How to get an Auto Dealer License in New York

TLDR: In order to sell more than five vehicles within a span of 12 months, acquiring a Motor Vehicle Dealer License is crucial. However, obtaining this license is no walk in the park. The following steps detail the process of obtaining a Motor Vehicle Dealer License.

What is a Motor Dealer License in New York

A Motor Dealer License in New York is a legal authorization granted to individuals or businesses that wish to engage in the buying, selling, or leasing of motor vehicles as a commercial activity. It is a mandatory requirement for anyone involved in the sale of more than five vehicles within a 12-month period. This license ensures motor dealers comply with state regulations, consumer protection laws, and industry standards while conducting their automotive business activities. It serves as an official recognition by the state of New York that the licensee is qualified and authorized to operate as a motor vehicle dealer.

Popular Types of Motor Dealers in New York

In New York, dealer licenses are categorized into seven main types based on business activity or vehicle type. These categories determine the specific type of license issued. The available options for dealer types are as follows:

• Retail Motor Vehicle Dealer – Dealers who have at least one franchise agreement with at least one registered manufacturer to sell at retail a particular make of a new motor vehicle. They sell new franchised passenger cars, SUVs, and light trucks
• Retail Motor Vehicle Dealer, Other – Dealers who engage in retail or retail with wholesale buying, selling, or dealing in motor vehicles, motorcycles, used cars, limited-use vehicles or trailers of more than 1,000 pounds unladen weight (other than mobile homes).
• Wholesale Motor Vehicle Dealer –Dealers who buy, sell, or deal in motor vehicles, motorcycles, or trailers at wholesale only.
• Boat Dealer – Dealers who are engaged in buying, selling, or trading boats designed to have a motor, and that can be used to transport one or more people across water.
• Transporter –Dealers who require the limited operation of motor vehicles, motorcycles, limited-use vehicles, or trailers for the purpose of delivery, repair, or improvements.
• ATV Dealer – Dealers who engage in buying, selling, or trading ATVs.
• Yacht Broker – Dealers who act as agents for either the buyer or the seller of a boat.

Step 1: Determine Your Business Corporate Structure

There are many options for your business: Limited Liability Company (LLC), S Corporations, and Sole Proprietorships. We list the pros and cons of each below: 

Limited Liability Corp (LLC)

‍S Corporation

Sole Proprietorship

‍Here is a link with more information on each business type. 

Step 2: Obtain Federal Employer Identification Number (FEIN)

If your business is anything other than a sole proprietorship or partnership, you would need to apply for a Federal Employer Identification Number. A federal EIN is a unique nine-digit tax identification number assigned by the Internal Revenue Service (IRS) to identify businesses operating in the United States. It is used for various purposes, including filing federal tax returns, opening business bank accounts, paying payroll taxes, applying for business licenses, etc. 

You can apply for a federal employer identification number on the official IRS website. The application can be completed within one session and a Federal EIN number will be provided to the applicant upon completion. 

A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN but can get one. In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number.

Step 3: Obtain your Certificate of Authority and Sales Tax ID

With a certificate of authority, you have the authority to collect taxes on your taxable sales and are also authorized to issue and accept the majority of sales tax exemption certificates in New York State. The Certificate of Authority and Sales Tax ID number are issued by the New York State Department of Taxation and Finance (DTF). You may apply by visiting the NY State DTF website where you will also get instructions. Be sure to record your Sales Tax ID on the Original Facility Application.

Once your application has been approved, the Department of Taxation and Finance will mail you your certificate of authority. 

Step 4: File for your official business name

There are various documents that you will need to complete based on the type of business you decide to register.  

Corporations and LLCs: 

• A copy of your Filing Receipt from the Department of State. Instructions to file can be found on the NY State Department of State website.

Partnerships and Individuals Using an Assumed Name: 

• A copy of your “Business Certificate of Assumed Name”. Contact your county clerk to obtain your business certificate.

Step 5: Purchase a dealer’s starter kit 

The dealer starter kit is required in your application to get an auto dealer license. Besides being a requirement by the New York DMV, they are also useful to the dealer because they generally include tools and materials to help the new dealer get started and promote the products effectively. Here are the components of a dealer starter kit.

• Book of Registry (Police Book)
• Bills of sale (Retail Certificate of Sale (MV-50))
• Odometer Statements (except ATV and Boat Dealers)
• Warranty Forms (except ATV and Boat Dealers)

These items can be purchased from a couple of vendors that have been recommended by New York’s DMV.

Step 6: Purchase a sign for your business

You will be required to purchase a sign for your business in order to apply for an auto dealer license. The sign offers a number of advantages to your business like brand recognition, 24/7 marketing, and competitive advantage. 

The DMV requires your sign to meet the following requirements: 

• Red background and white lettering
• To measure at least 3 feet wide by 2 feet tall
• To be permanently mounted and visible at all times from the nearest street or highway
• Display “REGISTERED (Facility Number) STATE OF NEW YORK MOTOR VEHICLE DEALER” in two-inch block lettering, as configured in the example shown below

Step 7: Obtain proof that you have permission to use the property at the business location

As part of your application, you are required to provide proof that you have permission to use the property at the business location. The various documents that you can provide are:

• A notarized statement from the property owner.
• A lease that may be contingent on faculty approval.  
• A sublease with the primary lease
• Mortgage
• Deed
• Receipt tax bill

Step 8: Purchase Workers’ Compensation Insurance

If you have any employees (family included), you must submit proof of Workers’ Compensation Insurance. This insurance provides benefits to employees who suffer work-related injuries or illnesses. You can visit the NY State Workers Compensation Board website for instructions on this process. If you do not have any employees, indicate that on your application. 

Step 9: Purchase a New York Motor Auto Dealer Bond

Licensed auto dealers and dealerships in New York are required to obtain an auto dealer bond. This bond serves as a guarantee that they will adhere to the regulations set forth by the Motor Vehicle Dealers & Transporters Regulations. Its purpose is to protect consumers by providing them with a recourse for seeking reimbursement in the event that the dealer or dealership fails to comply with licensing laws, leading to financial losses. Essentially, the bond ensures that consumers have a means of recovering their losses if the dealer or dealership engages in fraudulent or illegal activities.

DMV does not provide surety bonds; you must contact a surety insurance company and have them fill out the Dealer Bond Under NY State Vehicle and Traffic Law Section 415 (6-B) (pdf) (VS-3). Be sure that the business name and mailing address on your bond exactly matches those that show on your application.

The amount of the bond depends on the number of vehicles you anticipate selling (used motor vehicle dealers):

Bond amount required for motor vehicles

‍

Step 10: Submit your application with the required documentation

Submit your Original Facility Application with the following documentation.

• Sales tax ID number 
• Sales Tax Certificate of Authority
• Photocopy of driver’s license(s) or other government-issued photo ID for everyone listed on the application
• Receipt for your purchase of the dealer’s starter kit and signs
• Proof of Workers Compensation Insurance for your employees 
• All required fees, via checks (app/license check & MV-50 check) payable to the Commissioner of Motor Vehicles
• A Filing Receipt found on the NY State Department of State website (Corporation or LLC) or a Business Certificate from the County Clerk (the individual using assumed name or partnership)
• A copy of your complete original sealed and signed Surety Bond.
• Proof that you have permission to use the property at the business location 

You must submit a hard copy of your application, associated documents, and fee to this address

NYS DMV
Bureau of Consumer & Facility Services
Application Unit
P.O. Box 2700
Albany, NY  12220-0700

Once your application has been reviewed, it will be sent to a regional office for review. They will contact you to schedule an on-site investigation.

Step 11: Prepare for the on-site investigation

After you schedule a date for the automotive facilities inspector (AFI)  to inspect your facility, take some time to prepare for this inspection because it will be important in determining whether your application is successful. They will be checking that you have the following items:

• Dealer starter kit
• Permanently mounted signs visible from the street. The AFI will deny your application if your signs are not clearly visible.
• Proof of identification for everyone named on the application (driver’s license or other government-issued photo ID)
  

The AFI will also inspect your location to see if it has the following requirements:

• A clear and permanent physical barrier from other businesses that may share your location 
• A display lot
• A mailbox at the business address dedicated to your business only
• A method of locking security items 
• Heat, electricity, desk and chairs
• A business phone (cell phone is acceptable)
  

Step 12: Receive a Hard Copy of Your License in the Mail 

If your application and the site inspection are approved, the DMV will issue you a certificate of registration, MV-50s (Retail Certificates of Sale) and a dealer plate letter (if applicable).

Step 13: Celebrate your new business!

Congratulations on achieving your license! Now the real work begins. However, before diving into the next phase, take a moment to relax, revel in your accomplishments, and experience a sense of pride for all the hard work you've put in thus far.

FAQS

How much does it cost to apply for an auto dealer license in New York?

How much time does it take to get a dealer license? 

After your application is processed in Albany, it will be forwarded to your local office for evaluation. The review process may take up to 4 weeks to complete.

Where can I buy an official dealer sign?

Since the DMV does not provide official dealer signs, you may purchase these signs from various sign shops and automotive supply stores.

When should I renew my auto dealer license?

To maintain a valid New York auto dealer license, it is necessary to renew it every two years. The license renewal process can be completed either online or through mail. It is possible to initiate the renewal up to 60 days in advance or within six months after the expiration date. Alongside the license, the New York auto dealer bond also needs to be renewed if your bond is expiring. 

Where can I buy a New York Auto Dealer Bond? 

You have the option to purchase a New York Auto Dealer Bond from any well-established surety broker that holds a valid license in the state of New York. The majority of surety bonds (>99% volume) are written through surety brokers. This is because surety brokers are able to compare price across various surety companies. When there are hundreds in the US alone, this comparison is invaluable.

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