FFL Firearm Meaning: What It Is, Who Needs One & How It Works (2026)
If you've spent any time in the firearms industry, you've seen the acronym everywhere: FFL. It's on every dealer's window, every online listing, every compliance document. But what does FFL actually mean — and more importantly, what does holding one require from a business perspective?
This guide breaks down what a Federal Firearms License is, who needs one, the different types available, the compliance obligations that come with it, and how the FFL system shapes everyday operations for firearms businesses of all sizes.
What does FFL stand for?
FFL stands for Federal Firearms License. It is a license issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) that authorizes an individual or business to engage in the business of manufacturing, importing, or dealing in firearms and ammunition.
The key phrase is "engaged in the business." Under federal law (18 U.S.C. § 922), anyone who is engaged in the business of dealing, manufacturing, or importing firearms must have an FFL. Private individuals can sell firearms from their personal collection without a license, but the moment the activity becomes repetitive, commercially motivated, or conducted for profit, a license is required.
An FFL is not a single, one-size-fits-all license. The ATF issues multiple FFL types, each authorizing different activities — from retail sales to manufacturing to importing to dealing exclusively in destructive devices. The type of license you need depends on what your business does.
Who needs an FFL?
Any business or individual who engages in one or more of the following activities on a commercial basis needs an FFL:
Selling firearms — whether from a storefront, at gun shows, or through online sales that ship to other FFLs for customer pickup
Manufacturing firearms or ammunition — including assembling firearms from parts, which the ATF considers manufacturing
Importing firearms or ammunition — bringing firearms into the United States for commercial sale
Pawn operations involving firearms — pawn shops that accept firearms as collateral must hold an FFL to return them to the customer (this is legally a "transfer")
You do not need an FFL to purchase firearms for personal use, to sell firearms from your personal collection on an occasional basis, or to repair firearms (though many gunsmiths hold an FFL for business reasons).
The Bipartisan Safer Communities Act change
The Bipartisan Safer Communities Act (2022) expanded the definition of who is "engaged in the business" of dealing firearms. Under the updated law, anyone who sells firearms primarily to earn a profit — regardless of location or volume — may need an FFL. This closed what was commonly referred to as the "gun show loophole" and means more individuals and small sellers now fall under the licensing requirement.
Types of Federal Firearms Licenses
The ATF issues nine types of FFLs across three categories: dealers, manufacturers, and importers. Here are the most common:
Type 01 — Dealer in Firearms (other than destructive devices)
The most common FFL in the country. This is the license held by gun shops, pawn shops, sporting goods stores, and home-based dealers. It authorizes the holder to buy and sell Title I firearms (handguns, rifles, shotguns, frames, and receivers), conduct transfers, and perform repairs.
Cost: $200 to apply, $90 to renew every 3 years.
Type 02 — Pawnbroker in Firearms
Functionally identical to a Type 01 but specifically designated for pawn shops that deal in firearms. If your business model involves accepting firearms as collateral and returning or selling them, this is the license you need.
Cost: $200 to apply, $90 to renew every 3 years.
Type 07 — Manufacturer of Firearms (other than destructive devices)
Authorizes the holder to manufacture firearms and ammunition and also includes full dealer privileges. This is the license for businesses that build firearms — whether from raw materials or by assembling commercially available parts. Assembling a firearm from a stripped lower receiver and a parts kit is considered manufacturing by the ATF, which is why many builders need a Type 07 rather than a Type 01.
Cost: $150 to apply, $150 to renew every 3 years.
For a detailed comparison of the two most common licenses, see our FFL Types Explained: Type 01 vs. Type 07 guide.
Type 06 — Manufacturer of Ammunition
For businesses that manufacture ammunition but do not manufacture firearms.
Cost: $30 to apply, $30 to renew every 3 years.
Type 08 — Importer of Firearms
Authorizes the importation of firearms and ammunition into the United States for commercial sale. Importers must also comply with additional regulations from U.S. Customs and Border Protection.
Cost: $150 to apply, $150 to renew every 3 years.
Special Occupational Tax (SOT)
FFLs who want to deal in or manufacture National Firearms Act (NFA) items — suppressors, short-barreled rifles, short-barreled shotguns, machine guns, and destructive devices — must pay an annual Special Occupational Tax in addition to holding the appropriate FFL:
Class 01 SOT — Importer of NFA items (requires Type 08 FFL)
Class 02 SOT — Manufacturer of NFA items (requires Type 07 FFL)
Class 03 SOT — Dealer of NFA items (requires Type 01 FFL)
The annual SOT cost is $500 for businesses with gross receipts under $500,000, or $1,000 for businesses above that threshold.
How to get an FFL
The application process is straightforward but has specific requirements:
Meet the eligibility criteria. You must be at least 21 years old (18 for Type 03 — Curio & Relic only), not prohibited from possessing firearms under federal law, not a fugitive from justice, and not an unlawful user of controlled substances. You must also have business premises that comply with state and local zoning laws.
Submit ATF Form 7 (Application for Federal Firearms License). This is the official application form. It includes your personal information, business information, the type of license you're applying for, and your proposed business location.
Pay the application fee. Fees vary by license type (see above).
Pass a background check. The ATF conducts a thorough background investigation on all applicants, including criminal history, mental health records, and prior ATF compliance history.
Complete an in-person interview and inspection. An ATF Industry Operations Inspector (IOI) will visit your proposed business location to verify that it meets federal, state, and local requirements, and will conduct an in-person interview to review your application and your understanding of the regulations.
The process typically takes 60–90 days from application to approval, though timelines vary.
FFL compliance obligations
Holding an FFL is not just about having the legal right to sell firearms — it comes with a set of ongoing compliance obligations that the ATF actively enforces through periodic inspections. Here are the core requirements:
ATF Form 4473 — Firearms Transaction Record
Every firearm transfer from an FFL to a non-licensee requires a completed ATF Form 4473. The form captures the buyer's identifying information, verifies their eligibility through a series of yes/no questions, and records the firearm details. The FFL must retain completed forms for a minimum of 20 years.
Form 4473 errors account for a significant portion of the top ATF violations cited during compliance inspections. Common issues include incomplete fields, missing signatures, incorrect dates, and illegible handwriting on paper forms.
This is where digital solutions make a measurable difference. Electronic 4473 software like E4473 eliminates handwriting issues entirely, uses built-in validation to catch errors before submission, and stores completed forms digitally for up to 20 years.
NICS background checks
Before completing any firearm transfer to a non-licensee, the FFL must contact the National Instant Criminal Background Check System (NICS) — operated by the FBI — to verify the buyer's eligibility. The check uses information from the completed Form 4473 to search federal and state databases.
With E4473's NICS integration, customer data from the digital form flows directly into the background check submission — no double entry, no re-typing information into a separate system.
Acquisition and Disposition (A&D) records
Every firearm that enters or leaves your premises must be logged in your A&D bound book. This is a running record of every acquisition (purchase, trade, or receipt from another FFL) and every disposition (sale, transfer, or shipment to another FFL). The ATF reviews this record during every compliance inspection.
Record retention
FFLs must retain all records — Form 4473s, A&D logs, NICS records, and supporting documentation — for the life of the license plus 20 years. If the business discontinues operations, all records must be transferred to the ATF's National Tracing Center within 30 days. Digital storage simplifies this obligation significantly.
ATF compliance inspections
Every FFL is subject to periodic ATF compliance inspections. An ATF Industry Operations Inspector will review your Form 4473 records, A&D book, NICS documentation, and licensed premises. The frequency of inspections depends on your license type and transaction volume, but every FFL should be prepared at all times.
For a detailed guide on audit preparation, see our complete FFL guide.
The FFL-to-FFL relationship: how B2B works in firearms
One of the most important aspects of the FFL system — and one that's often overlooked in consumer-facing content — is how FFLs interact with each other. The entire supply chain of the firearms industry runs on FFL-to-FFL transactions.
Distributor to dealer
Firearms distributors (who hold their own FFLs) ship inventory to retail dealers. These transfers are recorded in both parties' A&D books but do not require a Form 4473 — the 4473 is only required when a firearm is transferred to a non-licensee (the end customer).
Online sales and transfers
When a customer buys a firearm online, the selling FFL ships the firearm to the buyer's local FFL. The receiving FFL logs the firearm into their A&D book, and the customer then completes a Form 4473 and passes a NICS check before taking possession. This is one of the highest-volume workflows for many FFLs, and having an efficient digital 4473 processmeans faster turnaround on incoming transfers.
Manufacturer to dealer
Type 07 manufacturers ship finished firearms to Type 01 dealers or directly to distributors. Again, these are FFL-to-FFL transfers logged in A&D records. The Form 4473 only enters the picture at the final point of sale to the consumer.
Returns and warranty work
Firearms returned for warranty service follow specific ATF rules. In most cases, a firearm returned to the person who originally transferred it does not require a new 4473. However, proper A&D documentation is still required for every movement.
Why digital compliance matters for FFLs
The compliance obligations outlined above are not optional — they are the cost of doing business as an FFL. The question isn't whether you'll comply, but how efficiently you'll do it.
Paper-based systems work. They've worked for decades. But they come with well-documented problems: illegible handwriting that leads to ATF violations, hours spent searching for a single form during an audit, boxes of records vulnerable to fire, flood, and theft, and sensitive customer data sitting unsecured in a backroom.
Digital 4473 software addresses every one of these problems:
Accuracy — Built-in validation catches errors before the form is submitted, reducing the violations that get FFLs cited during inspections
Speed — Customers complete forms on their own device in minutes. NICS checks are submitted from the same platform with no double entry
Audit readiness — Pull any form in seconds during an ATF inspection. The ATF Audit Portal gives your IOI restricted access to search, view, and print records on demand
Security — Encrypted storage with 5-tier data protection replaces filing cabinets full of Social Security Numbers and personal information
Storage — Cloud storage retains forms for up to 20 years with daily on-site backups, meeting every ATF digital storage requirement
The bottom line
An FFL is not just a license — it's a framework of responsibilities. Understanding what FFL means goes far beyond the acronym. It means understanding which license type fits your business model, which compliance obligations apply to your operations, and how to build systems that keep you audit-ready every day of the year.
Whether you're a single-location gun shop processing 10 forms a month or a multi-store operation handling thousands, the compliance obligations are the same. The only variable is how efficiently you meet them.
For FFLs ready to modernize: E4473 digitizes the entire 4473 process — from customer form completion to NICS submission to ATF-compliant cloud storage. Built for Type 01 and Type 07 FFLs of all sizes. Schedule a demo to see how it works.