How to Get an Auto Dealer License in Louisiana

TLDR: If you want to sell more than four vehicles in a 12-month period in Louisiana, you must get an auto dealer license from the Louisiana Motor Vehicle Commission. The license will enable you to sell as many cars as you want and give you credibility as an auto dealer. In this article, we will take you through the steps you need to take to become a licensed dealer in Louisiana. 

Step 1: Register your business

Before you can apply for an auto dealer license in Louisiana, you need to have a legitimate business entity registered with the appropriate authorities. Here are the steps to register your business:

• Decide on a Business Structure: Choose the legal structure for your motor vehicle dealership. Common options include a sole proprietorship, partnership, corporation, or limited liability company (LLC). Each structure has its own legal and tax implications, so it's essential to consult with a business attorney or tax professional to determine the best fit for your specific needs.
• Choose a Business Name: Select a unique and suitable name for your dealership. Ensure that another business does not already use the name to avoid legal complications. You can check the availability of your desired business name through the Louisiana Secretary of State's website or office.
• Register with the Louisiana Secretary of State: Once you have decided on your business structure and name, you must register your business with the Louisiana Secretary of State. This registration process will formalize your business entity and provide you with a legal framework to operate within the state.
• Obtain an Employer Identification Number (EIN): An EIN, or Federal Tax Identification Number, is a unique nine-digit number assigned to your business by the Internal Revenue Service (IRS). You'll need an EIN for tax purposes, hiring employees, opening a business bank account, and other business-related transactions. You can apply for an EIN online through the IRS website.
• Sales Tax Permit: As an auto dealer, you will be involved in sales transactions subject to sales tax. You need to obtain a Sales Tax Permit from the Louisiana Department of Revenue to collect and remit sales tax on your vehicle sales.

Step 2: Set up a business location

Once you have registered your motor vehicle dealership as a legal entity and obtained the necessary permits and licenses, setting up a physical business location is the next crucial step. The location will serve as the base of your operations and where you interact with customers. Your business location will require the following: 

• Signage that is visible from across the street. This sign should be a minimum of 16 square feet.
• A business telephone that's listed with the National Directory Assistance. This line must work all the time
• You should obtain zoning verification from your local zoning authority

Step 3: Determine the type of dealer you want to become

Louisiana has different license types depending on the type of vehicles you want to sell and the business you wish to conduct. Knowing the type of license you wish to acquire will help you start early. Here are the different types of auto dealers in Louisiana:

Used Dealers

Used dealers, also known as used car dealers, specialize in selling pre-owned vehicles to the public. They play a significant role in the automotive market by providing customers with affordable and reliable options for purchasing vehicles.

Wholesale Dealer Auctions

Wholesale auto auctions are primarily for licensed dealers in the automotive industry. Dealers participate in these auctions to purchase vehicles for their inventory. These auctions often feature many vehicles, including trade-ins, off-lease vehicles, fleet cars, and repossessed vehicles. Wholesale auctions are not typically open to the general public.

Public Auto Auctions

Public auctions allow individuals to bid on vehicles directly. These auctions may include used vehicles, government fleet vehicles, seized vehicles, and other types of automobiles. Public auto auctions are open to anyone interested in purchasing a vehicle, and they can be an excellent opportunity to find deals on used cars.

Salvage Auction

A salvage auction dealer is a type of automotive dealer that specializes in selling vehicles with salvage titles through auction platforms. Salvage vehicles are cars that have been significantly damaged, usually due to accidents, natural disasters, or other incidents, and have been declared a total loss by the insurance company. As a result, these vehicles can only be driven on public roads once they have been repaired and passed a safety inspection.

Used Parts and Accessories Dealer

Used parts and accessories dealers are automotive businesses selling pre-owned or second-hand vehicle parts and accessories to customers. These dealerships play a crucial role in the automotive industry by providing an affordable alternative for car owners to repair, upgrade, or customize their vehicles. Whether a customer needs a replacement part for a repair or wants to add personalized touches to their car, used, parts and accessories dealers offer a diverse range of options to choose from.

New/Franchise Dealer

A new dealer, also known as a new car dealer, is an automotive dealer specializing in selling brand-new vehicles from various manufacturers. Automakers authorize these dealerships to sell their new models directly to consumers. New car dealers play a crucial role in the automotive industry by providing customers with the latest vehicle models, warranty support, and other services associated with new vehicles.

Step 4: Obtain an auto dealer bond

An auto dealer bond is a type of surety bond that auto dealers must obtain to acquire or renew their dealer license. Its purpose is to protect consumers and the government from any dishonest or unethical actions by auto dealers.

This bond operates as a contract involving three parties: the auto dealer (known as the principal), the government agency requiring the bond (known as the obligee), and a surety bond company (known as the surety) that issues the bond. The bond compensates affected parties, including customers who suffer financial losses, should the auto dealer engage in illegal activities, violate regulations, or fail to fulfill their obligations.

In Louisiana, motor vehicle dealers are required to obtain a bond of $50,000. This bond is proof of financial responsibility and must be included in the dealer's application packet.

Step 5: Attend an educational seminar

Attending an educational seminar is an essential step in becoming a licensed auto dealer in Louisiana. The Louisiana Motor Vehicle Commission requires prospective auto dealers to complete an educational seminar or pre-licensing course as part of their licensing requirements. The course will be held on Tuesdays from 9:00 a.m. to 1:00 p.m. at the Louisiana Used Motor Vehicle Commission. The scheduling for this seminar will be available on their website. This seminar provides valuable information and guidance on the legal and regulatory aspects of operating an auto dealership in the state. On completion of the seminar, you must fill out the Education Training Seminar Registration Form and include it with your application.

Step 6: Submit your dealer application 

After completing all these steps, you can now complete the auto dealer application. This application contains the full packet of forms you need to submit with your application. These are the forms you need:

• Surety bond form
• Zoning verification form
• Pictures of business sign
• Application for salesperson license
• Educational Training seminar registration form

 After completing the application, you will need to mail your application to:

LOUISIANA USED MOTOR VEHICLE COMMISSION
3132 Valley Creek Drive
Baton Rouge, Louisiana, 70808

You will also need to pay a license fee of $400.

Step 7: Receive your license

After submitting your application, the Motor Vehicle Commission will take around 14 days to assess your application. If it is approved, you will receive your license through the mail. Congratulations on completing this process. You can now start working as a dealer!

Summary

Aspiring dealers must follow several essential steps to become licensed in Louisiana. These include registering their business, setting up a physical location, determining the type of dealer they want to be (e.g., used dealer, wholesale dealer, etc.), obtaining an auto dealer surety bond, attending an educational seminar, and submitting their dealer application. After completing these steps and paying the necessary fees, the Louisiana Motor Vehicle Commission will assess the application. If approved, the dealer will receive their license to operate.