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Starting an Ammunition Company (Part 5)

I hope that as you go through these articles that you gain a better sense of things that you need to consider and deal with before starting your ammunition company.

As the government quarter is about to end, I realized that I didn’t mention another vital thing to remember.  This applied to how you will develop your cost model.  Many people probably do not know that on every sale of ammunition, there is an excise tax that must be paid.  This is due every quarter and must be received by the Tax Bureau by the 20th of the month that it is due.  These are due on April, July, October, and January.  You have to pay for the quarters inventory by the end of the month after the quarter ends.  This is why the last payment is due in January.

Now with this, the amount of tax is 11% of everything produced.  All of the rules of this are pretty complicated and I won’t elaborate too much here as I don’t want to be giving legal advice where I’m not qualified.

For this you will need to register, you do this by sending your check in, to the Alcohol and Tobacco Tax and Trade Bureau. You can get the information from your ATF agent when they come to interview you for your FFL.  They do not collect the tax, but they will give you the organization that does.

I needed to hit this topic as I just sent my check in for this quarter, and wanted to let everyone know that when you are selling ammunition as a company, you need to include this in your price.  The manufacture pays this tax, not anyone else.  Sales tax however is different, and maybe I should mention this while I’m on a roll about taxes.

Sales tax is a state and local matter, and your area may be different than where I am, but I’ll give you a general feel of things.  There are state, and local taxes.  I reside in the state of Alabama.  Here, every month you need to submit your state and local taxes.  You only need pay for ammunition sold in the location where you have a business presence.  This gets a bit complicated, so you should consult a tax accountant for help in your local area.  This also applies across state lines if you have multiple locations.  For my business, we are located in Alabama, so anywhere I sell in Alabama, I owe Alabama state tax.  This includes in person or on line.  If you sell however to a gun shop, they are responsible for the sales tax, and you do not need to remit this, as that would be double taxation.  As a rule of thumb, whoever sells to the public, pays the tax.

One last thing in this regard.  This isn’t just an ammunition issue, but for all businesses.  This is the “start up”.   When you are starting your company, you will have a large amount of up front expense.  Until you start selling your product, every dollar goes into the “start up” phase.  You do not exit this phase until you open your doors.  Once this happens, all of the money that you have spent up to that point will be spread across 15 years.  So you only get to write off on your taxed 1/15th of that amount.  So, the reason I bring this up is to get out of this start up phase as fast as possible.  If you wait until everything is perfect, you will not see a full return on this money for 15 years.  Now the particulars are up to an accountant to address, but you need to consider getting out of this phase as fast as possible.   You will incur a large amount of expenditures getting your building, supplies, machines, and all of the other needs such as boxes, trays, accounting software, computers and the like prior to selling anything.  But if you can start on one caliber, and phase the other ones in, it might be a better idea.

Until next time, I hope that this is helping you plan what you might like to do for your business.

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Starting an Ammunition Company (Part 4)

So here we are for the next installment. Hopefully, you have read the previous three posts to get you to this point.  If so, you would now conceivably have your building, FFL, ITAR certification https://www.pmddtc.state.gov/regulations_laws/itar.html, insurance, and your loading machines.  You should also have your suppliers.  But during this phase, you need to think about how you are going to sell your ammunition.

When I started my company, I was mainly looking at selling specialized ammunition.  With this, I needed a large target audience.  So a website was a natural way to go.  Well, I know ammunition, but I didn’t know a whole lot about websites.  I started looking at putting one together and quickly decided to move on to a professional.  Ammunition websites have some very specific issues associated with them.  For one, you need a payment portal for taking online orders.  Many banks will not deal with anyone in the firearms industry, so you need to search for one that is ammo friendly.  In this vein, you might want to get a credit card reader.  Again, you need to look.  Most people are familiar with the Square readers.  Think again, they won’t touch ammo.  If you start to feel like someone with leprocy, then you’re about right. Now if you are blessed with being an expert in ammunition and web design, then two thumbs up.  But I would suggest that you pay someone to do this work.  If this is going to be you lifeblood of your business, you need to get it right.

You will also need to contact a shipping company and get an account.  The only way you can ship ammunition is by ground.  No air shipments for us.  There are only two companies that you can use: UPS https://www.ups.com/?flash=false, and Federal Express http://www.fedex.com.  You will need to get the Department of Transportation stickers for the side of the box.  You will need two.  One says that the box contains small arm ammunition, and the other is a diamond shape with black on one half, and white on the other.  You cannot simply use a drop box, or a UPS store.  UPS stores do not ship ammunition.  You will need to go to a distribution center, so having one in reasonable distance to your location is really helpful.

Now if you have enough volume, which means that you are shipping ammunition nearly every day, then you can arrange for either to come to your location for pickup.  This is a great option, but one that will probably not be useful for a while until you get your business base to a certain level.  If you don’t have packages to ship when they arrive, then they will start to charge you.  So, be sure that you are consistent.  You can also arrange for them to come on set days like every Tuesday and Thursday to be sure that you have something to give them.

Well this post is starting to get a bit long, so I’ll post more later.  I still need to talk about where and how to sell, what to expect, SEO, and advertising.  Until next time!

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Starting an Ammunition Company (Part 3)

So if you are tracking with me, you should have a physical location, your Class 6 FFL, and your ITAR certification.  Now is time to think about insurance.  (You can do this the same time as your ITAR.) You will need liability insurance at a minimum.  It is also good to get insurance on your building, equipment, and an umbrella policy to cover if someone come to your building and gets hurt.  So now, you are knee deep in insurance policies.  Depending on where you live, the costs will obviously vary.  The  thing to realize is that in order to get liability insurance, you need to convince someone that you are a low risk enterprise.  So if you have any explosives background, training, or certifications, you should list it.  Once a company agrees to accept you as a client, you will then pay based on your expected production amount.  Here, the more you make, the more you pay.  So don’t estimate too high when you first start.  Say you figure you will sell 50,000 rounds the first year.  If you are going good, you may make more.  But as soon as you make 50,000, you will need to contact the company for a new estimate.  If you have an incident, and they find out you had pumped out 300,000 rounds, you might not get the stellar customer service that you were hoping for.  Each year, they will review your policy and issue you a new one based on the previous year, and your estimates for the coming year.

You will also need a good security system with cameras.  Close proximity to a police station wouldn’t hurt either!

Now along with all of this, you need to estimate the cost of equipment,and the care and feeding there of.  I would suggest that starting with a group of Dillon Super 1050’s would be good.  Each will set you about about $1700.  Then you need to get the Mr. Bulletfeeder http://www.mrbulletfeeder.com to go along with it.  Believe me, don’t miss this step!  You will also want to get all of the accessories along with various spare parts.  You don’t want to be in production, break a indexing spring (they do break!) and be down for 4 days waiting on a shipment from your friends at Dillon https://www.dillonprecision.com.  Dillon by the way has excellent customer service and are a great company to deal with.

If your pockets are a bit deeper, then you may opt for automating this, or getting the new Mark 7 autoloaders https://www.google.com/search?client=safari&rls=en&q=mark+7+autodrive+1050&ie=UTF-8&oe=UTF-8.  You can retrofit your Dillon with this product, or you can get one of their new systems that was demonstrated at the 2017 NRA show in Atlanta.

If you have very deep pockets, you could opt for a Set Point https://www.setpointusa.com/ammunition-equipment/ammo-loader.html, Camdex http://www.camdexloader.com, or an Ammoload http://www.ammoload.com.

The thing to remember here is that you need to feed these systems.  Your Dillon can grind out about 1200 rounds an hour with the bullet feeder.  With this, I would highly recommend the RF-100 https://www.dillonprecision.com/dillon-rf-100-sm-primer-filler_8_9_23474.html  This device will enable one operator to keep up with the loading rate.  It takes some fiddling around with to get it set up, but it will load a tube of primers faster than you can pull the handle 100 times.  Well worth they money in my book.

So say that your costs for a box of 45 ACP minus the excise tax is $15.00.  So that is 30 cents a round.  So to keep that machine moving for one 8 hour day would cost $2,880.  For a month of 20 work days, that would be $57,600.  That is just a single Dillon machine, and you would be able to make 192,000 rounds.  So you can see that a single machine can crank out a lot of ammo.

The point here is that if you need to get the machine that will be the most cost effective.  To by a Set Point for $100,000, you better know that you can support that care and feeding.  Given our example, such a machine could produce about 640,000 rounds a month with a component cost requirement of $192,000 per MONTH!

So choose your loading machines wisely.  Also, you should buy a spare machine or two just for when one breaks down. That way, if you don’t have the particular spare part, you can move your operations over to the spare machine and not lose production.  Believe me, this happens!

Stay tuned for Part 4 where I will discuss brick and mortar stores versus on-line selling, advertising, SEO, sales tax, excise tax, …….

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Starting and Ammunition Company (Part 1)

When I started http://moylanllc.com I searched the web for information about things that I needed to consider.  Starting an ammunition company is like many other companies, but due to government regulation there are some very special items to consider.  I was able to find some information that was helpful, but nothing that laid out in detail what I needed to do.  This is the reason why I’ve started this blog series.

I plan to post several articles covering various aspects of what is required, and what you should think about before jumping head long into ammo manufacturing. You are probably a certifiable gun nut.  This has led you to the desire to reload your own ammo.  If you are not a gun nut, and if you don’t already reload your own ammunition you need to stop reading!  You must be passionate about any company that you start, and if you don’t have the skills over years of hand loading the ammo of your choice, you clearly don’t need to be in this business. But chances are quite good if you found this blog, that all of your friends know you have a real passion for this industry.  You probably own multiple guns safes, have what most non-gun people would consider an arsenal of pistols, rifles and shotguns, and have at your disposal a stack of firearms related magazines that is tall enough to pose a safety hazard if it was to fall.  So with this, let’s begin our journey!

The first question you may ask yourself is what do you bring to the table? The ammunition industry is a very mature industry with some very large corporations that dominate the field.  These companies produce ammunition at a rate of millions of rounds per day.  So with an economy of scale that probably equals several small countries, they have prices as low as they can possibly go.  If you feel that you can load 9-mm ammo at their prices and make a profit, you need to be writing this article!  I understand that you can handled your own ammunition economically, but that is a far cry from selling it at those prices.

But if you were going to try to convince someone to buy into your company, what are you going to tell them that you do differently than everyone else?  When someone walks into a ammo store, or searches on line for ammunition, why are they going to pick up your box, or click on your link?  Once you have your niche carve out, then you are ready to move on to the next phase of the process.  My next blog will start to detail the next series of questions that you need to address in your quest to become the next Hornady, Buffalo Bore, or DRT.

I will be adding a lot more content on this topic. To catch all of the posts, click on http://moylanllc.com and go to the blog link.

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Cheaper Shipping for Large Orders

Hey everyone,

We know that no one likes to get a good deal on ammo, only to see how expensive it is to ship it. Ammunition is heavy and shipping costs can be high! But, at Moylan LLC, we put customers first and we want to help keep ammo affordable. Today, we’re starting a new flat rate shipping program to be sure that our customers pay as little for shipping as possible.

The first aspect of this program is that all ammo crates ship for free!

Second, if you’re ordering individual boxes, then the shipping costs are based on quantity — up to 10 boxes:

  • 5 boxes or less
    • $10 flat rate or the shipping costs as normally calculated for UPS — whichever is cheaper*
  • 6-9 boxes
    • $5 flat rate
  • 10 boxes
    • free shipping!

* If your shipping costs are less than $10, you get the cheaper option. More, and Moylan LLC will pay the difference!

So, the effective price of the ammunition decreases with the amount you buy. Simple supply-side economics. The more you ask me to supply, the more you can demand a better deal. This same information is now included in our Shipping Policy.

Finally, to keep getting even better deals, please sign up for our email list on the homepage. We will be sending out specials to our loyal customers, and even announcing free ammo giveaways. Also join us on Instagram, Twitter, and friend us on Facebook.

God bless, and hope to see you at the range some day shooting Moylan LLC Ammunition.