TLDR: A Motor Vehicle Dealer License is essential if you want to sell 5 or more vehicles in a 12-month period in Ohio. 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.
Any prospective new, used, or motorcycle dealer must be licensed through the Ohio Bureau of Motor Vehicle Services (BMV). You will need to submit a completed dealer application form together with multiple required supporting documents and certificates. You will also need to apply for dealer plates and get an auto dealer surety bond, in addition to meeting other requirements.
This may seem like a daunting task, but we will break it down for you into more clear and manageable steps to make getting a license an easy feat for you.
As listed above, there are two different types of dealer licenses and you need to decide what license you are applying for based on the type of vehicles you are planning to sell.
The Bureau of Motor Vehicles issues two motor vehicle dealer licenses depending on the type of cars you want to sell.
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:
Pros: Maximum amount of flexibility in business operations: This is advantageous for auto dealers as it allows them to adapt their business strategies and offerings based on market conditions and customer demands.
Cons: A lot of filings and fees to stay compliant and the cost of insurance tends to be higher: Auto dealers, especially those dealing with multiple vehicle types, may have to navigate various regulations and licensing requirements. This can involve paperwork, filings, and associated fees, which can be a bit cumbersome.
Pros: Better if there are a large number of share holders . Allows for certain tax benefits, and easier to distribute income. Also easier for fundraising.
Cons: More admin and rules than LLC. Corporations have more formalities and governance requirements compared to LLCs. This can involve additional paperwork, shareholder meetings, and adherence to specific rules and regulations.
Pros: Easiest to get started, meant for solo business owners: If someone is starting an auto dealership as a solo venture, a sole proprietorship provides the simplest and most straightforward structure to begin operations without the need for additional paperwork or formalities.
Cons: Lack of legal distinction between the individual and the business. The owner is the business: In a sole proprietorship, the owner and the business are considered one entity legally. This means that the owner's personal assets are at risk in the event of any liabilities or legal issues faced by the auto dealership. It may be more challenging to separate personal and business finances, which can have potential drawbacks.
Prior to applying for an Ohio motor vehicle dealer license, it is necessary to register your business name with the appropriate offices. The easiest method for registration is through the Ohio Business Gateway. To initiate the process, you simply need to register with the gateway system.
The Ohio Business Gateway provides comprehensive guidance on the various requirements involved in the registration procedure. As part of the registration process via the gateway, you are also required to register with the Ohio Department of Taxation.
Furthermore, alongside the business registration, you will need to obtain a certificate from the Secretary of State, confirming the official registration of your business.
Prior to applying for a dealer's license in Ohio, it is essential to acquire an Ohio vendor's number from the county auditor's office. This number is required for reporting the sales tax collected on the vehicles sold under the dealer's license. Additionally, it may be necessary for the entity obtaining a dealer's license to register with the Ohio Secretary of State's office. The process of registering your business with the Secretary of State is explained in more depth during the dealer education class.
If your business is anything other than a sole proprietorship or partnership, you would need to apply for a Federal Employer Identification Number. A federal EIN is a 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 various 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.
A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN but can get one. In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number.
Both new and used motor vehicle dealers must have a suitable business location that meets the following requirements:
You must display your phone number in public view under your business name. If you are selling used cars, there are additional location requirements you must meet available on the BMV’s website
Individuals who are applying for an Ohio used motor vehicle dealer's license and have not held a license in the past two years must undergo a six-hour dealer educational course. This course can be completed either online or in a classroom setting. The online course is equivalent to the in-person course and offers the flexibility to start and pause the training at your convenience. Once you finish the course, you will receive a dealer certificate of completion, which should be included in your dealer license application.
The BMV has prodived a list of authorized used motor vehicle training providers.
As part of the application procedure, it is compulsory to undergo a criminal background check. Each person who is listed on the application in the Ownership Section is required to complete a criminal history record through the Bureau of Criminal Identification and Investigation (BCI). They will also need to submit an electronic fingerprint to obtain a dealer’s license. You must request the fingerprinting location to send an electronic copy to “BMV Dealer Licensing”. The Ohio Attorney General’s Office provides a full list of fingerprinting locations that you can choose from.
If you do not live in Ohio you must call the Dealer Licensing Section at 614-752-7636 in Columbus to obtain your fingerprint card.
Be sure to include a copy of each owner’s fingerprint card in your dealer license application packet.
To protect your customers, the BMV requires you to have a $25,000 auto dealer bond. An auto dealer bond guarantees that you will comply with all state laws concerning you and your business, outlined in the Ohio Administrative Code.
A surety bond is a financial guarantee made by the surety (insurance company) toward the obligee (BMV) that the principal (auto dealer) won’t violate rules and regulations governing the auto dealer industry.
The auto dealer bond serves as a safeguard for your customers, guaranteeing fair business practices and the application of warranty policies to all clients. Acquiring the surety bond involves paying a premium, typically ranging from 1% to 3% of the total bond value. The premium amount is determined by the bonding company, considering factors such as your financial statements and credit score. A higher credit score results in lower premium payments.
You will need to provide pictures of each of the various parts of your dealership below. This requirement serves several purposes such as the verification of your business location and checking if the premises complies with the regulations. The pictures you take should show the following:
The state of Ohio requires a minimum net worth of $75,000 whether you want to sell new or old cars. To determine your net worth, add all your assets and subtract the liabilities.
You must provide the necessary documentation upon request by the Ohio BMV, which includes a financial disclosure statement.
Auto Dealers are required to purchase at least one dealer plate. You can get the dealer plates from the BMV.
By this point, you are ready to complete the dealer application. Depending on what type of dealer you want to become, you can fill in either the New Motor Vehicle Dealer Application or the Used Motor Vehicle Dealer Application
This is among the final steps in the auto dealership license application process. After filling out the correct application form, make sure you attach the following documents:
After completing all the steps we have taken you through, it is now time to mail out your application to the BMV. You will mail everything to this address.
Ohio Bureau of Motor Vehicle Services(BMV)
Dealer and Salesperson Licensing Section
Your lot must pass a physical inspection before or after getting your license. Be careful to ensure that your lot meets the requirements of the BMV. Failure to meet these requirements can lead to your license being revoked.
In this article, we have provided a step-by-step guide on how to obtain a motor vehicle dealer license in Ohio. We began by explaining the importance of this license if you plan to sell five or more vehicles within a year.
Here is a summary of the key steps involved:
Following these steps will help you navigate the process of obtaining a motor vehicle dealer license in Ohio successfully.
We have broken down the various fees you will need to pay in order to get your license below
Application fee- $150.00
Permit - $50.00
Each addition plate-$10.25
The Ohio Revised Code (R.C) has a list of reasons that can cause your application to be denied. We advise you to go through them to know what things to avoid doing in your application.
In Ohio, dealership licenses are valid for one year and must be renewed to continue operating your business. The renewal process can be conveniently completed online through the Ohio Department of Public Safety Identity Manager Platform. For further details regarding the expiration and renewal of your license, you can reach out to the BMV at (614) 752-7636.