Used car dealer license

[enio45]

I am looking for advise related to obtaining a used car dealer license in AZ. Im considering purchasing a warehouse to do dome small scale resto work, buy and sell of parts and storage for my cars. From time to time buy and sell a few cars....Thinking thru the benefits of a dealer license by not needing to register all the cars, insurance etc and using the warehouse as a business location.

Im sure many of you have thought about this...and maybe have launched into business.....

Im looking for some of your thoughts and advise...is this the way to go??

[Zedder]

Ed, I recently completed a business plan for the same thing although it was for Ontario as opposed to AZ. My fixed costs were about $20,000/year including rent, insurance, license fees etc. with the killer being rent. In Ontario, you must have a separate facility from your home to obtain a dealer's licence. Insurance was also hefty at about $3,000/year for $250,000 in inventory and one driver. So, unless you absolutely require the space for your cars, this idea does not make much financial sense...unless of course you want to do this for a living. As for buying and selling a few cars per year, this can be done in many States with no repurcusions other than capital gains taxes, which would be less in most instances than your actual business tax rates, especially if one's wife doesn't work outside of the home and can claim the income.

I decided to go with a 3-car garage and a couple of lifts and just take the capital gains hit if I sell a car.

[Hylton]

Mark,

Is there a requirement for someone to post a bond of some sort in Ontario?

[Zedder]

In Ontario, you need to be part of the Used Vehicle Dealers Association which has a one-time fee of I think $500 or $1,000(I can't remember exactly) and then $200/year or so which takes care of the bond. You also have to take a course to gain a license, but it is very simple.

[enio45]

Mark, i need a place to work on my cars and customers cars when needed, so buying a warehouse vs building a detached garage is the most likely scenerio im working on. Now that im going to invest in a warehouse i was considering making a small business out of the process, and take some tax advantage of business deductions. Ill retire from my current company and will play with the car business full time. Based on this - im trying to decide how to best leverage the warehouse investment with the car business. I have 5 cars that require storage away from the home so the space is needed for sure. Building a detached garage (20 x 50) next to the house will not give a return to the house considering the investment and zoning requirements. So i was thinking of this small business approach with a dealer license?? How does the insurance work, how many dealer plates do you get?

[Zedder]

Ed, If I were in your position then I would do the same. First step is to Google search Used Vehicle Dealers License in Arizona and find out what is required with respect to the premises, education and licensing. Next look at locations...keeping in mind that many landlords will not allow automotive uses. Then contact insurance companies in the area that handle business policies for used vehicle dealers. Insurance cost is based on the value of inventory, number of dealer plates the business owns, and number of drivers. Vehicles can only be used for business puroses. You can buy as many dealer plates as you like, but you likely only need one or two. Then determine the structure of the business sole propiertorship, partnership, LLC ect. and register the business etc. Good lawyer, good accountant, and a business plan and you are basically set. Remember, this was the process for my location, so it may be somewhat different from where you will be. One interesting side revenue stream that I came across was the storage of collector cars. My calculations showed that storage revenues would likely cover more than half my rental costs.

Many collectors use this sort of arrangement to better manage their collections, so I am sure others will offer advice also. Good luck