When states require a car auction license, this usually means you'll need both a car dealer's license, which allows you to sell cars commercially, and a separate auction license if your state requires one. Both are state issued, though some municipalities may also require their own additional licenses such as wholesale or franchise dealer, and specific guidelines vary from state to state.

Determine if you need a car dealer's license. Each state has its own regulations that specify the maximum number of cars per year you can sell without a dealer license. In New York, for example, it's up to four cars annually. If you want to sell more cars per year than your state's unlicensed maximum, you will need a dealer license.

Meet all of the prerequisites required by your state for an auto dealer's license. Proof you've met these conditions will have to be attached to your application. Each state is different, but generally, these prerequisites include:

  • Physical showroom or office, depending on whether you intend to sell retail or wholesale, that meets any specified square footage and zoning requirements
  • Sign, in compliance with signage zoning laws
  • Surety bond, the required amount of which may differ if you plan to have more than one location and whether you employ salespeople
  • Business name registration, if you're going to use a name for your auto sales/auction business other than the one on your birth certificate
  • Copies of your articles of incorporation, if you've filed as a corporation with your state division of corporations
  • Liability insurance, in the amount required by your state
  • Trader licenses from both your municipality and your county, if they are required
  • Proof of completion of your state's licensing course, if required
  • Proof of an inspection conducted of your showroom or office, signed off on by an inspector from the state licensing agency. 

Send your application with all required supporting documents to the appropriate agency for your state. For example, New York auto dealer licenses are issued by the Bureau of Consumer and Facility Services, and in North Carolina they are issued by the North Carolina License and Theft Bureau. Include any fees your state requires at this time, such as a license application fee, license certificate fee, sales representative fee and dealer license plate fees.

Apply to the IRS for an Employer Identification Number, and to your state department of revenue for a sales tax ID, which will allow you to collect and submit the required taxes on any sales you make.

Investigate whether you need a separate auction license or not; again, each state is different. In Florida, you don't need a license to auction automobiles, if the auction is restricted to automobile dealers and it is conducted by a licensed auctioneer. If you want to auction cars to the public, you need an auction license.

Secure an auction license, if your state requires one. In some jurisdictions municipalities also require their own licenses on top of those which the state requires. Requirements for an auction license vary from state to state. The Florida Department of Business and Professional Regulation's Board of Auctioneers, for example, requires that you be at least 18 years old and have completed either one year of apprenticeship or 80 hours of classroom training in an approved educational program. You may also have to take an exam, or receive an endorsement from the Florida Department of Business and Professional Regulation if you have an existing license from another state.