How can I legally flip cars in Ohio? (i.e. selling more than 5 per year)?
What you are contemplating is not becoming a dealer. Most states and the wordage of so many per year means they WANT you to become a dealer. That requires a license, a bond, a location zoned for business and my state even requires a sign and a landline phone. And garage liability insurance. (The insurance is not cheap) Now, I asked this very question to my state about 33 years ago...and I asked what if I sold more than 5 a year. He said they would want you to take the steps to become a licensed dealer. My concern was would there be large fines or anything? He said no, unless you repeatedly ignored their requests to become licensed or stop doing it. I later found out, in my state, there is nobody whose sole job is to count how many cars you sold in what period of time. They said most of their complaints were from neighbors of people who were running a car lot out of their yard in a residential area.. My suggestion since you are brand new at this is to worry about becoming licensed AFTER you convince yourself it's a viable business for you. The last thing on your mind should be..."gawd, This is my 6th car, I'm going to jail". Now, there ARE benefits to becoming a dealer. You no longer have to pay sales tax for every car you sell. (Your customer will, but not you because you are a dealer) Call your states dealer regulatory agency or look it up on the web, they probably have very detailed instructions. Becoming licensed is a burden in many ways. But it will allow you access to auctions where you probably cannot go now. (Many salvage auctions are not open to the public and very few dealer auctions are) The concern from way back when with people flipping cars was the state was not getting their sales tax. The state is getting sales tax twice if you are not licensed. So you having sold 11 cars in a calendar year or whatever, is NOT a huge priority for bureaucrats. When I started, the rules for becoming a dealer were a lot easier and cheaper. When i started, I became a wholesale only dealer. That got me in auctions. And then when I sold them, I could just sign the title over to the buyer and they would pay sales tax and the state never knew I was not a retail dealer. That changed over time and I HAD to become one. Insurance was not required when I started and I never got it. If it had been, I may have never been able to make a go of it. But I was not building cars, you are. I say don't worry about becoming licensed until you are convinced it will benefit you or you get a cease & desist letter from the state. (That is their way of saying sh i t or get off the pot)\ You can probably easily sell 10-15 cars a year exactly as you describe for years on end. Unless you live in a very small county or something where some government worker sees a reason to look into it. (Most couldn't care less about anything more than cashing their paycheck) One more thing, in my state, a "rebuilders license" used to be REQUIRED to turn a prior salvage into a salvage. Now, that is no longer the case. But I do not know the details except I know they have to come out & inspect the cars and its not free or cheap. (That's part of the process of turning salvage into prior salvage) But, you will likely find a lot of cars that are not prior salvage so none of that is needed. They tend to sell for more because of less hassle. EDIT, I forgot to mention that your biggest possible liability is not fully disclosing the salvage history. So, you need to make sure your bill of sales makes it very clear or you have a separate piece of paper that you have the customer sign. (The point is, an ounce of prevention is worth a pound of cure and you do not want to be sued over it. Even if you win, you have to show up for court) And fully disclosing it is easy. 95% of my cars were not prior salvage but when they were, I wrote in a separate spot on the bill of sale."buyer understands the car has a salvage history" and I had them initial it. And I had an as is disclosure on all my titles right above where they signed. If you buy cars with very little damage, TAKE PICTURES because they will be a selling point. Without them, most will assume you are lying about the amount of damage because many salvage sellers at least downplay it if not lie.
The Football God
Get with DMV and obtain a dealer's license, probably required. If you think it's a do it at home, under the table job, you're wrong. Especially if you handle salvage titles.
In my area, selling more than 5 is a business. So you have to buy a business license from the city as a car lot. Which is a problem if you are doing this in a RESIDENTIAL AREA ONLY. " No business's" Meaning you got to get to rent a space in a commercial part of the town or industrial part (I suppose). You find the spot, maybe sharing a lot with another business, so you pay for a business license and for rental of the space. The city does not care if you do not make any sales (once they got their money.) "I currently own over an acre inside city limits". You first GOT TO FIND OUT FROM city hall what your property designation is. They have maps of all the lots in the city, so your lot is there. Actually your property tax notice would also say what the designation of your property is. . But seeing you are at City Hall anyways, go to the Planning department...and ask them WHAT the RESTRICTIONS ARE. They will tell you. They make the rules so you may have to make an application to change the designation for your property as it affects the neighbors. They have the final say. . This is the way it works. Have lived in multiple cities and the rules were the same for all of them. The neighbors have the right and will use it to REPORT YOU IF YOU ARE OPERATING A BUSINESS in an area that is not designated for businesses.
The state says that if you sell more than 5 per year, you are dealing in cars for profit. Therefore they want their share in taxes and fees, and some control over vehicle sales. In my state you have to warranty, to some degree, the car you sell. They say you are a dealer, so you need to have a dealers license to do it.
In addition to a Dealer's License (with it's associated requirements and restrictions), you also need a Business License, a registered business name, a properly zoned and approved place of business, business insurance, a business bank checking account, a state tax number, file Federal Estimated Taxes four times a year, have a proper accounting system, and enough business sense to actually make a profit (which is not easy).
First of all, go the Finances Department and ask for advice. Then you can think about what way you should take.
You need a Dealers license
Question are you in it for the money or for working on cars? Why? Unless you can prioritize and or cut overhead, you are going to lose money. Aint nothing going to get flipped. My advice, purchase and flip what people need. Not what they want. People need a little azz honda or toyota to save some gas on their commute. People need an old Ford or Chevy pickup for their lawncare business. People need a scooter to go back and forth between their apartment and their school. Would you rather lose $1300 dollars or $10000. At that, would you rather spend 1300 on a car, flip it in a week or a month, and earn 300 dollars on that, or spend $30000 on a Dodge Viper, sit on it for 6 months to a year, and then turn around and sell it for $20000, because bástards are cheap on Craigslist.
My dad used to put the car in the cats name. our cats have owned lots of cars. If you are going to contine doing this why not do it legally?
Sounds to me like a really shiity idea.
There's not really a way "around" getting a dealer's license if you plan to legally sell more than 5 cars per year. Dealer licenses are typically prohibitively expensive for just a single person selling a fairly low number of (but greater than 5) cars per year, at least when you factor in the level of insurance etc., required to satisfy the conditions necessary to obtain the dealer's license in the first place. I'd imagine that if you had a friend/significant other etc., willing to sign their name on titles as the buyer when you pick up cars at copart, you could probably double that number to 10 cars per year split between your two names, but even that might be pushing the envelope of risking enormous fines for being a "dealer" without the proper licensing and insurance etc., requirements if you got caught. It's probably not worth the risk financially to try and skirt the rules in this way, and it might not be worth trying to get the license for only ~10 cars per year either. All that said, you might be underestimating the amount of time it's actually going to take to flip each wrecked car if you're doing most/all the work yourself. I'd see how long it actually takes you to flip 5 cars in a year first before worrying about becoming a licensed dealer. Good luck.