Do you really want to extend credit to that new customer or business?  An existing client wants you to bill them for the goods or services at the end of the month.  Should you?  Before extending credit, try finding out who [...]]]> WHAT YOU SHOULD KNOW BEFORE YOU EXTEND CREDIT…  AND HOW TO FIND OUT FOR FREE!

Do you really want to extend credit to that new customer or business?  An existing client wants you to bill them for the goods or services at the end of the month.  Should you?  Before extending credit, try finding out who you are dealing with.  If a bank would ask for a credit application before extending credit, why should you not feel comfortable asking for the same type of information?  Find out what you can from the customer or client first.  But that only tells part of the story.

Then you want to see what you can find out about them on your own.  You may not be able to run a credit report on a potential customer or client, but there is a lot of information that is available to you, at no charge. Below is an outline of some of the information that is free to check, and can provide you with the information to make the decision to extend credit or not.

1.   Are They A Corporation, LLC, Or Other Entity Listed Through The Texas State Comptroller’s Office?

https://ourcpa.cpa.state.tx.us/coa/Index.html – To Search Texas State Comptroller’s Records, or call 1-800-252-1386

• Are they in good standing?
• Who are the Officers/Directors/Managers and Registered Agent?
• When were they formed?
• What is the principal business or corporate address?

2. Do They Have A Trade Name Or Sales Tax Permit Issued Through The Texas State Comptroller’s Office?

http://ecpa.cpa.state.tx.us/staxpayersearch/SlsTxpyrSearch.jsp – To Search Texas State Comptroller’s Sales Taxpayer Records, or call 1-800-252-5555

• Search by Taxpayer’s Legal Name
• Search by Business Name
• Do they have a Sales Tax Permit, and if so, is it active?
• How many locations do they have, and under what names?

3. Are They A Sole Proprietor, Partnership, Etc., Doing Business In The County Under A Trade Name? (Not all Counties have records on line.)

http://www.cclerk.hctx.net/applications/websearch/AN.aspx – To search Harris County Assumed Name Records

• Search by Name of Business or Name of Owner
• Have they filed an Assumed Name?
  • Who are listed as the owners?
  • Does it match the name of the contact on the contract?
• What is the business address shown?
  • Is it a residence address?
  • Is it a P.O. Box address?
  • Is it the same address provided on the contract?
• Do they own multiple Assumed Names?
  • Are the names very similar to one another?
  • In the same type of business(es)?
• Have there been many owners of that same Assumed Name?
  • Are all the locations for the business the same?
  • How often does the business change owners?

4.    Has The Entity Been Involved In Litigation In The County Courts? (Not all Counties have records on line.)

http://www.cclerk.hctx.net/applications/websearch/Civil.aspx – To search Harris County Civil Court Records from the County Clerk’s office.

• Have other people or companies filed suit against them?
• Have they filed suit against other people or companies?

5.    Have Abstract Of Judgments Or Other Liens Been Filed Against The Entity And Do They Own Real Property? (Not all Counties have records on line.)

http://www.cclerk.hctx.net/applications/websearch/RP.aspx – To search Harris County Real Property Records.

• Have other people or companies filed a lien against them?
• Have prior release of liens been filed?
• Are there any tax liens filed against them?
• Do they own any non-exempt real property that may be available to satisfy a judgment if one is taken?

6.     What Is The Appraised Value Of The Real Property That They Own, If Any?

http://www.hcad.org/records/default.asp – To search Harris County Appraisal District Records, click on “Real Property Search”

http://www.mcad-tx.org/html/records.html – To search Montgomery County Appraisal District Records

• You may search by owners name
• You may search by property address
• What is the appraised value of the property owned?
• Is the property listed as homestead exempt?

7.     What Is The Appraised Value Of The Businesses Personal Property, And Are They Even Listed?

http://www.hcad.org/records/default.asp – To search Harris County Appraisal District Records, click on “Business Personal & Mineral Property”

http://www.mcad-tx.org/html/records.html – To search Montgomery County Appraisal District Records

• You may search by owners name
• You may search by property address
• What assets are shown as part of the business property?
• What value does the county show for the business assets?

8.     Do They Have A Telephone Listing?

• Check under both the business & government pages, as well as the yellow pages under their business category
  • Are they listed in the phone book?
  • Is the name of the business in the book different from that shown on the contract?
  • Is the address in the book the same as the contract?
  • Do they list multiple numbers and addresses?
  • What does the ad look like?
• Do they have a web site or presence on the Internet?
  • http://www.google.com/ - Is one of many internet search engines
• Are they listed on internet telephone listings?
  • http://www.switchboard.com/ – Is one of many internet yellow page listings
  • Is the name of the business in the book different from that shown on the contract?
  • Is the address in the book the same as the contract?
  • Do they list multiple numbers and addresses?

The more information that you can gather about a client or customer, the better you can judge if they would be a good credit risk.  It doesn’t have to be expensive to check, but it can save you a lot of money on outstanding accounts receivables.

Often, families will try to assist their loved ones with these task.  However, sometimes there is no family [...]]]> What is Long Term Care?  It is the care that someone needs to assist with activities of daily living (ADL’s), such as bathing, dressing, eating, continence, and getting in and out of the bed, to name a few.

Often, families will try to assist their loved ones with these task.  However, sometimes there is no family that can help, or family members may not be physically able to handle some of these tasks themselves, or may not be able to give the full-time care that is needed.  Other options are to bring someone into the home to assist,  or to move into assisted or nursing care facilities.  These options can be very expensive.

So, does it make sense to purchase Long Term Care Insurance?

An AARP article stated that if you live to 65 you have a 40% chance of entering a nursing home sometime during the rest of your life. The average stay lasts 2 1/2 years and costs $175,000.

So is Long Term Care Insurance right for you?  That answer may depend upon whether you are a man or a woman.  Women have a longer life expectancy than men by about 7 years.  Women also tend to have more chronic illnesses that lead to impaired mobility.  This may lead to more need for long term care.  Medicare only covers short-term medically necessary care in a skilled nursing facility.

Long Term Care Insurance plans vary widely, and you should consider all the terms carefully in deciding if it makes sense for you.  Plans can be costly, and often require a 30, 60, or 90 day waiting period before you qualify for benefits.  Some do not cover in-home care.  If you have a sizable estate, self-insuring may be your best option.

When you allow a business to pay for goods or services at a later date, you are extending credit. A bank will not extend credit to a person or a business without getting some basic information to see if they are “credit worthy”; or a good credit risk. If [...]]]>
1. LEARN MORE ABOUT THE BUSINESS:

When you allow a business to pay for goods or services at a later date, you are extending credit. A bank will not extend credit to a person or a business without getting some basic information to see if they are “credit worthy”; or a good credit risk. If you are considering extending credit to a business, you should feel comfortable in asking for the same type of information that a bank might ask for.

You certainly would want to find out what type of business it is; a corporation, partnership, or a sole proprietor, or an LLC. If it is a corporation or an LLC, is it in good standing, and what is its charter number? Who are the officers or members of the corporation? Is the business doing business under an assumed name? If so, they should be able to provide you with a copy of their assumed name certificate. What are their physical and mailing addresses, if different?

Have they provided you with credit references? Find out from the credit references if they are a slow pay, or not. The more information you learn about a business before you extend credit, the better. In some businesses, credit is only extended after there has been a business relationship established for a few months. Remember, if a bank would not lend them money, why should you?

2. PUT EVERYTHING IN WRITING:

A contract is an agreement between parties. It lets everyone know what is expected of them, and what is expected of the other party. If the contract is not filled out properly, or portions are left blank, then it raises questions about what the obligations are of each side.

3. KEEP COPIES OF FINANCIAL RECORDS AND CHECKS:

When a business pays for goods or services by check, you should always run a photocopy of that check and keep it with your records. By maintaining copies of checks and other financial records, you can learn a lot of valuable information.

Most banks will not print checks listing an assumed name unless they have been provided a copy of the assumed name certificate for the business. Therefore, the name that is listed on the check may be very helpful to determine what type of business you are dealing with.

Often times a business will be conducted under an assumed name without ever filing an assumed name certificate in the county. Many times the checks are listed in the name of the sole proprietor, the partnership, LLC, or the corporation, without listing the name the business is conducted under.

There have been several instances where an individual files an assumed name, but the check shows that it is actually a corporate or LLC account. If a lawsuit is required, it is necessary to know who all the potential parties are. Be aware that an “Inc.”, “Corp.”, or “LLC” after a name does not guarantee that the business is a corporation or LLC. Check with the Secretary of State or Comptroller’s office to see if they are really the entity that they purport to be.

It is also helpful to know if the business changes bank accounts, and where the business banks if a judgment is obtained. As a general rule, money in a business checking account is subject to garnishment to pay a judgment.

4. THE OLDER THE CLAIM, THE LESS COLLECTIBLE:

When claims are allowed to get stale, they are more difficult to collect. This is true for several reasons. Most often, if the business has not paid the bill, it is because of financial difficulty. If the business knows that you are not aggressively pursuing collection of the debt owed, your claim becomes less of a priority than other creditors who have aggressively pursued theirs. It is the old “squeaky wheel” situation; the one that squeaks loudest usually gets paid.

Also, if the business is having extreme financial difficulties, there may not be enough money to pay all the bills before the business either closes or files for bankruptcy. The claims that are pursued earlier are more likely to be paid before the business hits financial bottom.

Businesses also do not pay their bills when there is a dispute regarding the goods or services provided. If the dispute is dealt with early on, there is a better chance of resolving it amicably and maintaining the business as a good customer. By the time the claim is stale, there is usually very little willingness on the debtor’s part to discuss the problem and seek a resolution.

Further, if a lawsuit is required, the more time that passes, the more difficult it is for witnesses to remember specific facts. Often documents and witnesses are no longer available. Our office recommends that accounts be turned over for collection when they are less than 60 days delinquent.

5. REMEMBER, IT IS STRICTLY BUSINESS:

When businesses are having financial problems, they feel like they are fighting for their financial lives, and often do not use the best business judgment. Debtors can be very creative in their excuses, but the most common is still, “the check is in the mail”. Nobody likes to be lied to, but getting into an argument with the debtor is counter-productive.

You should establish a protocol for dealing with all outstanding receivables, and strictly follow the procedures for all cases. It is helpful to let them know that it is not personal, but that your business has certain established procedures that you must follow; i.e. if the payment is not received in your offices by a date certain, it will be turned over to their attorney for collection. Follow through, and turn the file over for collection if the payment is not received by that date.

We have often collected on delinquent accounts for our clients, and have been able to maintain a good business relationship between our clients and the debtors, when the debtor has cash-flow difficulties and is embarrassed to discuss it with the creditor. The file is not being turned over to the attorney for collection because you are mad at the debtor for not paying the bill. It is strictly business, and the file should be turned over to the attorney for collection because you have obligations you need to meet.

For the article on “How to Improve Collections, Part II”, please click here.

In order of importance, they are:

Will

A Will is the document that you prepare to say who you want to receive your property at death, and who you want to handle your estate. [...]]]> There are three types of documents that most people should have.

In order of importance, they are:

• Will
• Medical Power of Attorney/Designation of Health Care Agent; and
• General Statutory Durable Power of Attorney

Will

A Will is the document that you prepare to say who you want to receive
your property at death, and who you want to handle your estate. If you
have minor children, you would also want to name the person that you want
to be the guardian of the children, and the trustee of the minor’s trust
(minors are not able to take gifts directly; the gifts need to be held
in trust for them until they are adults).

Click here for more information about preparing a basic Texas will.

Medical Power of Attorney/Designation of Health Care Agent

A Medical Power of Attorney/Designation of Health Care Agent is a document
that allows you to name an agent to make health care decisions for you,
if you become unable to make those decisions yourself. Without this document,
neither your spouse nor your children have any authority to make health
care decisions for you, except in an emergency, without a court appointing
them as your guardian.

Statutory Durable Power of Attorney

The general Statutory Durable Power of Attorney is a document that allows
you to name an agent, or “attorney-in-fact”, to make other non-health
care decisions for you. This would include things like paying your bills,
and generally handling your affairs. You can make this effective immediately,
or reserve those powers until you become unable to handle your own affairs.

This can have a significant impact on a larger estate; since traditionally the “death tax” as many have come to call the estate tax, can eat up nearly half of a wealthy person’s estate. People that fall into that category may [...]]]> As of January 1, 2010, the estate tax went away for a year.

This can have a significant impact on a larger estate; since traditionally the “death tax” as many have come to call the estate tax, can eat up nearly half of a wealthy person’s estate. People that fall into that category may include those with “family owned business” and small farms.

The one year break from estate tax does not mean that no taxes will be paid. Instead, there will be a complex tax on capital gains. This will have a greater affect on more taxpayers.

Unless Congress makes changes, the estate tax is due to come back in 2011 with a lower exemption ($1 million) and a higher tax rate (up to 55%).

Uncle Sam will look at the whole estate, including any insurance proceeds, whether payable to the estate or not, in determining the size of a person’s taxable estate. So even if you may not have much more than a home, vehicles, a few stocks and bonds, and a retirement account, if you have life insurance, you may very easily exceed the exemption amount.

If you may have a taxable estate and would like a no-cost review to see if tax planning would be beneficial, please give us a call or email to set up an appointment.