How to Start a Gun Company: FFL License and ATF Rules

To start a gun company in the United States, you need a legal business entity, a location your local government will approve for firearms activity, and a Federal Firearms License issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives before you sell or make a single gun. Manufacturers carry an additional stack of obligations, including State Department registration, a federal excise tax, and strict marking rules. From a complete application, the FFL itself typically takes about 60 days to issue.¹

Decide Which FFL You Actually Need

Federal law forbids anyone from engaging in the business of manufacturing, importing, or dealing in firearms without the appropriate ATF license.² Since the 2022 Bipartisan Safer Communities Act, the trigger is simpler than it used to be: if your intent is “predominantly one of obtaining pecuniary gain” rather than adding to or liquidating a personal collection, you are engaged in the business.³ Willfully operating without a license carries up to five years in federal prison, a fine of up to $250,000, or both.⁴

Picking the wrong license type is a common mistake that forces applicants to start over. Three types cover most new gun companies:

Type 01 (Dealer/Gunsmith) lets you buy at wholesale, sell at retail, and perform repairs. It does not allow manufacturing firearms for sale.
Type 07 (Manufacturer of Firearms) covers everything a Type 01 does and adds the authority to manufacture. If you plan to machine receivers, assemble complete firearms from parts, or build custom guns for customers, this is your license.
Type 06 (Manufacturer of Ammunition) covers commercial ammunition production. Reloading for personal use does not require it; selling reloaded rounds does.

Because a Type 07 holder can also deal in firearms, startups planning to both manufacture and retail generally apply for the 07 rather than two separate licenses.⁵

Form the Business and Lock Down a Compliant Location

Before you touch the federal application, you need a legal entity and a location the ATF can approve. Most firearms businesses form an LLC or corporation through their state’s Secretary of State office. LLC filing fees vary widely, roughly $35 to $500 depending on the state. Once the entity exists, apply for an Employer Identification Number using IRS Form SS-4, which you can do online at no cost.⁶ The EIN goes on your federal firearms application.

Zoning is where many aspiring owners hit a wall. Your business location must be approved by local planning authorities for commercial firearms activity, and many jurisdictions restrict firearms sales and manufacturing near schools, parks, or residential areas. The ATF will not issue a license for a location that violates local zoning. Get written confirmation from your city or county planning office before signing a lease, and have a building inspector verify that the premises meet fire and safety codes for storing firearms and, if applicable, ammunition.

Some states also require a separate state-level firearms dealer license or general retail sales permit. About a third of states charge an additional fee for this; the majority do not require a supplemental state permit at all. Check with your state’s licensing authority early, because a missing state permit can jeopardize your federal license.

Apply for the Federal Firearms License

Documents and Responsible Persons

The federal application is ATF Form 7 (Form 7CR for corporations and other entities). Every “responsible person” must be identified. The ATF defines a responsible person as anyone with power to direct the management and policies of the company, including owners, partners, corporate officers, and board members.⁷

Each responsible person must submit two FD-258 fingerprint cards taken by a trained technician on official forms, a 2×2-inch photograph taken within the last six months against a neutral background, and personal identifying information including social security number, date of birth, and residential history.⁸ Poor fingerprint quality and missing information are the top reasons applications get sent back. Order official cards from the ATF Distribution Center and have prints taken somewhere experienced with federal forms.

Fees and Submission

Application fees cover a three-year license period and are nonrefundable if you’re denied. A Type 01 dealer license is $200; a Type 07 manufacturer license is $150.⁹ Applications can be filed on paper through the Federal Firearms Licensing Center or through the ATF’s eForms system.

The Onsite Inspection

After the paperwork clears initial review, an Industry Operations Investigator visits your proposed business location. This is not a rubber stamp. The investigator checks physical security, including locks, safes, and alarms, and confirms that you have secure gun storage or safety devices available wherever firearms will be sold to the public, as federal regulations require.¹⁰ The investigator also verifies that every responsible person is legally eligible to possess firearms, confirms local zoning approval, and walks through the record-keeping rules you will need to follow. Use this meeting to ask compliance questions before you’re actually accountable for them. If everything checks out, expect your license within roughly 60 days of a complete submission.

Extra Obligations for Manufacturers

ITAR Registration

Any company that manufactures items on the United States Munitions List, which includes virtually all modern firearms and ammunition, must register with the State Department’s Directorate of Defense Trade Controls under the International Traffic in Arms Regulations. The rule applies even if you never export a single product.¹¹ New registrants fall into Tier 1 at $3,000 per year. A temporary program effective January 2025 allows qualifying Tier 1 registrants to petition for a $500 reduction, bringing the fee to $2,500.¹² Budget for this before you have revenue.

Federal Excise Tax

Manufacturers owe federal excise tax on every firearm and round of ammunition they sell. The rate is 10% of the sale price for pistols and revolvers, and 11% for all other firearms, shells, and cartridges.¹³ The tax is administered by the Alcohol and Tobacco Tax and Trade Bureau, not the ATF, and is reported on TTB Form 5300.26.¹⁴ A small-manufacturer exemption applies if you manufacture, produce, and import fewer than 50 pistols, revolvers, and firearms combined in a calendar year. Each calendar year stands alone for that count.¹⁵

Special Occupational Tax for NFA Items

If your plans include suppressors, short-barreled rifles, short-barreled shotguns, or machine guns, you need Class 2 Special Occupational Tax status on top of a Type 07 license. The annual tax is $1,000, or $500 if your gross receipts for the most recent tax year were under $500,000.¹⁶ Every NFA firearm produced must be reported on ATF Form 2 by the close of the next business day, with a separate form for each day’s production.¹⁷

Marking and Serialization

Every firearm you make must be permanently marked on the frame or receiver before it leaves your facility. Required markings include a unique, non-duplicative serial number and either your business name with city and state, or your name with an abbreviated FFL number as a prefix to the serial number.¹⁸ You also mark the model designation if one exists, the caliber or gauge, and, for imported firearms, the country of manufacture. Markings must be engraved, cast, or stamped to a minimum depth of .003 inches, and serial numbers must appear in print no smaller than 1/16 inch. Invest in proper engraving equipment or contract with a professional engraver before your first production run.

Build Compliance Into Day One

The Bound Book

The acquisition and disposition record is the backbone of your compliance obligations.¹⁹ Every firearm entering or leaving your inventory must be logged with serial number, manufacturer, model, type, and caliber. Manufacturers have seven days from the date of manufacture or acquisition to record an incoming firearm, and seven days from the date of sale to record an outgoing one.²⁰ NFA firearms are logged by the close of the next business day. Errors or gaps in this ledger are the single fastest way to lose your license during an inspection.

Form 4473 and NICS

Every retail transfer to a non-licensed buyer requires a completed ATF Form 4473 and a background check through the National Instant Criminal Background Check System.²¹ You cannot release the firearm until NICS returns an “approve” response or three business days have elapsed since the check was initiated. At that point the transfer is permitted but not required; you can always wait for a definitive answer.²² For buyers under 21, a flag for possible disqualifying juvenile records can extend the wait up to 10 business days. Completed 4473 forms must be retained for the entire life of your business; the 20-year mark only lets you move older paper forms to a separate warehouse counted as part of your premises. If the business closes, all records go to the ATF’s National Tracing Center.²³

Reporting Deadlines You Can’t Miss

Respond to National Tracing Center trace requests within 24 hours with the disposition information from your records.²⁴
Report any theft or loss of a firearm from inventory to both the ATF and local law enforcement within 48 hours of discovery, using ATF Form 3310.11. Failure to report is itself a felony.²⁵
File ATF Form 3310.4 when you sell two or more pistols or revolvers (in any combination) to the same unlicensed buyer within five consecutive business days.²⁶

None of these are especially difficult with a system in place. The businesses that get into trouble are almost always the ones that treat record keeping as an afterthought rather than building it into their daily workflow from the start.

Renewal and What Happens If You’re Denied

An FFL lasts three years. The ATF mails a renewal application (Form 8 Part II) about 90 days before your license expires. Renewal fees are lower than the initial application: $90 for a Type 01 and $150 for a Type 07.²⁷ If you miss the window, you cannot legally conduct any firearms business until a new license is issued. Calendar the date carefully.

If the ATF denies your application, you have 15 days from receiving the notice to request a hearing in writing. The hearing is informal, presided over by the Director of Industry Operations, who reviews the evidence before issuing a final decision. If you disagree with that decision, you have 60 days to appeal to a federal district court for a fresh review.²⁸

1
Bureau of Alcohol, Tobacco, Firearms and Explosives. Current Processing Times
2
Office of the Law Revision Counsel. 18 USC Ch 44 – Firearms
3
Federal Register. Definition of Engaged in the Business as a Dealer in Firearms
4
Office of the Law Revision Counsel. 18 US Code 924 – Penalties
5
Bureau of Alcohol, Tobacco, Firearms and Explosives. Federal Firearms and Explosives Licenses by Types
6
Internal Revenue Service. About Form SS-4, Application for Employer Identification Number
7
Bureau of Alcohol, Tobacco, Firearms and Explosives. Background Checks for Responsible Persons – Final Rule 41F
8
Bureau of Alcohol, Tobacco, Firearms and Explosives. ATF Form 7 – Part B Responsible Person Questionnaire
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Bureau of Alcohol, Tobacco, Firearms and Explosives. ATF Form 7 – Application for Federal Firearms License
10
eCFR. 27 CFR 478.104 – Secure Gun Storage or Safety Device
11
eCFR. 22 CFR Part 122 – Registration of Manufacturers and Exporters
12
Directorate of Defense Trade Controls. DDTC Registration Fees
13
Alcohol and Tobacco Tax and Trade Bureau. Firearms and Ammunition Taxes and Tax Exemptions
14
Alcohol and Tobacco Tax and Trade Bureau. Firearms and Ammunition Excise Tax Forms
15
eCFR. 27 CFR Part 53 – Manufacturers Excise Taxes, Firearms and Ammunition
16
Bureau of Alcohol, Tobacco, Firearms and Explosives. Special Tax Registration and Return – National Firearms Act
17
Bureau of Alcohol, Tobacco, Firearms and Explosives. Notice of Firearms Manufactured or Imported – ATF Form 2
18
ATF eRegulations. 27 CFR 478.92 – Identification of Firearms and Armor Piercing Ammunition
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eCFR. 27 CFR Part 478 – Commerce in Firearms and Ammunition
20
eCFR. 27 CFR 478.123 – Records Maintained by Manufacturers
21
Bureau of Alcohol, Tobacco, Firearms and Explosives. ATF Form 4473 – Firearms Transaction Record
22
Office of the Law Revision Counsel. 18 USC 922 – Unlawful Acts
23
Bureau of Alcohol, Tobacco, Firearms and Explosives. ATF Form 4473 – Firearms Transaction Record Revisions
24
eCFR. 27 CFR 478.25a – Responses to Requests for Information
25
Bureau of Alcohol, Tobacco, Firearms and Explosives. Report Firearms Theft or Loss
26
Bureau of Alcohol, Tobacco, Firearms and Explosives. Multiple Sale or Other Disposition of Pistols and Revolvers – ATF Form 3310.4
27
Bureau of Alcohol, Tobacco, Firearms and Explosives. Federal Firearms Licenses
28
Bureau of Alcohol, Tobacco, Firearms and Explosives. Explanation of the Hearing Process