FFL License Types
A Federal Firearms License (FFL) is a federal authorization that allows individuals or businesses to legally engage in firearm sales, gunsmithing, imports, or NFA manufacturing. As a leader in ATF compliance software, FastBound offers the tools and insights businesses need to navigate FFL license types, understand FFL license cost, and maintain compliance for everything from online gun sales to advanced manufacturing.
FFL Types
As a FFL, it’s important to understand the different Federal Firearms License types and what each one allows. There’s a specific type of FFL for each firearm dealer, manufacturer, importer, and collector as well as Special Occupational Taxpayer (SOT) classes that are required for those involved in making or selling items regulated by the National Firearms Act (NFA).
Type 01
Dealer
Type 02
Pawnbroker
Type 03
Curios and Relics
Type 06
Manufacturer of Ammunition
Type 07
Manufacturer of Firearms
Type 08
Importer of Firearms or Ammunition
Type 09
Dealer in Destructive Devices
Type 10
Manufacturer of Destructive Devices
Type 11
Importer of Destructive Devices
SOT Forms
SOT forms are required to make or sell NFA items, including short-barreled rifles, suppressors, and machine guns. Each SOT class covers a different aspect of the NFA firearms business.
Class 2 SOT
Manufacture and Deal NFA Firearms
Class 3 SOT
Sell NFA Firearms
ATF Forms
Navigating ATF forms is a key part of staying compliant with federal regulations in the firearms industry. Each form serves a specific purpose, from manufacturing or transferring NFA items to recording retail sales. Whether you’re building a firearm, transferring to another FFL or SOT, or documenting a sale to a customer, understanding these forms ensures every step of the process is properly processed and tracked.
ATF Form 1
Firearm Construction
ATF Form 2
Notice of Firearms Manufactured or Imported
ATF Form 3
Transferring NFA Items to SOT
ATF Form 4
Transferring NFA Items to Someone Without an FFL
ATF Form 5
Application for Tax Exempt Transfer and Registration of Firearm
Form 4473
Firearm Transfers from an FFL
Compliance
From ITAR regulations governing defense-related articles to 922r requirements distinguishing between U.S.- and foreign-made firearm parts, each rule plays a vital role in meeting federal legal requirements. Maintaining compliance helps ensure that licensed dealers meet federal standards and avoids costly penalties.
ITAR Compliance
Manufacture, Sale, and Distribution of Defense-Related Articles and Services
922r Compliance
American-made Parts vs Foreign-made Parts While Manufacturing a Firearm
ATF Compliance
Checkout FastBound's Features that Help You Stay Compliant with the ATF
Why Federal Firearms Licenses Exist
The federal government regulates firearm commerce to prevent illegal sales, enable traceability, and protect public safety. This system was formalized under the Gun Control Act of 1968, which established rules for licensing and recordkeeping for anyone engaged in the business of selling or manufacturing firearms. FFLs create accountability by requiring background checks, accurate recordkeeping, and compliance with ATF regulations.
- Prevent firearms from entering illegal markets
- Enable traceability of every firearm transaction
- Protect public safety through background checks and controlled distribution
- National legitimacy for legal firearm transactions
- Direct access to manufacturers and wholesalers
- Strong consumer trust and credibility
ATF Authority and Legal Framework
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the federal agency responsible for enforcing firearms laws and regulating commerce in firearms and ammunition. The ATF has the authority to issue and renew FFLs, conduct audits and compliance inspections, and revoke licenses when violations occur. When license holders fail to comply with these regulations, the consequences can be severe. Violations may result in civil fines, suspension or revocation of the FFL, and even criminal charges that can lead to imprisonment. This strict enforcement underscores the importance of maintaining accurate records, following background check procedures, and adhering to all ATF rules to avoid legal and financial penalties.
Core Firearms Laws
- Gun Control Act (GCA) – Governs firearm sales and licensing
- National Firearms Act (NFA) – Regulates machine guns, suppressors, and other NFA items
- Arms Export Control Act (AECA) – Controls the export of firearms and related technology
- Selling firearms as a business
- Manufacturing firearms or ammunition
- Importing firearms or ammunition
- Providing gunsmithing services for profit
- Private intrastate sales
- Occasional personal transfers of firearms between individuals
- Non-operational collectors
According to 18 U.S. Code § 922, engaging in the business of selling firearms without an FFL is a felony.
Nine FFL License Types
Type | Description | Primary Use | Initial Fee |
01 | Dealer in Firearms | Retail firearm sales and gunsmithing | $200 |
02 | Pawnbroker in Firearms | Firearm sales and accepting firearms as collateral | $200 |
03 | Collector of Curios & Relics (C&R) | Collecting historical firearms | $30 |
06 | Manufacturer of Ammunition | Ammunition production only | $30 |
07 | Manufacturer of Firearms | Firearm and ammunition manufacturing, plus sales | $150 |
08 | Importer of Firearms and Ammunition | Import firearms and ammunition | $150 |
09 | Dealer in Destructive Devices | Sale of destructive devices | $3,000 |
10 | Manufacturer of Destructive Devices | Manufacturing destructive devices | $3,000 |
11 | Importer of Destructive Devices | Importing destructive devices | $3,000 |
Type 01 – Dealer in Firearms
This license allows the sale of firearms and provides gunsmithing services, but does not permit manufacturing beyond minor repairs. It is one of the most popular licenses for retail stores, online firearm sales, and home-based operations. The initial application fee for a Type 01 license is $200, and the renewal fee is $90 for a three-year term.
Type 02 – Pawnbroker in Firearms
The Type 02 license includes all the privileges of a Type 01 license and also authorizes the pawnbroker to accept firearms as collateral. The initial fee for Type 02 is $200, and the renewal fee is $90 for a three-year term.
Type 09 – Dealer in Destructive Devices
This license allows businesses to deal in destructive devices, which include grenades, bombs, large-bore firearms, and similar weapons classified under federal law. The initial fee for Type 09 is $3,000, and the renewal fee is $3,000 for a three-year term.
Type 03 – Collector of Curios & RelicsPawnbroker in Firearms
A Curio and Relic (C&R) firearm, as defined by the ATF, is at least 50 years old or listed on the ATF’s official C&R list due to historical or collectible value. The Type 03 license costs $30 for three years, making it the most affordable FFL option. This license is strictly non-business, meaning it cannot be used to engage in buying and selling firearms for profit. However, collectors are still required to maintain acquisition and disposition records for any C&R firearms obtained, even though they are not obligated to keep a bound book with fewer requirements for business purposes.
Examples include WWII-era rifles and early Colt revolvers, both highly sought after by collectors for their historical significance.
Type 06 – Manufacturer of Ammunition
This license allows manufacturing ammunition only, excluding firearms. The initial fee for Type 06 is $30, and the renewal fee is $30 for a three-year term.
Type 07 – Manufacturer of Firearms
This license authorizes manufacturing both firearms and ammunition, as well as acting as a dealer. This is the most common license for businesses that produce firearms and ammunition. The initial fee for Type 07 is $150, and the renewal fee is $150 for a three-year term.
Type 10 – Manufacturer of Destructive Devices
This license covers the manufacturing of destructive devices, including explosives, grenades, and ordnance. The initial fee for Type 10 is $3,000, and the renewal fee is $3,000 for a three-year term.
Additional Considerations:
- ITAR Registration: Tiered fees based on registration
- Federal Excise Tax: 10–11% on firearm and ammo sales
- NFA Manufacturing: Requires a Class 2 Special Occupational Tax (SOT) in addition to the Type 07 license
Type 08 – Importer of Firearms
This license allows importation of firearms and ammunition and permits sales as a dealer. The initial fee for Type 08 is $150, and the renewal fee is $150 for a three-year term.
Type 11 – Importer of Destructive Devices
This license extends import privileges to destructive devices and NFA items. The initial fee for Type 11 is $3,000, and the renewal fee is $3,000 for a three-year term.
Both licenses require registration under ITAR and compliance with the Automated Export System (AES) for exports. Common use cases include sourcing surplus firearms and importing foreign ammunition brands.
To work with destructive devices, licensees must also comply with federal explosives regulations:
- Explosives Permitting: Businesses must obtain the appropriate explosives license or permit from the ATF’s Explosives Division to store or handle explosive materials.
These licenses are subject to enhanced security inspections, stringent storage requirements, and extensive record-keeping obligations.
Cost Breakdown and Special Occupational Tax Requirements
Federal Firearms License fees are set at the federal level, which makes budgeting straightforward but essential for anyone entering the firearms industry. These fees are fixed, non-refundable, and must be paid at the time of application or renewal.
| License Type | Initial Fee | Renewal Fee | Validity Period |
|---|---|---|---|
| Type 01 – Dealer in Firearms | $200 | $90 | 3 years |
| Type 02 – Pawnbroker | $200 | $90 | 3 years |
| Type 03 – Collector (C&R) | $30 | $30 | 3 years |
| Type 06 – Manufacturer of Ammunition | $30 | $30 | 3 years |
| Type 07 – Manufacturer of Firearms | $150 | $150 | 3 years |
| Type 08 – Importer of Firearms | $150 | $150 | 3 years |
| Type 09 – Dealer in Destructive Devices | $3,000 | $3,000 | 3 years |
| Type 10 – Manufacturer of Destructive Devices | $3,000 | $3,000 | 3 years |
| Type 11 – Importer of Destructive Devices | $3,000 | $3,000 | 3 years |
Cost Highlights:
- Lowest cost: Type 03 Collector and Type 06 Manufacturer of Ammunition – $30 for three years
- Highest cost: Types 09, 10, and 11 – $3,000 for three years
Special Occupational Tax (SOT): Classes, Rates, and When They Apply
The Special Occupational Tax (SOT) is an annual tax that must be paid by FFL holders who manufacture, import, or deal in NFA (National Firearms Act) items such as suppressors, machine guns, short-barreled rifles, and destructive devices.
- Class 1: Importer – $500 to $1,000
- Class 2: Manufacturer – $500 to $1,000
- Class 3: Dealer – $500 (no revenue tier)
- The tax is $500 per year for businesses with less than $500,000 in gross revenue from firearms activities.
- For businesses with revenue over $500,000, the annual SOT is $1,000.
Hidden Costs Including ITAR, Excise Tax, and Insurance
While federal license fees are straightforward, there are additional expenses that can significantly impact your budget. These costs often apply to businesses involved in manufacturing, importing, or exporting firearms and ammunition.
The International Traffic in Arms Regulations (ITAR) requires manufacturers and exporters of firearms, ammunition, and related components to register with the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC).
- Annual Registration Fee
- Tier 1: $3,000
- Tier 2: Starting at $4,000
- Tier 3: $4,000 plus $1,100 for each favorable license over five
- Applies if you manufacture firearms or ammunition for export or produce items on the U.S. Munitions List.
Manufacturers of firearms and ammunition are subject to an excise tax under federal law:
- 10–11% on the sale price of firearms and ammunition
- Paid quarterly to the Internal Revenue Service (IRS).
Obtaining liability and property insurance is strongly recommended, and often necessary, to meet ATF security expectations and protect your business against theft, accidents, or loss.
- Estimated Cost Range: $500 to $5,000 annually depending on coverage and business size
These hidden costs highlight the importance of thorough financial planning before applying for your FFL.
How to Choose the Correct FFL for Your Firearms Business
Choosing the right Federal Firearms License (FFL) is a foundational step for your business. The best approach is to start with your goals, then map them to the license type and any additional requirements, such as the Special Occupational Tax (SOT). Below is a practical roadmap to help you make the right choice.
Decision Tree for Common Scenarios
Follow this simple guide to identify the correct FFL and SOT needs for your business model:
- Retail Storefront (Brick-and-Mortar Shop)
- Goal: Sell firearms to the public in person
- Recommended License: Type 01 (Dealer)
- SOT: Not required unless dealing in NFA items
- Online-Only Firearms Sales
- Goal: Sell firearms via an e-commerce platform
- Recommended License: Type 01 (Dealer)
- SOT: Required only if you handle NFA items
- Custom Builds or Gunsmithing
- Goal: Manufacture or assemble firearms
- Recommended License: Type 07 (Manufacturer)
- SOT: Class 2 if making NFA items
- Import Firearms or Ammunition
- Goal: Bring products into the U.S. from abroad
- Recommended License: Type 08 (Importer)
- SOT: Required for NFA imports
Online Sales and Home-Based Operations
Running an online or home-based FFL business comes with unique considerations:
- Zoning Rules: Local ordinances may restrict commercial activities in residential areas. Check zoning compliance before applying.
- ATF Interview: Be ready to explain security measures and recordkeeping during your in-home compliance inspection.
- License Types: Type 01 (Dealer) and Type 07 (Manufacturer) are the most common for home-based or e-commerce models.
- Compliance: Even when shipping interstate, you must complete NICS background checks for all firearm transfers.
- Tech Tip: Many FFL software solutions (like FastBound) integrate with e-commerce platforms to maintain ATF compliance.
Manufacturing NFA Items and Ammunition
If your business involves manufacturing NFA-regulated items (like silencers or short-barreled rifles) or ammunition, your license choice is critical:
- Best Option: Type 07 Manufacturer + Class 2 SOT
- Most cost-effective for making standard and NFA firearms
- Covers gunsmithing, production, and limited ammo manufacturing
- Alternative: Type 10 Manufacturer
- Required for Destructive Devices (DDs) and advanced ordnance
- Includes explosives storage compliance under ATF regulations
- Why SOT Matters: Class 2 SOT allows you to make NFA items without paying the $200 tax per item, saving significant costs over time.
Compliance Checklist and Software Solutions
Ongoing compliance with ATF regulations is mandatory, not optional, for every Federal Firearms Licensee. Staying organized and audit-ready protects your business from costly penalties or revocation. Here’s what you need to know.
Bound Book, e4473, and Inventory Controls
The Bound Book is your official acquisition and disposition record required by the ATF. It must track every firearm you acquire or sell.
- Manufacturer
- Model
- Serial number
- Caliber or gauge
- Date of acquisition and disposition
- Fully legal when using an ATF‑compliant platform
- Eliminates handwriting errors and manual reconciliation
- Offers instant search by serial number or acquisition date, plus inspection‑ready reporting
Form 4473 Requirements:
Every retail firearm transfer requires a completed ATF Form 4473. Licensees must retain every Form 4473 (approved or denied) until the business is discontinued.
Preparing for an ATF Inspection
ATF inspections are regular and expected, so preparation is essential. Use this pre-inspection checklist:
- Reconcile Inventory: Match physical stock to your bound book records
- Verify 4473 Completeness: Check for signatures, dates, and NICS responses
- Review Renewals: Confirm SOT and ITAR registrations are current
- Organize Records: Keep three years of 4473s easily accessible for inspectors
Typical Inspection Timeline:
- Notification: ATF usually provides advance notice
- On-Site Review: Inspectors check bound book, 4473s, and inventory
- Corrective Window: You will have time to fix minor recordkeeping errors before enforcement
How FastBound Simplifies Daily Compliance
FastBound makes staying compliant simple and stress-free:
- Automated Bound Book: Cloud-based and fully ATF-compliant
- e4473 with Digital Signature Support: Capture signatures on any device
- Real-Time Error Checking: Detect and correct mistakes before submission
- Proven Results: FastBound’s users report significant reductions in common Form 4473 errors thanks to automated validations, digitized workflows, and built‑in compliance checks.
Start a free FastBound trial to safeguard your FFL today.
FAQs
Yes. A single firearm business can hold several FFL license types at the same premises. Each federal firearm license requires its own application process and application fee under federal regulations.
Yes. Importing firearms or ammunition from foreign countries requires a Type 08 or Type 11 FFL license, plus ITAR registration. For NFA firearms like a machine gun or destructive device, you also need to register as a Special Occupational Taxpayer (SOT).
A Type 01 FFL dealer license is best because it allows a licensed dealer to perform repairs and modifications under federal firearm rules. It supports gunsmithing business activity without the higher costs of becoming a full manufacturer of ammunition or firearms.
You need a Type 07 FFL and a Class 2 SOT registration to produce and sell NFA items such as short-barreled rifles, silencers, or a machine gun. This combination satisfies National Firearms Act and federal requirements for FFL holders engaged in manufacturing.
A Type 01 FFL permits a gun dealer or licensed dealer to sell firearms and perform basic gunsmithing. A Type 07 FFL adds authority to manufacture firearms and ammunition, making it better for long-term growth and ATF compliance for a firearm business.
The application process for a federal firearm license typically takes place during a 60-day period. Delays can occur if responsible persons fail the background check, zoning laws conflict with local law, or issues arise during the ATF Form review by an Industry Operations Investigator.