Your state's secretary of state issues auto dealer’s licenses. Laws and regulations vary by state, so be sure to check your state's laws before applying for an auto dealer’s license. In general, five categories of car dealers exist that require you to have a license if you sell more than three cars in a 12-month period: independent dealer, franchise dealer, service facility, wholesale dealer, auctions and salvage. State laws do not require auto dealers to have a storage lot, but do require auto dealers that fall into any one of these five categories to obtain a dealer’s license.
Contact the Zoning Department
Contact the zoning department for your city or county. Find out the zoning requirements for you to sell vehicles from your residential or business location. If you only have one or two vehicles for sale, it is generally permitted under zoning laws. Zoning laws do not prohibit you from putting the vehicles up for sale, but may limit how many you can have for sale at one time.
Contact the Secretary of State's Office
Contact the secretary of state's office. Call the office or visit the website of the secretary of state to identify which of the five categories of dealers you fit into. You can request an application package be sent to you by regular mail or download it from the website.
Contact the Department of Motor Vehicles
Contact the Department of Motor Vehicles (DMV) for your state to set up a site inspection. While you are not required to have a car lot to sell vehicles, you are required to have a place of business where your business records and accounting books are kept on a regular basis. A representative from the Department of Motor Vehicles will come out to your home or business location to perform the inspection.
Complete the Auto Dealer Application
Obtain and complete the auto dealer application for the Highway Safety and Motor Vehicles (HSMV) division. In addition to submitting the completed application to the secretary of state, you have to complete and submit this application to the HSMV. You have to submit proof of application and that you have met with a DMV representative when you submit your application to the secretary of state .
Apply for a Surety Bond
Apply for a surety bond. Contact an insurance agent to obtain a surety bond. The dealer license application states the minimum amount the state requires. In Florida, it is $25,000, but in Michigan it is only $10,000.
Complete a Dealership Training Course
Complete a dealership training course. From the list of approved dealership training course providers, register for the course. The number of hours you have to complete varies by the state and by what type of dealer you are. You will need to submit proof of satisfactory completion showing you took and passed the course when you submit your application to the secretary of state.
Register the Business Name
Register the business name or fictitious name for the business with the secretary of state. The business division of the secretary of state is responsible for registering the name of your business or fictitious name of your business, if you are operating under a name that is different from your own name. Complete and submit the business registration application according to the type of business entity you are registering—sole proprietorship, partnership, corporation or limited liability company. You have to submit proof of registration with your auto dealer license application.
Apply for a Sales Tax Number
Apply for a sales-tax number with the state. Contact the Department of Revenue for the state to apply for a sales-tax number. This is the number you use to charge and collect sales tax from customers, that you then pay to the state.
Apply for a Federal Tax Identification Number
Apply for a federal tax identification number. Contact the IRS by phone or download the SS-4 Form from the IRS website. Complete and submit the application to obtain the federal tax identification number for the business, which is the business equivalent to your social security number for federal tax purposes.
Submit the License Application
Submit the auto dealer’s license application and supporting documents to the secretary of state.
Kristie Lorette started writing professionally in 1996. She earned her Bachelor of Science degree in marketing and multinational business from Florida State University and a Master of Business Administration from Nova Southeastern University. Her work has appeared online at Bill Savings, Money Smart Life and Mortgage Loan.