A debt collector charges a percentage of the money that is obtained from people who are behind on their debts. There are plenty of businesses that can use help from a debt collector, including medical services and hospitals, credit card companies, stores and government offices. Find out how to start a collection agency business to see if it is right for you.
Steps
1
Learn about the business of debt collection. There are federal and state laws that govern how debts can be collected. They determine how and when you can contact individuals who owe on debts.
2
Talk to state and local officials. Find out how to start a collection agency business legally. You may need general permits and licenses to run a business, as well as specialized licensing and bonding to work with money and debt. These officials can provide you with specific information for your particular region.
3
Set up your tax structure. Meet with a business adviser, attorney or accountant to set up your business. Register your business with the IRS.
4
Determine your fees. A typical collection fee is 25% on debts that are over 6 months old. Fees go up for older debt. Another option is to purchase delinquent debt from companies at a percentage of the amount. Once you collect from the debtors, you keep what they pay off. This takes much more financial investment as well as a higher level of risk.
5
Create your collection method and materials. Choose whether to contact debtors by phone or letter. Your first attempt at collecting debt could be a form letter, followed by a phone call. Have form letters and scripts prepared in advance.
6
Set up your office and phone lines. You could rent office space, but working in a home office is acceptable. You'll need a computer, a space for files and a phone. Set up a toll free phone number for recipients to get in touch with you.
7
Create marketing materials. You will need business cards, letterheads and brochures or flyers. A website can help potential customers learn more about you and your services. Many web hosting companies offer free templates to easily set up a website.
8
Contact potential customers. Both local and national companies may be in need of debt collection services. Create contacts for services which they can sign. From there, they will send lists of debtors for you to begin to contact.
Steps
1
Learn about the business of debt collection. There are federal and state laws that govern how debts can be collected. They determine how and when you can contact individuals who owe on debts.
2
Talk to state and local officials. Find out how to start a collection agency business legally. You may need general permits and licenses to run a business, as well as specialized licensing and bonding to work with money and debt. These officials can provide you with specific information for your particular region.
3
Set up your tax structure. Meet with a business adviser, attorney or accountant to set up your business. Register your business with the IRS.
4
Determine your fees. A typical collection fee is 25% on debts that are over 6 months old. Fees go up for older debt. Another option is to purchase delinquent debt from companies at a percentage of the amount. Once you collect from the debtors, you keep what they pay off. This takes much more financial investment as well as a higher level of risk.
5
Create your collection method and materials. Choose whether to contact debtors by phone or letter. Your first attempt at collecting debt could be a form letter, followed by a phone call. Have form letters and scripts prepared in advance.
6
Set up your office and phone lines. You could rent office space, but working in a home office is acceptable. You'll need a computer, a space for files and a phone. Set up a toll free phone number for recipients to get in touch with you.
7
Create marketing materials. You will need business cards, letterheads and brochures or flyers. A website can help potential customers learn more about you and your services. Many web hosting companies offer free templates to easily set up a website.
8
Contact potential customers. Both local and national companies may be in need of debt collection services. Create contacts for services which they can sign. From there, they will send lists of debtors for you to begin to contact.
How to Start a Collection Agency Business
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