Introduction
Starting an auto dealership in New York is a significant business undertaking that requires adherence to various legal and regulatory requirements. The state mandates that anyone wishing to sell more than five vehicles within a 12-month period must obtain a Motor Vehicle Dealer License. This comprehensive guide outlines the steps, requirements, and considerations involved in obtaining a dealer license in New York, ensuring that prospective dealers are well-informed and prepared for the process.
Understanding the Motor Vehicle Dealer License
A Motor Vehicle Dealer License in New York is a legal authorization that allows individuals or businesses to engage in the buying, selling, or leasing of motor vehicles as a commercial activity. This license is crucial for compliance with state regulations, consumer protection laws, and industry standards. It serves as official recognition from the state that the licensee is qualified and authorized to operate as a motor vehicle dealer.
Types of Dealer Licenses
In New York, dealer licenses are categorized into seven main types based on the business activity or vehicle type. The categories include:
- New Retail Motor Vehicle Dealer - Authorized to sell new vehicles.
- Used Retail Motor Vehicle Dealer - Authorized to sell used vehicles, motorcycles, trucks, trailers, and RVs.
- Wholesale Dealer - Engaged in the wholesale trade of vehicles.
- Boat Dealer - Authorized to sell boats.
- Transporter - Engaged in the transportation of vehicles.
- ATV Dealer - Authorized to sell all-terrain vehicles.
- Yacht Broker - Engaged in the sale of yachts.
Steps to Obtain a Dealer License
Step 1: Determine Your Business Structure
Before applying for a dealer license, you must decide on the structure of your business. Options include sole proprietorship, partnership, corporation, or limited liability company (LLC). Each structure has different legal implications and requirements for registration.
Step 2: Obtain a Certificate of Authority
A Certificate of Authority allows you to collect sales tax on taxable sales. This certificate is issued by the New York State Department of Taxation and Finance. You can apply for it online, and it is crucial to have this certificate before making any taxable sales.
Step 3: File for Your Official Business Name
You must file for your official business name with the appropriate state agency. This process varies based on your business structure:
- Corporations and LLCs: Obtain a Filing Receipt from the Department of State.
- Partnerships and Individuals Using an Assumed Name: Obtain a Business Certificate of Assumed Name from your county clerk.
Step 4: Purchase a Dealer's Starter Kit
A dealer's starter kit is a requirement for your application. This kit typically includes essential documents such as a book of registry, bills of sale, odometer statements, and warranty forms. The cost of the starter kit is approximately $200.
Step 5: Secure a Business Location
You must have a physical location for your dealership. This location should comply with local zoning laws and be equipped with a display lot for vehicles. Additionally, you will need to purchase an official dealer sign that meets specific requirements, including size and visibility.
Step 6: Obtain Proof of Property Use
As part of your application, you must provide proof that you have permission to use the property for your business. Acceptable documents include a notarized statement from the property owner, a lease agreement, or a mortgage deed.
Step 7: Purchase Workers’ Compensation Insurance
If you have employees, you must obtain Workers’ Compensation Insurance to cover work-related injuries or illnesses. Proof of this insurance is required during the application process. If you do not have employees, you should indicate that on your application.
Step 8: Secure an Auto Dealer Bond
An auto dealer bond is a requirement for all licensed dealers in New York. This bond serves as a guarantee that you will adhere to state regulations and provides consumers with a recourse for seeking reimbursement in case of non-compliance. The bond amount varies based on the type of dealer and the number of vehicles sold annually:
- For those selling 50 or fewer used vehicles: $20,000
- For those selling over 50 used vehicles: $100,000
- For new vehicle dealers: $50,000
- No bond is required for those selling trailers, motorcycles, boats, etc..
Step 9: Schedule a Business Location Inspection
Once your application is submitted, the DMV will schedule an inspection of your business location. An Automotive Facilities Inspector will evaluate your compliance with state regulations, including the presence of the dealer starter kit, signage, and overall business setup.
Step 10: Submit Your Application
After completing the above steps, you can submit your application to the New York State Department of Motor Vehicles (DMV). The application must include all required documents, proof of insurance, and the appropriate fees. The total application fee typically includes:
- Non-refundable application fee: $37
- Registration fee: $450
- Retail Certificate of Sale Fee: $260.
Step 11: Await Approval
The review process can take up to four weeks. If your application is approved, the DMV will issue you a Certificate of Registration, MV-50s (Retail Certificates of Sale), and a dealer plate letter if applicable.
Step 12: Renew Your License
Once obtained, the New York auto dealer license is valid for two years. To maintain its validity, you must renew it every two years, either online or through mail. You can initiate the renewal process up to 60 days in advance or within six months after the expiration date.
Conclusion
Obtaining a dealer license in New York is a multi-step process that requires careful planning and adherence to state regulations. By understanding the requirements and following the outlined steps, prospective dealers can navigate the licensing process effectively. It is crucial to remain compliant with all regulations to ensure the smooth operation of your dealership and to protect the interests of consumers.
References
- ACV Auctions. (2023, August 29). How to Get a Dealer License in New York. https://www.acvauctions.com/blog/how-to-get-a-dealer-license-in-new-york
- GNYADA. Dealer Licensing. https://www.gnyada.com/dealer-licensing
- SuretyBonds.com. (n.d.). How to get a New York Auto Dealer License. https://www.suretybonds.com/guide/new-york/auto-dealer-license
- SuretyNow. (n.d.). How to get an Auto Dealer License in New York. https://suretynow.com/post/how-to-get-an-auto-dealer-license-in-new-york
- SuretyBondsDirect. (n.d.). How To Get a Dealer License In NY - A Step By Step Process. https://www.suretybondsdirect.com/blog/becoming-an-auto-dealer-in-new-york