The repossession industry is a lucrative business prospect in Texas. When an individual or company fails to pay the debts they owe to a bank or government, the lender may desire to take possession of assets to help pay the debt off. A repo business is the company that goes to the debtor on behalf of the lender to take possession of the assets in question. The repossession business is most successful during troubling economic times.
Register your Texas Repo Business
Determine what type of entity you would like your repossession business to be, such as a corporation, limited liability company, partnership or sole proprietorship. Decide on the name for your company, which should be something that is both easy to remember and conveys the purpose of your repossession business.
Obtain an Employer Identification Number (EIN) from the IRS website. Even if you don’t intend on having employees in the beginning, you will need this number for registration and tax purposes as well as opening business checking accounts. It will allow you to refrain from using your personal Social Security number on such documents.
Refer to the Resources link below to obtain the registration forms you will need from the Texas Secretary of State office, as the forms you need depend upon the type of entity you intend to create. Fill out the forms and send them, with the appropriate fee, to the address listed on the form. If you wish to file your registration documents online, sign up for a SOSDirect account.
Determine the North American Industry Classification System (NAICS) number for a repossession business. You will need this number to obtain tax accounts. The 2007 NAICS Definition for repossession services is number 561491 (see Resources).
Put together the elements you will need to apply for a Texas Sales Tax account number, which include the NAICS number you obtained, a Social Security number for all owners or officers for the company, the EIN number (step 2) and the business’ registration number assigned by the Texas Secretary of State. Then visit the Texas Comptroller of Public Accounts website for an online application.
Put Your Texas Repossession Business Together
Research what the competition offers. To get a leg up on the repossession industry in your Texas community, you will need to offer better prices and services than your competitors.
Put together a price list for the services you will provide. There are several items that you can repossess for clients. You can offer auto repossession services exclusively, or extend that to items that rent-to-own centers offer (such as furniture or appliances), boats and farm equipment – there are many possibilities.
Obtain the equipment you will need to conduct your Texas repo business. First, you will need a truck of some kind to haul items in since most of the items you will repossess will be large. In fact, you will likely need towing capabilities, depending on the services you offer. Depending on whether you will deliver the items you obtain directly to your client, you may need a storage facility if there is a delay in the delivery process. Depending on the size of your operation, an office may be necessary.
Promote your business by visiting local banks, lenders, revenue offices and rent-to-own centers. Bring your service and price list with you and let them know that your new business is available. If your prices and services are competitive enough, you should quickly obtain new clients. Additionally, if you provide quality service, you will likely retain those clients and your Texas repo business will remain busy.
Michelle Cramer has been writing/editing freelance since 2007, including the Small Business Buzz Blog and articles for Work.com. Cramer's current writing projects include articles for informational websites and several blogs. She has a bachelor's degree in English literature from the University of Missouri.