How to Get a Dealer License in Texas

How to Get a Dealers License in Texas Step by Step instructions,

Short Texas Dealer License Video

Long Texas Dealer License Video

1. Submit Dealer Application at eLICENSING

You must submit your dealer application through the TxDMV eLICENSING website. Your application must be submitted online. The TxDMV no longer accepts dealer license applications by mail. You may submit your dealer license application at www.TxDMV.gov and scroll down on the home page and click on eLICENSING login to begin.

The application process is quite extensive and must be completed correctly and in its entirety. Mistakes on your dealer application can cause significant delays in your licensing process. If you need assistance during the eLICENSING process you may call 888-368-4689. We will submit a dealer license application online later in your dealer training course.

2. Fingerprinting and Criminal History

You must be fingerprinted before you receive your dealer license from the TxDMV. The TxDMV must review your criminal history and the criminal history of all owners and managers listed on the license. ALL owners and managers MUST disclose all prior offenses – both convictions and those that resulted in deferred adjudication in any jurisdiction. When your application is on file with the Texas Department of Motor Vehicles you will be directed to obtain your fingerprints from IdentoGO. It is very important that you do not obtain your fingerprints until directed by the TxDMV to report to your fingerprint location.

The existence of a criminal history does not automatically disqualify a person from gaining a dealer’s license. The TxDMV will review criminal history on a case by case basis. When you complete the information when applying for your license through the eLICENSING system you must answer all questions correctly. If you make false statements during your application process you may have your licensed denied, cancelled, or suspended. You may also face criminal prosecution. If you or any owners/managers have a criminal history court records must be submitted with your dealer application.

3. Business Building

You must have a place of business to be used for the purpose of selling motor vehicles. It must be located in a building with connecting exterior walls on each side. The building must meet all local zoning requirements. You must have an office in the building for the operation of your dealership. The office cannot be located within an apartment house, hotel, motel, or rooming house. If the office is located at a private residence, it must be completely separate from the actual residence and must meet the zoning requirements from that city or county. Your office must include, at minimum, a desk, two chairs, internet access, and a working telephone listed in your dealership name. A dealer phone number may never be shared with another dealer. Wireless internet access is acceptable. If a dealer shares their location with another business, the dealer must have their own office area.

Before you rent or purchase a building to operate your dealership you must contact your local planning and zoning office at your city hall or county courthouse to ensure you may operate a dealership at that location. TxDMV Enforcement Officers may request documentation to ensure all zoning requirements have been met.

The dealer must own the property where the license is located or must lease the property for the entire term of the dealer’s license. If the building is being leased, the lease must be for no less than 2 years. Your lease may not expire before your dealer license expiration date. A Certificate of Occupancy (COO) is required if a COO is required by the city or county. The State allows up to four retail dealers or up to eight wholesale dealers to operate out of one business building. Retailers and wholesalers may not share a building.

4. Display Area

You must have a display area has sufficient space to display 5 of the vehicle types the dealer is selling. Those spaces must be reserved exclusively for the retail dealer's inventory and may not be shared or intermingled with another business or a public parking area, a driveway to the office, or another dealer's display area.

The display area may be located outside of the building or inside the building. This retail sales area must be kept separate from any wholesale vehicles being held for resale. The display lot cannot be a driveway and must be a hard surface such as concrete or gravel. Some local zoning ordinances may require a dealer display lot to be paved. The lot must meet all local zoning requirements.

The display lot must be separated from any other business, repair shop, a driveway to the office, or other dealership’s display area. If a retail dealer shares a display area or parking area with another business, including another dealer, the dealer inventory must be separated from the other business’s display lot or parking area by a material object or barrier which cannot be readily moved. Such separation must be properly maintained during the entire period for which a used motor vehicle dealer license is held. If a dealer is going to operate at night the display area must be illuminated.

Dealers can have a display area which is not part of the lot. The display area must be located at the retail dealer's business address or next to the retail dealer's address. A storage lot which is not next to the retail dealer’s address is permissible only if there is no public access and no sales activity occurs at the storage lot. A sign stating the retail dealer's name, telephone number, and the fact the property is a storage lot is permissible. You may never have any sales activity on the storage lot. If your customer is interested in a vehicle which you have on a storage lot, you or a salesperson, would need to bring the vehicle from the storage lot to the retail sales lot to show the vehicle. You may never have sales activity on a storage lot.
All retail sales activity must take place at the licensed location only. Retail and salvage inventory must be also kept separate. Wholesale vehicle dealers are exempt from the display area requirement.

5. Business Sign

You will need a permanent business sign which is visible from the public roadway. The dealership name on the sign must be at least 6 inches or larger. The business name on the sign should match either the DBA certificate filed with the county (for sole proprietors/general partnerships) or the business name/DBA registered with the Texas Secretary of State (if a corporation/LLC/LP).

The sign must be mounted at the address listed on the dealer application. Your sign must match the exact name of your dealership as it is listed on your dealer’s application. The sign is not required to have business entity information such as Inc., LLC, LP, etc. The sign must be permanent in nature and be clearly visible to the public. A banner is not an acceptable business sign nor are magnet boards or handmade cardboard signs. A dealer may use a temporary sign as long as they can produce a sign order which shows a sign has been paid for an ordered. Most printing companies can produce a permanent business sign at minimal costs.

Wholesale dealers must follow GDN requirements (permanently mounted outside sign with 6-inch letters) but may mount a sign on the office door with 2-inch letters if the landlord does not allow outside signage.

Each dealer must post their own business hours if an office is shared and a dealer’s hours must be posted even if a location is shared with another type of business. Be sure the letters in the dealership name meet the minimum height requirements under Texas law.

6. Business Hours

A retail dealer must be open at least 4 days a week for at least 4 consecutive hours per day. A wholesale dealer must be open at least 2 days per week for at least 2 consecutive hours per day.

Business hours must be prominently displayed near the entrance to the building. You may post your business hours on the front of the building, on a window, or on the business sign.
The dealership must be open and staffed during the posted hours of operation. The dealer must be staffed by an owner or bona fide employee. If you are not able to staff the dealership during the posted hours due to an emergency, or special circumstances, you must post a sign which states the date and time which you will return. If the dealer ever changes the hours of operation the TxDMV does not have to be notified. Any customer must be able to view your vehicle inventory without an appointment.

Regardless of the retail dealer's business hours, the retail dealer's telephone must be answered from 8:00 a.m. to 5:00 p.m. weekdays by a bona fide employee, answering service, or answering machine.

Texas Blue Law prohibits a motor vehicle dealer from selling vehicles on a consecutive Saturday and Sunday. A dealer may not sell vehicles on Saturday and Sunday on the same weekend. Travel trailer and trailer/semitrailer dealers may operate 7 days a week. If a person holds a motor vehicle license and a trailer license, they may open on Saturdays and Sundays but cannot sell motor vehicles on a consecutive Saturday and Sunday. Motor vehicles may only be sold on a non-consecutive Saturday or Sunday.

7. Dealer Surety Bond

Most persons must obtain a $50,000 dealer surety bond in order to obtain a Texas Used Motor Vehicle Dealer's License. The name on the surety bond must match exactly the name on the dealer application filed with the TxDMV and as registered with the Secretary of State. If you are operating your dealership as a Sole Proprietor or General Partnership, the name on the bond must match be issued in the first and last name of the Sole Proprietor or General Partnership.

State law requires notice of the surety bond and the procedure by which a claimant may recover against the surety bond to be posted next to your dealer license.

The surety bond is used for replenishing funds used to compensate retail purchasers of motor vehicles. The bond must be issued for 2 years and must start on the first day of the month and end on the last day of the month of your dealer licensure term. You must maintain your bond during entire licensure period.

The bond must be signed by the dealer and the bonding representative. The bond must include a proper Power of Attorney from the bonding company. Franchisees, travel trailer dealers, and utility/semitrailer dealers are exempt from the dealer surety bond requirement. Dealer surety bond pricing is based on your credit score and can be obtained by an insurance agent or bonding company.

8. Register Business Name with Texas Secretary of State or County

Many dealers must register the business name with the Texas Secretary of State and include copies of each registration with your dealer application. The Texas Secretary of State wants to have a record of every business which is operating the in the state. Sole Proprietors & General Partnerships are excluded; however, Sole Proprietors and General Partnerships must file a DBA/Assumed Name Certificate in any county they operate if they are using a name other than their proper name.

Registering your business with the Secretary of State is covered in great detail later in your dealer training course. For additional information on registering your business you may contact the Texas Secretary of State Business & Commercial Section via email at corpinfo@sos.texas.gov or call them at 512-463-5555.

9. Licensing with Office of Consumer Credit Commissioner if Financing

Any dealer that offers assistance with any type of financing must be licensed with the Texas Office of Consumer Credit Commissioner. You can obtain the license at www.occc.texas.gov or you may call 512-936-7600 for further information. We will cover licensing with the Office of Consumer Credit Commissioner extensively later in the course.

10. Records

You must maintain records on all vehicles purchased, leased, and sold for a minimum of 48 months. The current and previous 13 months of records must be kept at the dealer’s licensed location to be ready for inspection by a TxDMV representative. The remaining 35 months records can be stored at a location other than the licensed location.

Records may be stored either via paper or electronically for a period of at least 4 years. Federal laws require some records be kept at least 5 years. We will review an entire section on exactly what records to keep later in your course.

11. I-9 Employment Eligibility Verification

The Employment Eligibility Verification Form I-9 is a U.S. Citizenship Immigration Services form. It is used by an employer to verify an employee's identity and to establish the worker is eligible to accept employment in the United States. You can find the form at www.uscis.gov . Federal law requires you to complete this form for every person whose name appears on the dealer license and all future employees. You do not need to submit this form with your application but you must store a copy of the form at the dealership location.

12. Employer Identification Number (EIN)

Before submitting your dealer application, most persons must obtain an Employer Identification Number which is also known as an EIN. This number is used to identify the new business you are starting and will be needed for tax purposes.

Obtaining this number is a very quick and easy step which will only take a few minutes. You can easily apply at http://www.irs.gov or directly at https://sa.www4.irs.gov/modiein/individual/index.jsp  and have your new Employer Identification Number in a matter of moments.

If a Sole Proprietor has employees, then an EIN is needed and may be used. SSNs may be used if the Sole Proprietor is the only employee of the business.
Applying for an Employer Identification Number is covered extensively later in the course.

13. Dealer Educational Course

Many persons applying for a Texas Independent Motor Vehicle GDN for the first time are required to take a 6-hour web-based dealer educational course. The training is required if you are selling cars, trucks, motor homes, neighborhood electric vehicles, recreational off-highway vehicles (ROV), all-terrain vehicles (ATV), and utility vehicles (UTV). The person taking the course must be an owner or manager listed on the application. You will receive a Certificate of Completion at the end of this course. Be sure to upload the certificate in your dealer application submission.

14. License Fees

The fees for your General Distinguishing Number (dealer license) are listed below. Your license fees can be paid with credit card or eCHECK. This example shows fees which include one optional metal plate:

General Distinguishing Number $700.00
Metal Dealer Plate $90.00
Subtotal $790.00
Additional Plate $90.00 (optional) $90.00
Grand Total $880.00

TEXAS LAW REQUIRES ALL DEALER LICENSES ARE DISPLAYED PROMINENTLY AT THE BUSINESS LOCATION. YOU MUST ALSO POST YOUR BOND INFORMATION AND INSTRUCTIONS ON HOW YOUR CUSTOMERS CAN MAKE A CLAIM AGAINST YOUR BOND ADJACENT TO YOUR DEALER LICENSE.