In South Carolina, you require a motor dealer license if you sell more than five vehicles in a given year. Getting your license may seem complicated, but we will take you through it below and make it simple so you can begin your career as a licensed dealer ASAP!
In South Carolina, a motor dealer license refers to a license issued by the South Carolina Department of Motor Vehicles (SCDMV) that allows individuals or businesses to legally engage in the buying, selling, or dealing motor vehicles. This license is required for anyone that sells more than five vehicles in any given year.
To obtain a motor dealer license in South Carolina, you typically need to meet certain requirements and file an application to the SCDMV. The specific requirements may vary based on the type of license you are seeking. In this article, we will walk you through how to obtain all dealer licenses in South Carolina.
The types of dealer licenses issued in South Carolina depend on the dealers' business. Here are the different types of auto dealer licenses issued by the South Carolina Department of Motor Vehicles(SCDMV).
This license allows individuals or businesses to engage in the retail sale of new or used motor vehicles. It covers dealerships that sell cars, trucks, and other motor vehicles to consumers.
This license is intended for dealerships primarily in wholesale buying and selling motor vehicles. Wholesalers typically sell vehicles to other dealers rather than directly to consumers.
This license is specifically for entities that operate wholesale vehicle auctions. These auctions provide a platform for dealerships and licensed buyers to purchase vehicles in a competitive bidding process.
This license is issued to dealerships specializing in selling motorcycles. It allows them to retail, selling new or used motorcycles to consumers.
Similar to the motor vehicle wholesaler license, this license is specifically for businesses that primarily engage in the wholesale buying and selling of motorcycles to other dealers.
This license is for dealerships specializing in selling recreational vehicles (RVs), such as motorhomes, travel trailers, campers, and other recreational vehicles. It enables them to sell new or used RVs to consumers.
Temporary Recreational Vehicle Dealer License: This license allows dealerships to operate temporarily, typically for a specific event or occasion, such as a recreational vehicle show or exhibition. It grants temporary authorization to engage in the sale of RVs for a limited time.
These various types of motor dealer licenses cater to different segments of the automotive industry and reflect the specific focus and activities of the dealerships involved. Each license costs $50 and must be renewed annually.
First, you must find a suitable location to set up your business. Establishing a business location is crucial when applying for a motor dealer license in South Carolina. On top of being a requirement by the SCDMV, it can bring various benefits to your business.
Legitimacy and Compliance: A physical business location demonstrates that your dealership is a legitimate entity operating within the legal framework. It ensures that you are not conducting business from an unverified or unregistered location, which could raise concerns about the credibility and legality of your operations.
Customer Confidence: A physical business location provides potential customers stability and trust. It signifies that your dealership is committed to providing reliable services and support. Customers often prefer to visit a dealership in person, inspect vehicles, and discuss their needs face-to-face. Having a physical location allows you to offer this level of customer interaction.
Vehicle Display and Inventory Management: An established business location provides space for displaying your vehicles to potential customers. It allows you to create an appealing showroom or lot where customers can browse and choose their preferred vehicles. A dedicated location also enables you to manage and store your inventory effectively, ensuring that vehicles are well-organized and easily accessible for viewing and test drives.
Administrative Operations: A physical business location provides a space for conducting administrative tasks for a dealership. These tasks include processing paperwork, maintaining records, and facilitating financial transactions. A designated office space ensures that these operations are efficiently managed, helping you stay organized and compliant with regulatory requirements.
The location you settle on and set up must meet some requirements set by the SCDMV, which are the following:
Permanent enclosed structure: The SCDMV expects the business location to have a permanent physical structure. This means that the structure should be fixed in place rather than temporary or portable. It should also have a minimum size of 96 square feet to ensure the dealership has adequate space for conducting its operations and meets the minimum standards for a functional business location.
Signage: The dealership's name, logo, and other relevant signage must be displayed in letters at least 6 inches tall. The signage should be visible from the closest street.
Display Area: A suitable display area is required to showcase vehicles to customers. The display area should be well-maintained, organized, and easily accessible. It should provide adequate space to exhibit vehicles and allow customers to examine them.
Records: Have adequate means of keeping records, files and books.
One step in obtaining a motor dealer license in South Carolina is attending an 8-hour pre-licensing course designed explicitly for non-franchise dealers. Attending a pre-licensing course for non-franchise dealers helps individuals gain the knowledge and understanding required to operate a dealership in compliance with the laws and regulations of South Carolina. It ensures prospective dealers are equipped with the necessary information to conduct business responsibly and ethically.
The SCDMV lists two providers who teach the course:
Once you complete the course, you will be awarded an original certificate of course completion which you should include in your application packet.
When applying for a motor dealer license in South Carolina, one of the steps is obtaining a criminal history report. This requirement is meant to ensure the safety and integrity of the automotive industry and protect consumers. To fulfill this requirement, you must apply for the National Criminal Report via Premier Biotech (officially recommended by the SCDMV) and submit it to the SCDMV through email. Getting this report costs $43.01.
Obtaining a criminal history report is a crucial step in the motor dealer license application process. It helps ensure that individuals operating motor dealerships in South Carolina have a record demonstrating their suitability, integrity, and commitment to complying with the law, ultimately safeguarding the interests of consumers and the automotive industry.
You must apply for a Federal Employer Identification Number (FEIN) if your dealership business is not a sole proprietorship or partnership. The FEIN is a unique nine-digit tax identification number issued by the Internal Revenue Service (IRS) to identify businesses operating in the United States. It is used for various purposes, such as filing federal tax returns, opening business bank accounts, paying payroll taxes, and applying for business licenses.
You can apply directly on the official IRS website to obtain a FEIN. The application process can be completed in a single session, and upon successful completion, you will receive a Federal EIN.
However, a FEIN is not required if you are a sole proprietor without employees and do not file any excise or pension plan tax returns. In this case, you can use your social security number as the taxpayer identification instead of obtaining a FEIN.
Note that this step is specifically relevant if your dealer business structure is anything other than a sole proprietorship or partnership.
In South Carolina, it is legally required for individuals or businesses engaging in sales activities to obtain a retail license from the South Carolina Department of Revenue (DOR) before conducting any sales. This license ensures compliance with state tax laws and allows the licensee to legally engage in selling products or services. Additionally, applicants must obtain a sales tax number as part of the retail license application process. To obtain a retail license and sales tax number, applicants must complete an application provided by the South Carolina Department of Revenue. The application requires information about the business, including a business summary, FEIN, address and owner SSN.
Once the retail license and sales tax number are obtained, the licensee collects sales tax from customers on taxable sales. For every sale made, it is necessary to fill out the Title Application (SCDMV Form 400) and include your dealer license number and sales tax number on the form. The licensee needs to understand the applicable sales tax rates and regulations and ensure proper collection and reporting of sales tax to the South Carolina Department of Revenue.
Next, you are required to fill out the affidavit of eligibility. You are required to submit one for each owner who owns at least 10% of the business. The Affidavit of Eligibility is a document that certifies that the applicant meets the eligibility criteria set forth by the South Carolina Department of Motor Vehicles (SCDMV) to obtain a motor dealer license.
An auto dealer bond is a type of financial guarantee that auto dealers must obtain to obtain or renew their dealer license. It is a form of protection for consumers and the government against fraudulent or unethical practices by auto dealers.
An auto dealer bond functions as a contract between three parties: the auto dealer (principal), the government agency that requires the bond (obligee), and a surety bond company (surety) that issues the bond. If the dealer engages in illegal activities, violates regulations, or fails to fulfill their obligations, the bond compensates affected parties, such as customers who suffer financial losses.
The most common way of getting auto dealer bonds in South Carolina is through brokers, and depending on your credit score, the cost of an auto dealer bond ranges between 1% to 5% of the legally required bond amount,. The bond amounts required are $30,000 for Motor Vehicle, Wholesale or Recreational Vehicle Dealer and $15,000 for Wholesale Auction, Motorcycle Dealer and Motorcycle Wholesalers.
Making a hand-drawn or computer-generated diagram of your business premises would be best. This diagram must be on regular letter size paper (8½” x 11”), and it must indicate, with clearly labeled dimensions:
Once you have gathered all these documents, you can complete your application for a Dealer or Wholesaler License form. Ensure you follow all the instructions and provide the required information to prevent delays in processing your application. Once you're done, submit your application with all your supporting documents to the SCDMV by mail to:
SCDMV, Dealer License Unit
PO Box 1498
Blythewood, SC 29016-0023
After the South Carolina Department of Motor Vehicles (SCDMV) reviews and processes your dealer license application, an SCDMV agent will contact you to schedule an inspection. This inspection aims to evaluate your business and procedures to determine if you meet the qualifications to become a motor vehicle dealer. If you follow our business location guidelines in step one of this guide, then the inspection should not give you any trouble. The inspection is the last hurdle to getting the SC dealer license. If you are able to pass the inspection, then you can just sit back, relax, and wait for the SCDMV to mail you your license in up to 10 business days.
In summary, obtaining a motor dealer license in South Carolina involves several steps to ensure compliance with state regulations and to establish a legitimate and reputable dealership. These steps include establishing a suitable business location, attending a pre-licensing course for non-franchise dealers, obtaining a criminal history report, obtaining a retail license and sales tax number, obtaining a Federal Employer Identification Number (FEIN), completing the affidavit of eligibility, obtaining an auto dealer bond, creating a diagram of the business premises, completing and submitting the dealer application, undergoing a business premises inspection, and ultimately receiving the South Carolina dealer license. Each step is essential in demonstrating eligibility, fulfilling legal obligations, and promoting consumer protection within the automotive industry.
