TLDR: To sell 12 vehicles in a year in Indiana, you must obtain a motor dealer license. While the process may seem complex, we will simplify it below, to help you get started on your career as an Indiana auto dealer.
In Indiana, an auto dealer license allows you to sell motor-vehicles which include the following:
Dealer Licenses in Indiana are provided by the Auto Dealer Services Division. This process of getting a license involves completing an online application and submitting a couple of required documents. This process may seem complicated but we will take you through every step you need to take below.
There are two types of motor-vehicle dealer licenses in Indiana. You should pick the appropriate one based on the type of car you wish to sell.
The new motor-vehicle dealer license is specifically designed for businesses or individuals who intend to sell new motor vehicles. To be eligible for this type of license, the dealer must engage in the sale of 12 or more new motor vehicles in a calendar year. These "new" vehicles refer to cars, trucks, motorcycles, or any other motorized vehicles that have not been previously registered or titled to a consumer.
The used motor vehicle dealer license, on the other hand, is for those looking to sell pre-owned or used motor vehicles. To qualify for this type of license, the dealer must engage in the sale of 12 or more used motor vehicles in a calendar year. "Used" vehicles are those that have been previously owned, titled, or registered by a consumer.
The next step of the process to become an auto dealer involves selecting a suitable business location. There are three physical location requirements that you must satisfy to become an auto dealer in Indiana. You must have a business location that has both an office and a physical plot of land for displaying vehicles. Your business location should meet the following requirements:
General requirements
Here are the requirements for the physical location:
Here are the requirements for the office space:
The next step of the process to obtain a motor dealer license in Indiana involves completing a background check, which requires providing your fingerprints . The background check is a critical step in the licensing process and is conducted to ensure that applicants have a clean criminal record and are fit to engage in the business of selling motor vehicles. Its purpose is to protect consumers and maintain the integrity of the automotive industry by ensuring that individuals involved in vehicle sales do not have a history of criminal activities that could pose a risk to customers or the public.
You are required to the fingerprinting service provider that has been specified by the Auto Dealer Services Division. The Indiana Secretary of State(SOS) has provided instructions on how to acquire your fingerprints from this service provider here.
Once the fingerprints are received, they are used to conduct a criminal history check. This involves searching state and federal databases for any past criminal records or convictions associated with the applicant. The search may include records of misdemeanors, felonies, and any other relevant offenses and influence whether or not your application is accepted.
The next step to obtain a motor dealer license involves getting your business entity information in order. You can obtain your business documentation and even register your business here. This step is crucial as it establishes the legal structure and details of your business, which will be used for licensing and regulatory purposes. Here's a more detailed explanation of this step. You will need to provide specific details about your business entity, including its legal structure and ownership information. The information required may vary based on the type of business entity you have. Here are the documents you may require and their specifications:
If your business is not a sole proprietorship or partnership, it is necessary to apply for a Federal Employer Identification Number (FEIN). The FEIN is a unique nine-digit tax identification number issued by the IRS, used for various purposes like filing federal tax returns, setting up business bank accounts, paying payroll taxes, and applying for business licenses.
You can easily apply for a FEIN directly on the official IRS website, and the application process can be completed in one session. Upon successful completion, you will receive your Federal EIN.
However, if you are a sole proprietor without employees and don't file excise or pension plan tax returns, you are not required to obtain a FEIN. In this situation, you can use your social security number as the taxpayer identification instead of getting a separate FEIN.
It's important to note that this step only applies if your business structure is anything other than a sole proprietorship or partnership.
An auto dealer bond is a financial assurance required for auto dealers to secure or renew their dealer license. It serves as a safeguard for both consumers and the government, protecting them from potential fraudulent or unethical behavior by auto dealers.
The auto dealer bond operates as an agreement involving three parties: the auto dealer (known as the principal), the government agency mandating the bond (referred to as the obligee), and a surety bond company (called the surety) responsible for issuing the bond. If the auto dealer engages in unlawful practices, breaches regulations, or fails to meet their responsibilities, the bond provides compensation to affected parties, including customers who experience financial losses.
You are required to get a $25,000 auto dealer bond in Indiana. When seeking an auto dealer bond, the bond agency evaluates several factors, including the dealer's experience, financial status, reputation, and credit history. Based on this assessment, the agency offers a bond quote. The premium for the bond is determined by the perceived level of risk associated with the dealer. Dealers with a solid credit score and significant experience generally receive a lower premium, typically ranging from 1% to 3% of the required bond amount.
The next step of the auto dealer license application process involves submitting photos of the proposed dealership location. This step is crucial as it allows the licensing authorities to visually assess the physical premises and ensure that it meets the necessary requirements for operating as a motor vehicle dealership. The photos provide evidence that the dealership complies with certain requirements, such as having a proper and well-maintained lot to display vehicles, a professional office space for conducting business, and adequate facilities for vehicle servicing.
Every applicant is required to submit pictures of the following:
Next, you should obtain a retail merchant certificate. This certificate is a crucial requirement for conducting retail sales in many jurisdictions and is necessary for operating a motor vehicle dealership legally. A retail merchant certificate, is a document issued by the state or local taxing authority that authorizes a business to collect and remit sales tax on retail transactions. It allows the dealership to legally sell vehicles and other products to consumers while complying with sales tax regulations.
You can get your retail merchant certificate from the Indiana department of revenue
The zoning affidavit is a critical document required as part of the motor dealer license application process. It plays a crucial role in ensuring that the proposed business location for the dealership is appropriately zoned for the operation of the dealership. Zoning regulations are established by local authorities to determine the permissible land use for different areas within a municipality or jurisdiction.
You can find the zoning affidavit form here.
After compiling all the documents in the steps above, you are now ready to complete the online dealer application and submit it. You will also submit these required documents online with your application. There is a $100 application fee that you can pay online using a credit or debit card.
You can monitor the progress of your license application by checking the Recent Transactions section on your dealer portal.
After you submit your application, a Licensing and Compliance Clerk will review it to ensure it is complete. If any deficiencies are found, they will contact you for corrections. Once the application is deemed complete, it will be passed on to a Field Examiner who will thoroughly assess whether the location meets all the necessary requirements. If the examiner approves the application, it will be returned to the clerk for license issuance. Once the license is issued, you can purchase approved plates through the dealer portal.
In conclusion, obtaining an auto dealer license in Indiana requires following a step-by-step process. The applicant must determine the type of license they need, complete a background check, obtain a Federal Employer Identification Number (FEIN), gather business entity information, secure an auto dealer bond, submit photos of the dealership, obtain a retail merchant certificate, and submit the dealer application along with supporting documents. Once the application is complete and approved by a Field Examiner, the license is issued, allowing the dealer to legally operate and sell motor vehicles in Indiana. By diligently following these steps, aspiring auto dealers can start their careers as licensed dealers and navigate the regulatory requirements with ease.
