compliance violations found during inspections — use the correct, current version and review each form for completeness before completing the transfer.
NICS Background Checks
Before transferring any firearm to a non-licensed buyer, you must initiate a NICS (National Instant Criminal Background Check System) check through the FBI. The check must be initiated via the 4473 and the result — Proceed, Delayed, or Denied — must be documented. A firearm may not be transferred to a buyer who receives a Denied response.
Reporting Requirements
Lost or Stolen Firearms: Any firearm lost from or stolen from your inventory must be reported to the ATF and local law enforcement immediately using ATF Form 3310.11.
Multiple Sales: If the same individual purchases two or more handguns within five consecutive business days, you must report this to the ATF and local law enforcement within that same five-day window.
Secure Storage
FFLs are required to store firearms securely when the business is closed. This means storing firearms in a locked premises with adequate physical security, or using locked gun safes, showcases, or storage rooms. The ATF doesn't mandate a specific type of storage device, but your storage setup will be evaluated during inspections for reasonable theft deterrence.
ATF Compliance Inspections
The ATF conducts periodic compliance inspections of licensed dealers, typically every three years though inspections can occur more frequently if there have been compliance issues or if the FFL is new. During an inspection, the IOI will examine your Bound Book, Form 4473 records, inventory, and general business practices. The four primary areas of inspection focus are: recordkeeping accuracy, inventory reconciliation, Form 4473 completeness, and compliance with transfer laws. Prepare for inspections by conducting regular internal audits of your records and inventory.
Renewing Your FFL
FFL licenses must be renewed every three years using ATF Form 8 (Renewal of Federal Firearms License). The ATF will send a renewal notice approximately 90 days before your license expires. If your business ownership, Responsible Persons, or licensed premises have changed, you must update this information with the ATF. Failure to renew on time results in the expiration of your license and loss of the ability to engage in firearms dealing.
Business and Legal Considerations
State and Local Laws: Federal law establishes the baseline, but state and local laws often impose additional requirements on firearms dealers. These may include state dealer licensing, additional background check requirements, handgun waiting periods, safe storage mandates, and zoning restrictions on where a firearms business can operate. Always consult with a local attorney familiar with firearms law before opening a gun business.
Business Structure: Choose an appropriate business structure — sole proprietorship, LLC, or corporation. An LLC provides liability protection and is a common choice for firearms dealers. All owners, partners, or managing members with operational authority must be listed as Responsible Persons on the FFL application.
Insurance: Obtain appropriate business insurance including general liability, product liability, and coverage for your firearm inventory. Standard business insurance may not cover firearms-related claims without specific endorsements.
Home-Based FFL Operations: It is possible to operate an FFL from a home-based location, but your city or county zoning laws may prohibit commercial firearms activity in residential areas. Check local ordinances carefully before listing a home address as your licensed premises.
Finding FFL Dealers on FFL Search
Whether you're looking to complete a firearms transfer through a licensed dealer or researching the FFL dealer landscape in your area, FFL Search is the go-to directory for locating licensed FFLs across the United States. Our database contains thousands of licensed dealers searchable by state, city, and zip code. Each listing includes the dealer's business name, license type, address, and contact information — everything a buyer needs to find a nearby FFL for a smooth, legal transfer.
Becoming an FFL dealer is a serious commitment that requires diligence, organization, and a genuine understanding of federal firearms law. For those willing to put in the work, it offers a unique opportunity to build a legitimate business in an industry that millions of Americans are passionate about. Use this guide as your starting point — and consult with an ATF-licensed compliance consultant or firearms attorney to ensure your operation stays on the right side of the law from day one.