How to start a Collection Agency Business

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A collection agency business is a very lucrative business to start, because the start-up costs are very low and the work can easily be performed from the comfort of your home. By opening a collection agency business, you will be assisting individuals and business owners collect on past due accounts. Often times companies are reluctant to aggressively follow through the collections process due to either the lack of staff to do an adequte job, or the reluctance of portryaing a negative image to the public. Many companies strive to adhere to a "customer is always right" attitude - even to non-payiing customers.

It is of the utmost importance that before embarking on your collection agency busines taht you thoroughly understand the policies within the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. As a collections agency business, you will be required to work within the frameowrk of their guidelines.

You probably already have all of the equipment you need to start a collections agency. An up to date computer with printer and internet access, and a telephone are the bare bones you need to run your company. Of course aquiring additional office supplies can help keep you more organzied and enable you to be more productive.

Debt collection can be a very lucrative business. There is no cap as to how much money you can make if you are willing to work the business in a careful and diligent manner.

Starting a Collection Agency business can be fun, exciting and very rewarding. If you are considering starting your own Collection Agency business, be sure to read the following advice so that you can shorten your learning curve, minimize your risk, and start generating income quickly.

Read on to learn how to start your own Collection Agency business in 10 easy steps.

1. Write A Business Plan.

Writing a business plan for your small business is key in getting your new Collection Agency Service venture off to the its best start. Lenders won't even consider your request for a loan without a written business plan in hand. Also, the process of preparing a business plan forces you as an entrepreneur to consider every aspect of the company's operations. Don't skimp on this crucial step.


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2. Choose A Company Name.

When choosing a company name, pick a name that easily fits into a web address or domain name. Your web address should be easy to type, simple but catchy. Every business has an internet presence nowadays. You must be sure that your Collection Agency business is on the internet as well. Once you pick a company name for your Collection Agency business, make sure to register the domain name quickly, before someone else does. You may also want to get not only the .com version of the name, but the .biz and .info versions as well, so that competitors don't encroach on your business by grabbing your domain with a different extension. You may regret not having these additional domains when your company grows and becomes successful.


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3. Incorporate Your Business.

One of the primary advantages to incorporating your Collection Agency business is the fact that you can then enjoy limited liability. As a sole proprietorship, of a Collection Agency business owner, you assume all the liability of the company. Your personal assets, such as your house and car can be seized to pay the debts of your business.
When you incorporate your Collection Agency business, you become a shareholder in the corporation. As a shareholder in the corporation, you can't be held responsible for the debts of the corporation. Your liability as an individual shareholder of the Collection Agency business is limited to the amount you have invested in the company. In today's litigious society, it is best to protect yourself, and separate your personal assets from the Collection Agency's company assets.


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4. File For A Tax Identification Number.

There are several types of tax id numbers:

*A Federal EIN Number - The Federal Tax Identification Number is used to identify a business entity and is required for employers and corporations as well as partnerships.

*A State Sales Tax Id - Sales tax id number or sales tax exemption certificate is a legal document issued by the state. This certificate of authority gives your business the authority to collect the required sales and use taxes, and to issue appropriate sales tax exemption documents, including resale certificates used for purchasing inventory

*A State EIN Number - A state specific Tax Identification Number. Check your state regulations to see if it is required.


5. Examine Your Competition.

Examine your competition in the Collection Agency industry - your clients will. Compare your business ideas against your competitors. Determine what are your strengths and weaknesses are. Compare them and determine how to strengthen your weaknesses and how to emphasize your strengths. Your clients will compare your Collection Agency services with others before choosing - so make sure you offer your clients a service they can't refuse.



6. Calculate Your Fees.

Since you will be working on your own you will need to determine your wages. Keep in mind that you will need to pay for self-employment taxes, insurances, supplies and education. Make sure when calculating your fee to include all of your expenses and what you need to make a profit. Make sure your rates are competitive or you can justify why you are charging more than your competitors. Remember, your potential clients aren't always looking for the cheapest Collection Agency business. They want dependability, relaibility and genuine quality service from a skilled and professional Collection Agency.


7. Get A Logo.

A logo is also a very important element for your Collection Agency business. A logo clearly sets the tone and presents a graphic representation of your business and it’s value - providing your Collection Agency business with an extra level of professional presence. You need to provide your clients with a sense of legitamacy, as they will be entrusting you with their Collection Agency business needs.
A great logo should be eye catching and visually appealing, without being too garish or flashy. Hiring a professional to design your Collection Agency company logo is a wise choice, because a logo is often the first impression a potential client will get of your Collection Agency services. So it is best to have a professional design it, who can create a timeless and balanced look that can stand as your business identity for years to come.


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8. Create A Website.

Hire a website developer or use one of the many do-it-yourself online companies that offer you an assortment of website templates, where you can enter your own content. Be sure to choose a template that relates to the Collection Agency industry.

Keep your website simple and to the point. Start with a home page, which describes your business and the services you offer. Then include a page that provides your professional biography and credentials as well as a photo. A web form that allows potential clients to enter their information for quote by phone is a nice feature. Don't forget a page that provides your contact information. Include a payment form where clients can pay for your services using a credit card or electronic check, if advance payment or a deposit for your services is required.


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9. Find Clients.

You will need to advertise, market and promote your Collection Agency business in order to attract clients. Make sure to prepare a budget for maintaining your a website, getting business cards, ordering fliers, and sending out a press releases. Offering a special incentive to your first clients could help speed up your client acquisition process.


10. Keep Learning.

Stay current within your field of Collection Agency. Sign up for free newsletters and subscribe to magazines and newspapers designed for those in the Collection Agency industry. This will help you stay in touch with the newest trends in the Collection Agency business world. The more knowledgeable you are about Collection Agency, the more likely to you are to succeed.


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