Self Employed Web

ASK Priority: Dealing with Deadbeats

Posted on Friday, March 14th, 2003 by

Dealing with Deadbeats

Q. My husband and I own a public relations and marketing firm. During the past eight or nine months, several of our clients have stopped paying their bills. Individually, these amounts aren’t large, but together they add up. Any suggestions on how to collect?

A.Assuming that these clients haven’t gone into bankruptcy, you have several options.* However, you always must comply with Fair Debt Collection Practices Act. You can turn the unpaid invoices over to bill collectors, but they typically take 40 percent off the top. You can use a lawyer to go after the deadbeats,but that will probably cost you an arm and a leg. Your best bet is to go to Small Claims Court. This entails completing an application and paying the clerk a small filing fee, which covers the cost of preparing and sending a summons by certified mail to the defendant. The cost varies from state to state, but it’s usually not more than $50. The advantages of this approach: it’s cheap, fast (usually the court will hear your case within 30 days), and you don’t need a lawyer. There’s a cap on the size of claims, however, that varies from state to state.
“The maximum amount of money for which you can sue—in legal terms, this is called the jurisdictional amount—is $5,000 in the District of Columbia and California, $3,000 in New York and $7,500 in Minnesota,” says lawyer Ralph E. Warner, author of Everybody’s Guide to Small Claims Court (Nolo Press, 2000). Which probably explains why we see more small-business owners in Minnesota smiling than anywhere else.

*If the client has gone into bankruptcy, consult an attorney. The bankruptcy code protects the debtor from certain collection efforts.

Hiring Foreign-Born Employees
Q. I’m starting a general contracting business and plan to hire several foreign-born employees. What kind of documentation—if any—do I need to meet United States immigration laws?

A.Elliot Bronstein, a spokesman for the Seattle Office of Civil Rights, says the Immigration and Naturalization Service (INS) requires all U.S. employers to hire only immigrants whose documents prove identity and work authorization in accordance with the I-9 Employment Eligibility Verification requirements. You’ll need to complete an I-9 form and keep it on file. The employee needs to produce a document or documents that prove identity and work authorization.* These include:

• U.S. passport (current or expired).
• Certificate of U.S. citizenship (INS Form N-560 or N-561).
• Certificate of naturalization (INS Form N-550 or N-570).
• Current foreign passport—with an I-551 stamp or attached INS Form I-94—which indicates current employment authorization.
• Alien registration receipt card with photograph (INS Form I-151 or I-551).
• Current temporary resident card (INS Form I-688).
• Current employment authorization card (INS Form I-688A).
* Employers are not allowed to ask for more documents than those required and may not demand to see specific documents—such as green cards or permanent-resident cards.

You also can employ foreign-born employees for up to six years through an H1B visa. This is a non-immigrant visa, which is generally quicker than applying for a green card. However, your prospective employee cannot apply for an H1B visa—you must petition for entry on his or her behalf..

Call to Duty
Q. One of my best employees is in the Army reserves and might be called to duty. If she is, it will make operating my business difficult. Are there resources to help me? Also, what are my obligations in terms of continuing her benefits during this period?

A.Small businesses that employ military reservists called to active duty may be eligible for U.S. Small Business Administration (SBA) loans through the Military Reservist Economic Injury Disaster Loan (MREIDL) program. Companies that can show they are losing an essential employee whose departure would economically impact the business are eligible to apply, says SBA spokeswoman Carol Chastang.

Small businesses may apply for MREIDLs of up to $l.5 million. These working-capital loans may be used to pay fixed debts, payroll, accounts payable and other bills. The interest rate on these loans is 4 percent, with a maximum term of 30 years. The SBA determines the amount of economic injury, as well as the term of each loan and the payment amount. (These are based on the financial circumstances of each borrower.) Businesses interested in applying for an economic-injury disaster loan should contact the SBA office nearest them for an application:

Niagara Falls, N.Y. 800-659-2955
Atlanta, Ga. 800-359-2227
Fort Worth, Texas 800-366-6303
Sacramento, Calif. 800-488-5323

You also can download the application by visiting

Regarding the second part of your question, if the reservist is on duty for more than 30 days, your employee and her dependents should be covered by military healthcare. For more information, she should contact her military unit. Also, upon completion of her military duty, she is entitled to return to the job—or a similar job—with no loss in seniority or other accrued benefits. Check the U.S. Department of Labor ( for more information. Or go to and type in “active duty protection laws” on the site’s search feature.

Web Presence
Q.My wife and I sell Native American jewelry and art and are interested in establishing a Web site to offer products online. We have a limited budget and aren’t sure how to begin.

A.There was a major shakeout in the Web-hosting business last year, with most of the survivors emerging as stronger companies. Also, rates for Web-hosting services for small businesses are well within the range of most entrepreneurs. For $499 a year, the staff at Microsoft’s bCentral portal( will build and maintain an interactive business site that you can change at any time. Rates for Yahoo! Inc.’s Web-hosting service ( range from $11.95 to $38.95 per month. The company’s Yahoo! Store, a leading e-commerce platform for small businesses, has merged with its hosting services and, like its competitors, is making a big pitch for small-business users.

“Many entrepreneurs know they need Web sites, but they haven’t yet gone online because they’re not sure how or where to start,” says Shirley Siluk Gregory, senior analyst with the ebi Group (, which studies e-business. “The challenge for Web hosts will be to find new marketing strategies that can effectively reach this group and offer compelling and user-friendly hosting packages that are easy for first-timers to understand, buy and implement.”

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