Start a Debt Purchase
Starting a debt purchase business can be a profitable venture if you understand what you’re doing. The first step is to decide whether you’re interested in debt buying as a career or as a sideline. Then, decide on a business model. You can either work with other companies, or you can do it yourself. But, keep in mind that the success of your business depends on your ability to attract clients. Listed below are the key steps in starting a debt buying business.
The first step in starting a debt purchasing business is incorporating. You’ll need to incorporate in order to protect yourself and your investors. Typically, this is a Limited Liability Company (LLC) because it is the simplest entity to incorporate in this industry. However, if you plan to buy large amounts of debt and invest in expensive marketing campaigns, you’ll need to use an S Corp. You’ll also need to find a professional accountant.
As a debt purchase, you’ll have access to hundreds or thousands of bank account numbers and social security numbers, so be sure to secure all of your information. In addition, make sure your business’s computer systems are protected. This means using a secure cloud storage system, encrypted email, and physical security. You can also protect yourself with the proper insurance. Hopefully, the information in this article was helpful. If you’re interested in starting your own debt purchase business, consider contacting an attorney or accountant to help you with this.
How to Start a Debt Purchase Business
Incorporating is essential for the safety of your company. In the debt purchasing industry, you’ll likely want to incorporate as a Limited Liability Company. This is the most common type of entity and it is also the cheapest to set up. If you intend to use your debt purchase business to run a collection agency, an S Corp will be the best option for you. Otherwise, a C Corp will be a better option if you plan to spend a lot of money on marketing. Your accountant will be able to advise you on the best option.
Ensure you follow the laws. The CFPB has a very clear mandate. It aims to protect consumers against predatory practices. While the CFPB has not taken action yet against Encore Capital Group, you should follow their guidelines. The CFPB will be very vigilant and look out for your own safety. In case of a lawsuit, be sure to comply with regulations. This will prevent you from being sued by the federal government.
When you’re deciding on a business model, you need to consider whether you’re ready to invest. For starters, a limited liability company is the best choice. A C Corp will protect the owners, while an S Corp will protect the company’s assets. Moreover, you’ll need to incorporate a Limited Liability company if you plan on buying loans from companies. A Limited Liability company is a great choice for newcomers in the debt buying industry.
