How to get a car dealer license

You need a car dealer license once buying and selling cars becomes a business, not a once-in-a-while sale of your own car. Before you work out how to get a dealer's license, check where your state draws the line. Most count sales per year:

• Florida: 3 or more vehicles in any 12-month period.
• Michigan and North Carolina: 5 or more in 12 months.
• Illinois: 5 or more used vehicles in a year.
• New York: more than 5 in a calendar year, or 3 or more on display for sale at one time.
• Texas: you're exempt only while you sell fewer than 5 vehicles of the same type in a calendar year that are owned and registered in your name. Selling even one car that isn't in your name takes a license.

Selling a car you bought and drove yourself is not dealing: North Carolina and California both exclude people selling their own personal vehicles. If you flip cars for profit, get licensed before you cross your state's line, not after.

Order matters. The location, course and bond all have to be in place before you apply, and some states inspect the site before they'll take your application.

If you plan to sell used cars to the public, you want the retail license. The other types exist for specific businesses:

The state fee is the smallest part of the bill. The bond premium, insurance and your location cost more, and they depend on your credit and your market. Here's what to price:

Sometimes. It depends on your state and on the license type.

• No lot for retail: Georgia requires an established place of business, not a car lot, and an office suite can qualify. North Carolina asks for a 96-square-foot salesroom with a sign and sets no minimum display area.
• No lot with a wholesale license: California, Florida, New York and Texas drop the display area for wholesale dealers, and Michigan's Class W wholesaler needs only an office of at least 8 by 8 feet. In exchange, you can't sell to the public.
• Lot required, even for wholesale: Alabama wants room to display at least one vehicle on every dealer license, Missouri requires a display lot for every dealer class, and Ohio's used dealer license, which also covers wholesale, needs a 3,500-square-foot lot.

Working from home is hard to qualify. Texas rules out offices in a residence, apartment, hotel, motel or virtual office, and Alabama rejects shared, virtual and rotating offices. Georgia will consider a separate office building detached from your house, where local rules allow.

For dealer-only auctions, yes. Florida law lets auctions sell only to licensed dealers, Missouri's wholesale auctions sell only to dealers licensed in Missouri or another jurisdiction, and Texas lets only licensed dealers attend its dealer-to-dealer sales. AuctionACCESS, the credential accepted at over 400 auction marketplaces in the US and Canada, admits only licensed dealers and their authorized representatives. The full process is in our guide to getting a dealer license for car auctions.

Plan the setup first: the course, the location, zoning approval and the bond all come before the application. Once your file is complete:

• Alabama: about 3 to 5 business days after the Department of Revenue receives your documents.
• Missouri: the law gives the state eight working hours to grant or deny a complete application, but the site inspection has to happen first.
• Michigan: allow 30 days from a complete application.
• North Carolina: the state must grant or deny within 30 days, and the site is inspected before you apply.

Time your fingerprints. Florida's fingerprint results are kept for only 6 months, so don't get printed long before you file.

Licenses run one or two years. Illinois and Michigan licenses expire December 31, Alabama's renew every October 1, and New York, North Carolina and Texas issue two-year licenses. Some states add conditions:

• Continuing education: 8 hours every 2 years for Florida independent dealers, 6 hours in the 9 months before each Georgia renewal, and 4 hours every 2 years for California used and wholesale dealers.
• Minimum sales: Missouri wants at least 8 sales in each full calendar year to renew, Michigan more than 5 purchases or sales in the prior 12 months, and Texas can cancel a license for failing to sell 5 vehicles in a calendar year.

The license gets you in the door; it isn't the business. You still need inventory, money to carry it and a way to sell it. Once you sell or offer more than five used vehicles in 12 months, the FTC's Used Car Rule requires a Buyers Guide on each used car you offer, and every sale needs proper title paperwork, including an odometer disclosure where federal and state rules require one.

Then the cars have to sell, and your listing photos are the first thing a shopper sees. CarShots turns phone photos into clean studio-style shots, each back in about 20 seconds, with no booth or lighting kit to buy. For the full launch plan, read how to start a car dealership.

This is general information, not legal advice. Rules change, so confirm each requirement with your state's licensing agency before you sign a lease or apply.