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In a struggling economy, a Colorado repo man can be very successful. Many individuals struggle to make ends meet and get behind on bills. If debtors fail to make payments on an automobile or appliance from a rent-to-own center, then that facility has the right to take possession of the asset, or "repossess" it. Repo men go in and pick up the asset in question and return it to the creditor for a fee, so that the creditor can sell the asset. Even if you intend to perform repo services as a one-man business, to protect your personal assets, you should register as a business entity.
Establishing a Colorado Repossession Business
Determine the name for your Colorado repossession service. The Colorado Secretary of State requires that business names be distinguishable from one another in order for a registration to receive approval. You can search the Secretary of State business database (see the Resources below) to make sure a name is not already in use before filing your documents. If you need to do other things before you actually register the business, you can also reserve the name you wish to use through the website.
Decide on the type of entity your Colorado repo business will be. The more popular types include sole proprietorship, limited liability company (LLC), partnership and corporation. The Secretary of State offers an article describing each entity type to help you choose. (See the Resources link below.)
Apply for an Employer Identification Number (EIN) through the Internal Revenue Service website (see Resources). Even if you never have employees, you can use an EIN instead of your social security number for business registration, opening a business checking account, and business tax purposes.
Visit the forms page on the Colorado Secretary of State website (see Resources) and submit the appropriate form for the business entity you chose to use.
Start Providing Services as a Colorado Repo Man
Take a look at the services and prices of your competitors. Find out how successful they are and, if possible, who their clients are. This will give you an advantage over the competition, especially if you can offer better prices and more services to their current clients.
Determine the repossession services you will offer and establish a price list. Clients may need you to repossess several different types of items, such as automobiles, furniture, appliances, boats and even farm equipment. Determine if you only want to offer specialty repossession services or cover a full spectrum of items.
Purchase the equipment you will need to run your Colorado repossession service smoothly. If you offer services for large equipment and vehicles, then you will need a tow truck. If you won’t always provide immediate delivery of the repossessed items to your clients, then you will also need a storage facility to hold the items until the scheduled delivery time. Depending on how many employees and vehicles you have in operation, you may need an office to keep things organized. You can run a smaller repo business out of your home.
Visit potential clients, such as local banks, revenue offices, or rent-to-own centers, to tell them about the services you offer. Bring a list of those services and their prices with you. Consider offering special incentives or discounts for first-time clients to get people in the door. As long as you provide quality services at an affordable price, you will likely obtain loyalty from many of your first-time clients.
Colorado does not require you to obtain a Sales Tax License if you provide only services. So unless you sell, rent or lease personal property through your repo business, filing for a Sales Tax License is not necessary.
While it may seem obvious to register your business as a sole proprietorship if you plan to never have employees and be the only individual providing services, this type of entity does not protect your personal assets if something should go wrong. Protecting your assets requires registration as a limited liability company, corporation or partnership.
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