Technically NO you do not have to have an FFL to engrave the receiver that is serial numbered! If the customer brings the receiver and remains in your shop while you engrave the receiver then no Fed. law is broken. The owner must physically stay in control of the the serial numbered item. The owner can not leave it in your shop. In that you live in CA and they have some extreme firearms laws you will also need to check with the CA Firearms Dept. Many moons ago I did repair work for the US Marshall's where I lived at the time on their fully auto firearms. I did not have a Class 3 license that would have allow them to leave it with me. They sat in my shop, told tall tales and drank my coffee. Some work took more than a day. They took the firearms when they left and then would return each day until the job was finished. Your tax dollar at work!
If it is an 80% lower receiver, you can engrave anything you want to on it. Once the fire control pocket is milled and the holes for the safety selector, trigger and hammer pins are drilled, it then becomes a firearm. Consider anything you do to an AR lower receiver that has been machined to that point as being like any other firearm.
I would suggest that anyone that is going to engrave AR lowers should do so BEFORE it has been machined to be functional. Otherwise, you can get in trouble with the BATFE for being an illegal manufacturer. Individuals can manufacture their own firearm legally. As long as they don't intend on selling them. They are not required to put any markings or serial numbers on them. If you are seeing functional AR lowers for sale without a serial number, those are illegal. You may have been looking at 80% lowers and didn't know it.
The picture with 3 lowers are unfinished 80% lowers. The other one shows a milled fire control pocket.
It sounds like the gentleman wants to do a registered SBR lower witch is very common a freind had so many comming in he had to get qualifyed as a ffl because they started mailing them to him (sans owner) as stated as long as you dont keep the registerd part .. the lower with out him your fine. Any time you keep a registerd frame you have to log it witch is the reasoning for a liscense ...trail of acountability and all that
Well that might change things, I just talked to him and they are definitely 80% lowers that he made. These are blank parts and he wants ID on them. He said there will be a lot of people in CA wanting this before 2019.
As an engraver in Ca., I can state that you must have an FFL to work on other people's guns in this state. 80% receivers that have been completed are firearms without a serial number. They have been machined backwards. They should be engraved and serialized before completing the fire control pocket. This area of Ca. laws is currently in flux, but it would not be a good idea for anyone without an FFL to work on someone else's completed 80% receiver. Jokes about the ATF undercover agents aside, they do exist!!!!