TLDR: A Motor Vehicle Dealer License is essential if you want to sell more than 3 vehicles in 12 months. It is not an easy process to obtain a motor vehicle dealer license. Below we outline the steps you need to obtain a motor vehicle dealer license.
If you buy, sell, or trade more than 3 vehicles in a 12-month period in the state of Florida, then you are legally required to obtain a motor dealer license. There are serious penalties for buying, selling or trading more than 3 cars without a license, including jail time. In this article, we explore the specific steps that one needs to take to get their dealer license in Florida.
There are a few types of popular motor vehicle dealer licenses in Florida:
As listed above, there are four different types of dealer license and you need to decide what license you are applying for based on the type of vehicles you are planning to sell.
All auto dealers in Florida are required to complete a pre-licensing dealer training course. The course has to be approved by the Florida Department of Highway Safety and Motor Vehicles (DHSMV). The licensing course covers topics such as the following:
There are many places you can register for the courses, including the following:
Once you complete the 16 Hour Training and Receive a Pass grade on the exam, you will be awarded a Certificate of Completion. You will need to submit a copy of this Certificate with your license application. This certificate is valid for 6 months from the date of issuance, which means you will need to complete your license application in 6 months. Otherwise, you would need to complete the same training again.
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.] (https://www.legalzoom.com/business/business-formation/compare.html)
There are various documents that you will need to complete based on the type of business you decide to register.
Limited liability Corp (LLC)
S Corporation
Sole Proprietorship
If your business is anything other than sole proprietorship or partnership, you would need to apply for a Federal Employer Identification Number. A federal EIN is an 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 a variety of 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.
If your business is a sole proprietorship or partnership, you can submit the following identification in place of a federal EIN: A state driver’s license/person ID or a valid US passport.
A Florida sales and use tax permit is a registration by the Florida Department of Revenue to businesses that sell tangible personal property or taxable services in Florida. You can use this form to apply for a sales tax number on the Florida Department of Revenue website. It requires your business name, physical address, telephone number and federal EIN.
Once your business has a Florida sales tax number, your business is required to collect and remit sales tax on all taxable sales made in the state. You are also required to file sales tax returns on a regular basis, either monthly or quarterly. If you have any questions, you can contact the Florida Department of Revenue at 850-488-6800.
Once you obtain a sales tax number, you will also need to obtain a dealership location and display lot and gain approval from the Florida Department of Highway Safety and Motor Vehicles (DHSMV). The specific requirements can be found in Florida Administrative Code 15C-7.003 and Florida Statute 320.27.
To simplify the display lot requirements, you need an office location that has a display lot for your dealership. Here are the specific requirements for the office:
Once you obtain a office location and display lot, contact your nearest compliance examiner from the local Department of Highway Safety Motor Vehicles office to inspect and approve your dealer location.
Garage liability insurance is a specialty insurance for businesses in the automotive industry, such as motor dealerships, repair shops and towing companies. The insurance provides coverage for bodily injury and property damage occurring on the business’s premises and liability arising from accidents involving the business vehicles. Auto dealers in Florida need $25,000 in single-limit liability coverage for bodily injury and property damage and $10,000 for personal injury protection. You will need to submit a garage liability insurance certificate as part of your dealer application.
Example garage insurance certificate
A surety bond is a financial guarantee made by the surety (insurance company) toward the obligee (Florida Department of Highway Safety and Motor Vehicles) that the principal (auto dealer) won’t violate rules and regulations governing the auto dealer industry.
In terms of bond amounts, apart from Recreational Vehicle Dealer License, all other license types require a $25,000 bond. Recreational Vehicle Dealer License needs a $10,000 bond amount.
To get a dealer bond, generally you need to provide basic information such as business name, owner name, address as well as social security number for a soft credit check.
Once you are approved for a dealer bond, you can make a payment on the bond and expect to receive the bond in your mail in 3-5 business days. You need the hard copy of the bond for your application.
If you don’t want to get a surety bond, you can also apply for an irrevocable letter of credit prescribed by Section 320.27(10), F.S., in the amount of $25,000. This letter of credit must be from a bank authorized to do business in Florida. An irrevocable letter of credit is essentially a promise by the bank of the applicant to pay Florida Department of Highway Safety and Motor Vehicles under certain conditions (i.e. if the dealer applicant broke the law).
Example Florida dealer bond
Each individual on the license needs to attend the fingerprinting appointment at a service location approved by the Florida Department of Law Enforcement. This is a list of LiveScan providers approved by the Florida Department of Law Enforcement. For example, IdentoGo is a popular fingerprinting service provider all across Florida.
The applicant needs to schedule a fingerprinting appointment. After the appointment, the applicant will get a receipt and need to submit the receipt with their license application. The purpose of the fingerprinting is to determine if you have been found guilty of a felony. If you have been found guilty, then the DHSMV will require an explanation. In such circumstances, we highly recommend you consult a professional attorney to maximize your chances of approval.
Once the steps above have been completed (including the inspection of the office location and lot), you can sign a lease agreement. One thing to note is to hold off on signing the lease agreement until the Compliance Examiner from the local Department of Highway Safety Motor Vehicles office has inspected and approved your site. Don’t count your chickens before they hatch!
One other requirement is that the office needs to have a permanent sign clearly identifying the dealership and the letters on the sign should be visible and readable from 50 yards. The hour of operations of the dealership needs to be clearly displayed as well as contact information. One important thing to note is that you must send the image to the compliance examiner for approval before installing the sign.
Finally, it’s time to put together the application. The application form can be found on the official Florida DHSMV site.You will need to submit the following documents:
If approved, you will receive your license in the mail in 2-3 weeks after you submitted the application. Otherwise, if your application is rejected, you will receive a letter informing you what you need to do to get your license approved.
Congrats on getting your license! Now the real work starts. But before you do that, sit back, celebrate and have a glass of champagne.
It depends on the time of the year because getting a dealer license depends on many agencies / stakeholders. It could take between 4 to 6 weeks to get approved with a dealership license.
It is easier to get a DMV approved location. If you can’t find it, you will need to search through craigslist and find a location zoned for a used car dealership. You can get a warehouse location with a small office setup. A real estate agent can also help you with your search.
Yes, Florida Independent Dealer License expires on April 30th each year. The renewal fee is $75. You also need to provide proof of at least 8 hours of continuing dealer training.
Franchise Dealer License expires on December 30th and recreational vehicle dealer license expires on September 30th.
It could cost as much as $4,000 to get a Florida Dealer License mainly because of the cost of leasing an office space with a display lot. Here is an example cost breakdown:
You can buy a Florida motor mehicle dealer bond at any major surety agency that is licensed in the state of Florida. We're one of them and have helped hundreds of auto dealers with their auto dealer bonds. Give us a call to get started.
