Corporate and LLC NFA Ownership
Another possible method for ownership of firearms governed by the National Firearms Act (“NFA”) is creating a corporation or limited liability company. While this approach is less popular than the individual or trust route, it does have its advantages, most notably dispensing with the need for fingerprints, photographs and most importantly, a Chief Law Enforcement Officer (“CLEO”) signature on a Form 1 or Form 4.
Advantages of Corporate/LLC Ownership:
The advantages of a corporation or limited liability company for NFA/firearm ownership are:
- Multiple possessors. Unlike the individual method, a corporation or LLC can permit multiple people to legally possess the NFA items. This usually involves the corporation’s directors/officers or an LLC’s members.
- No fingerprints or photographs required.
- No CLEO signoff needed. This can speed up the processing time as there is no waiting for the CLEO signoff.
- Asset protection. A corporation or LLC provides limited liability for its owners/members. This can be a viable tool for protecting assets from an individual’s creditors.
Disadvantages of Corporate/LLC Ownership:
Some disadvantages also follow with using a corporation or limited liability company:
- Costs to form a corporation or LLC can be high. Filing fees in Nevada can run at least $400. This does not include hiring an attorney to draft bylaws, minutes, or an operating agreement. Also, a resident agent is required and this can run $200 annually.
- Annual fees must be paid to the Secretary of State in order to keep the corporation or limited liability company active. If the entity’s status is revoked, it can pose significant problems with regards to NFA items.
- No anonymity. Filings with the Secretary of State are public record.
- If the corporation or LLC is dissolved, a Form 4 transfer must occur for each NFA item owned by the entity along with the $200 tax stamp for each item. This transfer must occur BEFORE the dissolution or there is potential liability.