An arms broker is any person who sells, negotiates, purchases, arranges contracts for, and/or transfers weaponry, defensive articles or services, in return for a fee or commission. Modern society has attached a stigma to arms brokers, sometimes referring to them as “Merchants of Death.” However, there are many successful and law-abiding arms brokers throughout the world. To become an arms broker, you must be prepared to take several steps before achieving your goal. There are also many legal requirements to go through.
Items you will need
- Understanding of the law
- Company registration
- Federal firearm license
Understanding the basics
Under the International Traffic in Arms Regulations, brokering activities include “the financing, transportation, freight forwarding, or taking of any other action that facilitates the manufacture, export, or import of a defense article or defense service, irrespective of its origin.” Due to the legal concerns regarding illegal arms dealing, each arms transaction must have prior written approval by the United States State Department.
You will need to registered your company. You can register your company as any one of the following:
Sole proprietor: A sole proprietorship means you have sole control over the business, including any liabilities. The cost to register as a sole proprietor is low, but depending on your location, you may need to acquire a business license, occupancy permit, and apply for a franchise/company registration number (used by state authorities to track tax collection).
General partnership: A general partnership is used if two or more individuals will run the business. A business partnership agreement is required, and it must include: the upfront contribution of capital from each partner; rights and duties of each partner; the profit and loss sharing methods and percentages; authorizations of cash withdrawal and salary disbursement from company accounts; and a dispute resolution policy, including partnership dissolution terms. A business license, occupancy certificate and registration number may also be required depending on your state regulations.
Limited liability partnership: A limited liability partner plays a silent role in business and company operations. This partner does share in the company's profits, but is not liable for debt and other potential liabilities. A similar contract as described above is required, but will include clauses regarding that partner’s limited liability.
Corporation: A corporation is a legal entity separated from the individuals responsible for creating it. An application for a charter according to relevant state law is required. The charter should explain the purpose of the corporation, names and addresses of those involved, the amount and type of capital stock the corporation will issue and rights of each owner by their class of stock. Registering as a corporation may include additional documentation and other paperwork varying by state.
Limited liability company (LLC): An LLC is the best option for those concerned about legal liability protection. There is a simple tax structure involved, and more freedom regarding business write-offs, losses and removal of assets without additional tax burdens. Depending on your state, an LLC may be subject to legal and statutory provisions.
Any arms broker must obtain a Federal Firearm License (FFL). To do so, you will need to complete an application: the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Form 7 or the ATF Form 7CR. Form 7 is the basic FFL application, Form 7CR is an application to become a licensed artifact collector. These forms can be obtained by contacting the ATF directly; they cannot be filled out online. You will also need to provide current photographs and fingerprints. You must be 21 years of age or older; you must not be prohibited from possessing firearms; you have not violated the Gun Control Act in any way; you cannot lie or fail to disclose information in your application; you must also have approved premises for conducting business. During the application process, you must confirm that your business is not prohibited by any state or local laws. You will also have to confirm that: you will comply with all local and state laws that may pertain to your business; and you will not do any business until you meet all local and state laws. You must notify your local Chief of Police of your intent to apply for an FFL and of the location you will use. You must also provide secure storage and safety devices for firearms that you will broker at your location.
Be sure to find out more information on the law and processes at the US State Department website.
Once you have your business registered and licensed, you can join the Central Contractor Registration (CCR) to become a government contractor. The CCR is a government-maintained database that is the primary source Federal agencies use to find new vendors.
Registering a company may vary from state to state; be sure to find out what your local and state requirements are.
Always seek professional advice from your attorney or CPA before registering a company.
- Legal Law Justice image by Stacey Alexander from Fotolia.com