Tag Archives: Start Up

16 Tax Advantages for Home Businesses

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Another tax deadline has come and gone. Most traditionally employed hard-working folks have given up almost half of their hard-earned wages for taxes, and then they get to survive on what’s left. Taxes may be a source of stress and anxiety for many, but it shouldn’t be for home business owners. Home-based business owners now qualify for more tax deductions than any other category of taxpayer in America.

In any home business you have many, many more tax advantages than you would if you were simply working for someone else. Even if you decide to keep your current job and start a home business part-time, you’d still be able to deduct business expenses.

These advantages really snowball when you consider how you can improve the bottom line profit of your home business by declaring all of the deductions you’re entitled to. So let’s look at some of the deductions you can take with a small home business:

1. Home Office

If you’re concerned that claiming a home-office deduction is like waving a giant red-flag at a bull and taunting the IRS to audit you – don’t be. The key is that you must use the definition of “home office” the same way the Internal Revenue Service does. The IRS says it must be a space devoted to your business and absolutely nothing else, but the deduction isn’t limited to a full room. If your “office” occupies half of your guest bedroom, it’s still deductible.

Once you determine how large your workspace is, you can divide it by the square footage of your entire residence. That will give you the percentage to calculate how much of your home-related business expenses you can deduct (rent/mortgage, mortgage interest, insurance, etc). And don’t forget the bathroom! The IRS considers that an acceptable addition to the amount of space required for your home business use.

2. Utilities

A percentage of your electricity, natural gas, water, sewer – and even garbage removal can be deducted. Just be sure to follow the same percentage guidelines as you would to determine what portion of your rent/mortgage is deductible.

3. Tuition and Educational Materials

Any cost you incur for legitimate educational needs can be claimed. This includes books/training materials, college or vocational courses (both on campus and online) or any other expense related to educating yourself for your business. Did you learn a new language to help you communicate with more customers? That’s deductible, too.

4. Office Supplies

Any office supplies you purchase for your business are deductible. That also includes postage, stationery, business cards… even coffee and toilet paper. Be sure you keep your receipts – or some other type of accounting (like a spreadsheet) for these expenses if you’re using a credit card.

5. Furniture

Desks, filing cabinets, bookshelves, chairs – even artwork – it’s all deductible if you purchased them for legitimate business purposes. There are a couple of different ways you can go, when deducting expense for furniture. You can deduct the cost of the purchase in its entirety for the year of purchase, or you can deduct a portion of the expense each year for seven years.

6. Other Equipment

Computers, fax machines, printers, scanners, calculators, postage meters or any other business related equipment are also a valid tax deduction. Similar to the furniture, you can deduct all of it in one year, or depreciate it over a five year period. Don’t forget that cell phone, if you’re using it strictly for business!

7. Software and Subscriptions

A newer tax break now allows for you to deduct the cost of any computer software you purchase without having to depreciate the cost over a period of years. Add to this the cost of any subscriptions to industry-related magazines, newsletters or other publications – including subscriptions to databases for skip tracing information – which is all considered a legitimate business expense.

8. Advertising and Marketing Costs

Any costs you incur to market your business, including both print and Internet advertisements, website design and upkeep, and even purchased marketing leads are all deductable expenses.

9. Professional and Consulting Fees

That CPA you hired to help you figure out your taxes? That’s tax deductible, too. As well as attorney fees or any other professional or consulting fees for the business you may have incurred.

10. Mileage

With a judgment recovery business, it’s unlikely that you’ll rack up a lot of mileage for business-related travel, but it should still be noted that you can claim this expense as a deduction. But if you do, be sure you keep track of your information. Record the date, mileage, parking costs, tolls, as well as the purpose of the trip.

If you’re purchasing a vehicle for business purposes, you can include the depreciation of your vehicle as well as the interest on your loan. Lease payments are also deductible.

11. Travel, Entertainment, Gifts and Meals

If, for some reason, you must travel, 100% of your lodging, travel (auto, air or rail) is deductible, as are any costs associated with the travel, such as dry cleaning and rental cars, etc. However, be aware that only 50% of your meals are tax deductible. You can also include 50% of any meals with customers, if you’re discussing business-related matters. Any gifts purchased for customers, or an employee, is 100% deductible, but you’re only allowed to spend up to $25 each year per person.

12. Insurance Premiums

Any healthcare insurance you pay for yourself is completely deductible (so long as you weren’t eligible for other coverage – including any available through an employed spouse’s medical plan). If your spouse worked for you, you can deduct all the medical premiums paid for your spouse and your family, if they were listed as dependents.

13. Retirement Contributions

Saving up for a rainy day is actually encouraged by the IRS. If you’re contributing to a SEP-IRA or Keogh for your own retirement, it’s all completely deductible.

14. Social Security

The good, the bad and the… well, you know how it goes. I’m a glass half full kind of gal, so I’ll start with the good news, which is that you can deduct half of all social security contributions you’re required to pay for yourself for the year. The bad news: You must contribute a chunk of your net profits to social security… sometimes referred to as “self-employment tax.” But, hey, at least you can take half of it back.

15. Telephone Charges

Telephone costs are 100% deductible. The easiest way to keep track of this is to have a separate telephone line, dedicated specifically for business use. If you don’t, and you’re sharing a home landline or cell phone for personal and business use, you can still deduct any portion of business related expense. You’ll need to circle the business-related calls on your phone bills and keep track of the total.

16. Child Labor

This is a little-known deduction and shouldn’t be overlooked. I always hired my kids in the summer (they have to be 12 or older). It gave them some responsibility, and also gave me the perfect opportunity to inspire them and help to influence their work ethic. If your child is younger than 17, not only can you deduct what you pay them as a business expense – you won’t have to contribute social security tax for them, either. I should mention, though, that this does not apply if you operate as a corporation or LLC… You can only take advantage of the social security tax break for your kids if you’re operating as a sole proprietorship.

Isn’t all of this great news? This is just a short list of the many business deductions available to you when you operate a business from home.

Honestly, what was the one most important factor that made you look into starting a home based business? I feel pretty safe saying most likely it was to “make more money.” Maybe your motivation is to have more spare time, freedom… or to be able to spend more time with your family. No matter the reason, there is no doubt that the tax advantages alone make it worth the effort.

Out of the few legitimate and low cost opportunities available to start a home based business, you’ll be hard-pressed to find a better one than Judgment Recovery… and guess what? Training materials are tax deductible! So I hope you’ll take a moment to re-visit: recoverycourse.com for more information.

If it’s been awhile since you’ve explored judgment recovery, and you’d like to read through the free Judgment Recovery 101 Start Up Guide again, you can download it here: www.recoverycourse.com/JR_101.pdf. If you have any trouble with the download, just CONTACT ME and I’ll send it to you manually.

Are you ready to go ahead and get started with your judgment recovery business? If today is the day, great! Just click here: Join SJR

Have a great week!

Christina Smiley

Sierra Judgment Recovery
Professional Judgment Recovery Training

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12 Totally Free Online Business Tools

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Did you know that you can get anything from customer websites to business plans without having to dish out a single penny? These days, with the contribution of so many programmers, techies and just plain generous Internet users, there are more valuable open source tools and applications available to us than ever before.

By ‘open source’ I’m referring to software applications whose original programming source code has been made freely available to anyone who wants to redistribute or modify the program or application.

The result is: totally rockin’ software applications that anyone can use for absolutely no cost whatsoever. This is stuff that I used to shell out hundreds of dollars for, and in many cases they function better than those old programs anyway.

There are literally thousands of these apps online for the taking, but I have wheedled out twelve of them that I think are worthy contributions to anyone trying to keep expenses to a minimum while starting or operating a business.

1. Open Office
www.openoffice.org
Apache OpenOffice is the leading open-source office software suite for word processing, spreadsheets, presentations, graphics, databases and more. It is available in many languages and works on all common computers. It stores all your data in an international open standard format and can also read and write files from other common office software packages. It can be downloaded and used completely free of charge for any purpose.

2. SCORE
www.score.org
Score is a nonprofit organization dedicated to educating and helping entrepreneurs with over 13,000 volunteers and 370 offices around the US. SCORE also has a section on its website with free templates and tools. This treasure trove includes business plan forms, financial templates, contract samples/templates and more. You can even ask a question to a local volunteer mentor right through the website.

3. Dropbox
www.dropbox.com
Dropbox is a free service that lets you bring your photos, documents and videos anywhere and easily share them. Store and sync files and documents on different devices and computers. No more hunting and searching for stuff on the cell phone, laptop, desktop or tablet. Plop your training materials into Dropbox and now you can access it anywhere. Same goes for important contracts. What a total time saver.

4. Design a Website: Weebly
www.weebly.com
Weebly is an easy-to-use online tool lets you pick a website template from about 150 choices and add photos and text using drag-and-drop tools. You can also add a full e-commerce portal, photo galleries, and slide shows, and register your domain right on Weebly.com. The result? A polished, professional site that’s up and running in a day, if not hours. Cost: Free for a basic site, then starting at $3 a month for a custom URL and advanced features.

5. Dashlane
www.dashlane.com
If you’re like me, you diligently strive to “be safe” and use different passwords on different sites across the internet. However, the downside to this “safe behavior” is that I can never remember any of my darn passwords. I would spend hours each week hitting “Forgot your password?”, waiting for my new password, getting re-authenticated, only to do the whole rigamarole over again the next week. Dashlane to the rescue. With one master password, Dashlane covers you across the internet — airline frequent flyer numbers, passwords, credit card numbers, addresses, pin codes. Never forget an online password again. Brilliant.

6. PaperRater
www.paperrater.com
We all know how important it is to put our best foot forward when communicating with existing or potential customers. PaperRater offers a free in-depth online grammar and spelling check. Just cut and paste your letter, email or other communication into the checker and PaperRater allows you to find those pesky mistakes and correct them before sending out important correspondence.

7. ZOHO
www.zoho.com
ZOHO offers free productivity, collaboration and business applications. A centralized collection of tons of free spreadsheets, presentation tools, management software and much, much more.  There is even a new section of apps for your small business needs.  Everything you could possibly need for operating a more productive business.

8. Wave Accounting
www.waveapps.com
Wave Accounting is a completely free app that helps you manage your business finances from any place you can get online. For an entrepreneur or freelancer, it also allows you to separate and track your personal finances, too, so you can handle all of your financial management from one location. You’ll find invoices, expense tracking, reports, and more. It has its limits, of course. It doesn’t track timesheets and some of the other features you’ll find in a paid app, but for those getting started or with a small business, it might be the perfect choice for you.

9. Jax Works
www.jaxworks.com
JaxWorks has hundreds of Excel spreadsheets available on their site for downloading at no cost to you. These free offerings cover a number of financial, accounting and sales functions at all skill levels.  Browse the selections and save any number of these for future reference. The free downloads are available for Windows Excel, Apple Macintosh Excel and Apple iWorks Numbers.

10. FormNet
www.entrepreneur.com/formnet
Use this free business forms download service available on Entrepreneur.com. Save yourself time and expense by using these free business form templates and documents available in Microsoft Word, Excel or Adobe pdf. Categories include accounting, credit and collections, insurance, inventory, human resources, leasing, marketing, management, sales, shipping and starting your own small business. No more creating documents from scratch!

11. LinkedIn
www.linkedin.com
These days I can’t imagine building a business without LinkedIn. I had a LinkedIn profile for years before I realized what an incredibly valuable networking tool it was. It’s free, and if you’re consistent about inviting and networking with new connections, within no time at all you will have access to a truly diverse network of people. I am still surprised by how many people do not have a LinkedIn profile. If you want to be taken seriously in your business, you need to set one up.

12. Small Business Administration (SBA)
www.SBA.gov
The SBA offers several free tools and resources, including online training webinars and videos for everything from how to write a business plan to how to qualify for government contracts. Apply for loans, grants and government contracts.

So there you have it – enough loot to make you feel like you’ve discovered buried treasure. “But wait…” you may ask, “What about the Mack Daddy of them all – Google?”

Excellent question. Google still offers one of the best collections of business tools around. A veritable Swiss Army Knife for the digital age Google is a startup’s best friend. Google hooks you up with a toolbox in and of itself between Drive, Documents,
Spreadsheets, Hangouts, Search, Chat, Calendar and (of course) Gmail. A decade ago, this suite would cost a small business hundreds if not thousands of dollars. As of 12/6/12 it’s no longer free, but it’s still a great value at $5/month, and it rocks.

You can store, share, and collaborate on documents using Google Drive, a cloud-based system accessible on the Web and a variety of mobile devices, including the iPad, iPhone, and Android phones and tablets. And if you’re still paying for email, you probably shouldn’t be on the internet, but if you have a business, your email address needs to end with @YOURDOMAIN.com. Using Gmail, Yahoo, or other services can look unprofessional and hurt your credibility. Google Apps solves all of that.

Those are my top picks, but if you spend a little time poking around I’m sure you’ll come up with some other free gems. As always, I welcome your questions or comments. If there are any topics you’d like to see discussed on this blog, please let me know and I’ll do my best to oblige!

If it’s been awhile since you’ve explored judgment recovery, and you’d like to read through the free Start Up Guide again, you can download it by clicking on the ‘Free Judgment Recovery Start Up Guide’ link below. If you have any trouble with the download, just contact me and I’ll send it to you manually.

Kind Regards,

Christina Smiley

PS: If you’re ready to get started with your judgment recovery business today click here: Join SJR

Sierra Judgment Recovery
Professional Judgment Recovery Training

Links:
SJR Home
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The Power of Positive Thinking

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Thoughts are funny things… We’ve all had days where it feels like everything is just going wrong. We think, “Why me?” and, “What did I do to deserve this?” or, “Good grief! What else could possibly happen?” And the more we let ourselves feel like a victim, the faster things seem to spiral out of control. We tend to spend all our energy focusing on the negative. But think about this: wouldn’t it serve us better to wade through all that garbage and find just one nugget of good to focus on?

When we focus on the positive things in our lives, we will ultimately attract and invite more positive influence. I’ve experienced this first-hand.

True story: When I was a struggling young mother of three small children, I came to a point in my life where my income wasn’t enough to pay my bills. It seemed like the harder I worked, the less time I had to focus on things that really mattered – like my family and friends – but most particularly I had no time to figure out how to make things better. I was spiraling the drain – both financially and spiritually.

It was a vicious cycle. Less money, more bills, more stress, work more hours, have less time to spend doing the things that make us happy… and the misery just went on and on. At the time my husband and I were running a carpet store. When we lost the store I thought my world was over. Little did I know that it was just the beginning of this crazy wonderful journey I’m still on today – because that’s exactly when I started my judgment recovery business.

The funny thing is, looking back now I can see how impossible it would have been to start the new business if I was still wrapped up in the carpet store. It practically hit me over the head! Had I still been so completely obsessed chasing my tail on the hamster wheel, I’d never have taken the time to seriously consider something else.

Instead of mourning the loss of the store and feeling like I failed, I became excited about starting something new.  Instead of giving in to fear and panic, I embraced the potential for new possibilities. Once I did that it seemed like everything miraculously started falling in place. I had recognized that when one door closes, three more open. All I had to do was walk through.

I’m sure everyone has a story they can relate this to. Maybe you lost your job, or your hours got cut back? Perhaps your retirement income didn’t turn out to be the golden goose egg you thought it would be. It could be that your life or career was derailed by other unanticipated circumstances out of your control… The silver lining in any of those discouraging events is that now you’ll have time to explore other possibilities where before you didn’t have time for a spare breath.

Some things happen at just the right time. They seem bad, but really they can be doorways to something better. Something you would never have considered unless you were forced by some other circumstance to look for other answers. Sometimes those answers literally just land on your head.

Even with the busiest of schedules, anyone can find time to set aside to focus on making things better, if they really want to. We find time to exercise, watch TV, shop and spend time on FaceBook… Why not invest a little of that time toward finding a way to make a positive change in your life? Skip a television show – there’s an hour. Spend a little mental energy on how you can create change in your life when you’re walking the dog; running the errands; watching the kids at baseball practice.

What’s stopping YOU?

Kind Regards,

Christina

Are you ready to get started with a judgment recovery business? Click here: Join SJR

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5 Steps: From Daydreaming to Starting a Business

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As a self-confessed opportunity junkie, I’ve spent countless hours daydreaming about new business ideas. Most of the time an idea only takes hold long enough for me to think how wonderful it would be if I could (“insert random idea of the day”)… Sometimes though, an idea actually gets some glue and I’ll spend even more time envisioning how to turn the dream into reality. I’m sure we’ve all done that, but actually navigating an idea from your imagination to the real world can be a daunting task to even consider.

I heard an old rock ‘n roll song the other day that inspired me to write about this topic. It was one of those songs that I sing along to, without really thinking about the words. The Eagles said it so eloquently: “So often times it happens that we live our lives in chains – and we never even know we have the key.” Personally, the “key” for me was to get off my butt, stop daydreaming and GET MOVING.

Here are some suggestions to help you get your own head out of the clouds:

1. Make an Official Road Map. Obviously, you already know where point “A” is. Point “A” is that idea rattling around in your brain looking for a way to see the light of day. This is true whether it’s your own original idea, or someone else’s business model that you’re considering for yourself. Now think about where you ultimately want to go on this entrepreneurial expedition. There will be several required points of interest along the way, and you may not even realize where all the pit stops are going to be, but recording your idea in writing is a great way to map out a plan of action. It will be your compass and provide you with a logical sequence of steps to get you where you want to go.

2. K.I.S.S. If you’re not familiar with that acronym, it means Keep It Simple Stupid (umm… not that I’m implying that you’re stupid – but you get the idea). Don’t obsess over making every little aspect of your business perfect, because at this point it’s impossible to even know what that should be. Focus instead on how you can make your primary product or service desirable to your customer – the rest can be fine-tuned later. Remember that nothing is set in stone. At this stage of the process (or any stage, for that matter) you can always change what doesn’t work, or tweak what does.

3. Use the tools in your toolbox. Don’t fall into the trap of thinking you have to invest money in brand new equipment, especially if you already have the tools to get the job done. Too often I see people get caught up in the mindset that they must squirrel away a ton of money to purchase brand new computers, printers and other office equipment. Or worse – those who think they must give wads of cash to hungry web designers for flashy, expensive websites. To keep your costs low, think about using what you already have and save your hard-earned resources for legitimate start-up necessities. The bells and whistles will come down the road.

4. Take the First Step. When starting a business (or even a major project) one reason it’s so difficult to get started is because there are just so many tasks demanding your attention. It can be positively overwhelming when the whole enchilada is staring you in the face. But I’ll tell you this – nothing will happen unless you take the first step. Splash some hot sauce on that son-of-a-gun and take a bite. For Pete’s sake, just pick something simple, like identifying who your target market will be. That should be easy enough, and you’ll feel terrific for taking action toward making something actually happen. Overcome your analysis paralysis… When you begin to take those initial steps, pretty soon you’ll gain some momentum.

5. Get the word out. Talk about your new business and let people know you’re starting. Nothing gets your engine revving faster than talking about a new business with friends, family and other acquaintances. Not only will it make your new business more of a reality for you, but it also invites questions and answers from others that offer invaluable marketing insights. In fact, when I started my judgment recovery business, talking about it with others is exactly how I landed several of my first assignments. I swear – people were throwing the stuff at me. And then would you just look at that… I was started.

What’s stopping you?

Warm Regards,

Christina
Are you ready to get started with a judgment recovery business? Click here: Join SJR

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5 Myths About Judgment Recovery

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I spend a good bit of every day answering questions about the judgment recovery business. Truth be told, the majority of those who take the time to write to me are pretty skeptical – and who can blame them? Aren’t there a million other ‘opportunities’ – many of them scams – flooding the Internet these days? How can you know who to trust, especially when it costs next to nothing for the ‘expert’ to market their product?

I honestly don’t mind answering those questions – I would much rather hear from someone if they have doubts, so at least I have a chance to personally address them.

Following are some of the concerns I find myself responding to most often.

Myth #1: Starting a judgment recovery business will cost a ton of money.

Fact: Costs to start and operate a judgment recovery business are surprisingly low. Chances are, you already have all the essential equipment you need to get going (computer and printer). Other very basic expenses will include a phone line dedicated for business use, a generic business license, a post office box and a locking file cabinet or desk drawer.

As for ongoing business operation costs, you’ll need information to help you find the debtor’s job, bank account and other assets (credit reports, banking detail information, etc. at $11-$12 per case), and court filing fees – approximately $35-$50 to seize any assets you find through the court system.

By comparison, consider that the average franchise requires thousands of dollars in investment capital. For example, a Subway restaurant will cost $12,500 cash just for the name, plus an additional investment ranging from $92,050 to $222,800 – and that’s just to get the door open. You’d need to rent or buy a storefront, hire and train employees, buy or lease equipment and inventory, and purchase advertising just for starters. Talk
about sticker shock!

Myth #2: I will have to harass the debtor to make him or her pay.

Fact: The assumption that you’ll need to become some sort of a finger-breaking thug to collect judgments is a little silly. Actually, you’ll have very little – if any – direct contact with the person who owes the debt at all. You’ll be using strictly non-confrontational, behind-the-scenes methods to collect these judgments. There’s simply no need to make harassing phone calls or send scary letters. Everything you do to enforce the judgment can and will be carried out through the court system by filing paperwork.

Myth #3: I’ll have to be some sort of legal genius to make this work.

Fact: No legal background is required in order for you to be profitable in a judgment recovery business. In fact, no background of any kind is necessary. Most of our current members didn’t have any sort of legal or collections experience when they began, either. I certainly kept this in mind when the course materials were written. I’ve trained truck drivers, soccer moms, retirees – you name it!

Don’t get me wrong – you’ll still need to do some research into procedures in your state, but the concepts and general rules are all pretty consistent throughout the US. These procedures are covered in step-by-step detail in the training materials. I’ll also provide you with the SJR State-By-State Civil Research Guide that includes specific information about the laws and codes that govern the enforcement of judgments in each state.

Myth #4: There is new “legislation” which makes collecting judgments very difficult.

Fact: Ah… the Internet rumor mill. If it’s written there, it must be true, right? Sorry, but it’s just wrong.

There hasn’t been any recent legislation passed or pending in any state that I am aware of that would affect your ability to successfully operate a judgment recovery business, or any new laws that would make enforcing judgments more difficult.

In fact, the opposite is true. In a few states, there is actually pending legislation that will make it easier to collect civil judgments. Most particularly, in some states where wage garnishments have never been permitted, there is pending legislation that will now make it possible.

Myth #5: Only attorneys can collect a judgment that was awarded to someone else.

Fact: Here is one, simple truth: Anyone who owns a judgment – or owns the rights to a judgment – can use the court system to collect. There is no court in the land that legally requires a judgment creditor to retain or use an attorney to collect a civil judgment.

Further, when all rights to a civil judgment are properly and legally assigned to another person, that person becomes the judgment creditor and owner of the judgment. This is all governed by civil statute in all 50 states.

I hope this helps to ease your mind about these important concerns. I know that if some people are asking about these issues, many more must also be wondering about the same thing. As always, I encourage you to contact me if you have questions of your own. Or if you would like to see any specific topics covered in more detail.

Warm Regards,

Christina

Christina Smiley
Sierra Judgment Recovery
SJR Strategic Research

Please note: I am not an attorney, nor do I aspire to be one. If you need legal advice, please consult qualified legal counsel.

Licensing Requirements for a Judgment Recovery Business

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All businesses require a license of some kind before you can hang out your shingle and open shop. Your city or county will always want a little piece of the pie for taxation purposes. After all, who do you think pays for your road maintenance and your children’s education? You do. You know what they say… Nothing is certain but death and taxes!

Aside from taxation purposes, your city’s planning and zoning department will want to ensure that if you are planning to operate your business from home that there won’t be a snarl of customers coming and going at all hours, or neon signs flashing from all of your windows.

The typical license required for a judgment recovery business is a generic business license from your local city hall or county offices. It’s unlikely that there will be a specific category designated for ‘Judgment Recovery,’ so in most cases you’ll be lumped into an ‘Other-Unspecified’ or ‘Miscellaneous’ category.

At first glance, you’d tend to think a judgment recovery business should fall under the ‘Collection Agency’ license category, but in most states it will not – because you are assuming ownership of these judgments and collecting them on your own behalf. If you ever have a couple of hours to kill and want to verify that for yourself, you’ll find that the most common legal definition of a ‘Collection Agency’ reads something like this:

“”Collection Agency” means any person engaging in business for the purpose of collecting or attempting to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

Here’s the important bit: “OWED OR DUE OR ASSERTED TO BE OWED OR DUE ANOTHER”

Why is that important? Because the judgment will no longer be owed or due to another – it will legally belong to you, and you will be enforcing it on your own behalf. The same is true in regard to a private investigator’s license… It’s not required – in any state – because you’re performing asset locations to enforce your own judgment, and not on anyone else’s behalf, or in exchange for any sort of fee.

By the way, the definition quoted above is taken directly from New Mexico’s legal code, and the language is usually the same – or a variation of that – in just about every state that requires debt collectors to be regulated.

A civil money judgment is an asset. Just like any other property or asset it can be bought, sold, transferred, etc. When a judgment is assigned to you, all right, title and interest in the judgment is transferred to you and your company. The same right, title and interest is revoked, without recourse, from the original judgment holder.

This means that once the judgment is assigned, you now legally own the judgment. This is referred to as ‘purchasing’ the judgment and you’ll also prepare a purchase contract for the judgment holder to sign. The nature of the purchase contract does not require you to pay any money up front for the judgment – you’ll simply make ‘installment payments’ to the original judgment holder when and if money is collected.

There are a few states that do require collection agency licensing. In these states, the regulatory agencies’ view is that if the debt didn’t originate with you, and you’re going to collect it, you must be regulated. To the very best of my knowledge, the states that require you to obtain a collection agency license are Colorado, Nevada, Tennessee, Utah and Washington. In these states this may seem like a downside, however, keep in mind that it means you’ll have little or no competition, and that there’s probably a great need for judgment recovery where you are!

If there are any other topics you’d like to see discussed here, or if you have other questions, just shoot me an email with the topic you’re interested in to: Contact Me.

Warm Regards,

Christina

Start Up Costs for a Judgment Recovery Business

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One of the questions I am asked most often is what start up costs are involved with getting a judgment recovery business open for business and off the ground. I know that it stands to reason that if even one person is asking the question, then ten more people are wondering the same thing.

Any new business, regardless of what it is, will require an investment of some sort before putting out the welcome mat – there’s just no way around it. You’ve got to spend it to make it, but start up costs for a judgment recovery operation are surprisingly low.

By comparison, consider that the average franchise requires thousands of dollars of investment capital. For example, a Subway restaurant will cost $12,500 cash just for the name, and an additional investment ranging from $92,050 to $222,800 – and that’s just to get the door open. You’d need to rent or buy a storefront, hire and train employees, buy equipment and inventory, and buy advertising just for starters. Talk about sticker shock!

I’d love to be able to give you a specific, solid start up figure for a judgment recovery business – but the truth is, there’s just no way to do it. Rather than just throw some generic figures out there, I spent some time poking around today to try and offer up a realistic cost outline.

You’ll need:

A Dedicated Business Telephone Line:
A traditional business ‘land line’ averages $50/month, if you keep the bells and whistles to a minimum. A great low-cost alternative to that would be a VOIP (voice over internet protocol) program, like Vonage. VOIP works through your Internet connection. Vonage‘s Small Business Basic plan includes local service, long distance, a FAX line, call waiting, voicemail, caller ID and even call forwarding – all for $39.99/month.

A Business License from your City or County:
Annual licensing fees are around $25-$60, depending on where you are, and whether or not you have employees. The great majority of states only require a generic business license, although a very few states do require collection agency licensing.

Locking File Storage:
Sensitive data, like consumer credit reports, bank account information and social security numbers are required to be locked away from potentially prying eyes. You can use an existing desk drawer (if it locks), or you can pick up a locking file cabinet from Wal-Mart for $59. Even a garage sale find would work!

Stationery (Letterhead, envelopes, business cards):
Homemade stationery, on quality paper will do – so long as you keep it simple and professional. The cost for a local printing company to print it will depend on the design and quantity. But you can usually order enough to get started for under $100. Try VistaPrint.com for free business cards – you’d just need to pay the shipping and handling cost.

Post Office Box:
Unless you plan on having a commercial location (most prefer to be home-based), you’ll need a post office box. If you rent a box from the US Postal Service, it starts at $10 for 6 months. Some people opt for a private mail box service, like MailBoxes Etc., which is about $50 for 6 months. And, don’t forget postage, at $0.44 per piece of mail.

Asset Location Expenses:
Locating judgment debtors and their assets (bank accounts, employment, property, etc.) is a key factor to your income. In addition to free resources – like public records – you’ll need access to non-public data as well. Consumer credit reports average $7, depending on what resource you decide to use when obtaining them. You’ll also want access to other types of private information, like banking detail reports, property searches and people locates. You’ll typically spend around $10 – $15 for basic asset location reports for each case.

Court Filing and Levying Fees:
While there is typically no cost to research civil judgment files (they’re public record), or to file the document to assign the judgment into your name, you will have court filing and levying fees when it’s time to seize assets through the court. Figure on spending $35-$50 per enforcement procedure. The cool thing about that is that your court filing and levying fees are legally added to the judgment and the judgment debtor has to pay for them. Any other expenses, like asset location costs, are reimbursed to yourself off the top of what you collect.

Seriously, as far as must-have expenses go, that’s all I could think of! There’s a pretty nifty breakdown on costs vs. income on the main page of my website, if you need some clarity on how much your bottom line will be. Obviously, the costs to locate assets and acting on that information will vary depending on how many judgments you’re working on at the time, but hopefully this information will help you realistically determine what you’ll need to get started.

BIO: Christina Smiley is the founder and owner of Sierra Judgment Recovery, established in 1997. She has helped thousands of people make money with a home based business by providing professional judgment recovery training.