Shizuoka Business

Archive for February, 2011

Proper entity structuring is the use of limited partnerships and limited liability corporations. These can help accomplish three important things:

Guard your assets so it is not worthwhile for the poachers to deprive you of the same. Manage your taxes to keep it what is owed to a minimum by claiming tax relief. Protect your privacy and build long-lasting wealth.

Here is an example from personal experience. My friend Paul had a family business that was a high-end department store. Being a financially intelligent man, he expanded his business by diversifying into others. As his business grew, I advised him to make sure that he had appropriately protected and structured himself and had bullet-proofed his possessions. Unfortunately, at that time, he was too busy making money to focus on protecting himself. He had also done no planning for tax relief and was paying more taxes than necessary. One day, what I feared would happen did. The Deputy Sheriff had to shut down his businesses in a matter of hours. He had to file for both personal and corporate bankruptcy as he lost everything in a matter of months. The fact is that this kind of situation can easily be prevented by using two useful entity structuring tools:

Limited Partnerships – as in separate legal entities. This will uncouple your personal possessions from business investments. Limited Liability Corporation – very much like limited partnerships, it is like a wall between you and the creditors and predators.

Planning your actions may prevent such disasters from happening. By planning for tax relief, you can see your wealth multiply.

Stepping back in time to the stakeholder meeting for the final draft of the UDMSA held November 2007 the writing was on the wall the future of debt settlement was going to be heavily regulated and the commissioners spoke – 30% of savings. That was a time when debt settlement was not a household name and lead price was under $20.00 for an exclusive qualified candidate.

The discussion contained debate on bonding, insurance and certification requirements as well as other general areas and concerns from all. This was another opportunity for changes even though the UDMSA had already been years in the making. My view of the proposal was broken down into two categories what was unreasonable and what was burdensome. Here is the short check list as what the passage in states would mean to an organization.

Bonding – created a challenge that it could limit the number of states that companies would be able to operate in and have an immediate impact on reducing the number of entrants into the space.

Insurance – this would be of little impact as companies would already have these types of instruments in place. The only concern was carrier rating and deductable.

Background Check – standard practice through the companies HR Department, items like FMLA, ADA, ERISA and EEOC are far more challenging.

Financial Audit – an additional expense as audits that were being done were by a CPA.
Sharing this information from a private company appeared to be intrusive.

Company Certification – this was going to take some time – ISO 9000 (6 – 12 months) and a sizable investment of capitol and labor.

Employees Certification – What would be accepted – looking back on the challenges of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and sorting the approved education programs.

License Fees – these would me minimal and no major impact or prohibition and in line with other state requirements.

The above list was easy to put in the burdensome column as there is little to nothing new for requirements already in place for a debt relief organization.

Fee Structure – 30% of Savings!!! – UNREASONABLE

The market place demanded to take advance fees. Competition in the debt settlement vertical was intense, lead price was soaring, default rates of a consumer were rising and creditors were mild in collection activity. The performance based companies were not experiencing the same growth rates and new entrants think they can see a pot of gold at the end of the rainbow.

The NCCULS conference room appeared absent of representation of a debt settlement companies in support of performance based fees. Instead, it was occupied with supporters of an advance fee model, individuals with concerns of fee caps and challenges of the free market, after all the US is a capitalist country. Result – 30% of savings!

Fee Structure – 30% of Savings!!! – BURDEMSOME

The fees being charged to consumers at the time ranged from 10% – 15% of the debt enrolled. How much impact would the new 30% of savings really mean? A debt settlement company could now charge an 18% fee and even higher as long as they performed the contracted services. Imagine a consumer’s debt being settled for 20 cents on the dollar and the company receiving fees of 24%. This is easier said than done even at 40 cents on the dollar. What this means is that companies have had five years to improve their processes become more efficient and deliver results to their clients.

Fee Structure – 15 – 30% of Savings!!! – THE FUTURE

Why did the free market that so many continue to support fail to reduce price and increase quality service? Will new regulations have an impact? That debate can continue for ever but the reality is a new line has been drawn and it is going the way of 15 – 20% of savings. It is now time to start working a new 5 year business plan.

Just as there are many people who are in debt for personal reasons, there are also many who have accumulated business debt. Business debt is considered as any debt accumulated for business use. Whether you took out a loan to start your business or needed parts or materials, this is known as business debt and should be kept separate from any additional personal debt you may have. Just as there are for personal debt problems, there are also a number of debt relief options available for people in business debt. It is important to take time to learn more about your options and do research to find out more before making any final decisions.

Applying for a business debt consolidation loan is one of the fastest and easiest ways to get out of business debt. Almost everyone is eligible for this sort of a loan and as long as you have half decent credit you should get approved. A debt loan business is a loan that pays off all your debt essentially, so you are only left with the single debt consolidation loans for bad credit loan to pay off each month.

Whether you need credit card loans specifically or low rates loans to cover a line of credit, there are some important benefits offered by loans consolidation debt. The main benefit is you get your debts paid off so creditors stop hounding you. This lifts a huge weight off your shoulders and you can stop ignoring your phone calls and trying to come up with stories or scheduling and rescheduling payment dates with your creditors.

Even people with bad credit can still apply for business loans debt, but they may have to stick with debt consolidation secured loans rather than unsecured debt loans. The debt consolidation loans secured are typically only approved for people with a decent credit rating, who show they are going to be faithful and make their payments on time every month. Unsecured consolidation loans to cover loans debt are just as good, only you are required to put up some form of collateral such as a vehicle or house in order to get approved.

If you have business debt, from payday loans or other loans debt, the most important thing is you deal with it as soon as possible. Ignoring your creditors and not paying your bills may seem like the easiest way to deal with it at the time, but this is only going to cause you problems down the road.