Funds Available to Firms That Hire, Train Laid-Off Employees

“Do I need a business plan?” “How do I introduce drug testing for my employees?” “Where can I get legal advice on a merger?” Small-business owners often have questions about how to run their companies. This column will attempt to provide answers from a variety of experts. Consultants are interviewed by freelance writer Karen E. Klein.

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Q: There are government programs that provide a certain amount of money to employers who hire a person who has been on welfare or is just out of school. Can a small company such as mine participate in such a program? Because my work is based on short-term contracts, I cannot always promise to keep the employee for a full year.

--Judy Corbett, North Hollywood

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A: If you hired someone from our program, which helps laid-off workers get trained for new jobs, we would pay half the employee’s wages while he or she is being trained. The length of time that the wages would be subsidized is agreed upon from the start and depends on how technical the job is and how much training you will have to give the employee.

We do work with small businesses, but after the training period is over, the employer is expected to keep the employee on staff, assuming the person has turned out to be a satisfactory worker. We would not be willing to pay for the employee to be trained and then laid off again within a short period of time.

--Mary Anne Roelke

Case management supervisor

Comprehensive Job

Assistance Center

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Q: What is the most effective way for a small business owner to collect overdue accounts? When I went to small claims court to collect from a client, it cost me $700 in time and attorney’s fees to collect the $1,200 I was owed. Is there a better way?

--Jack Severens

Lighthouse Construction Co.

Santa Ana

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A: We have found that we get the best response by hiring an attorney to write a very, very strong letter to the overdue debtor. The fee for such a letter is about $75 or $100 and the percentage of debtors who pay up once they receive it is very satisfactory. The letter must make it clear that you mean business and that you are determined to collect this debt.

Our letters usually include language stating that this is the only notice the overdue client will get and setting a deadline for payment. Then they go on to state that you will file a lawsuit in state court if you are not paid and they remind the debtor that he will have to hire an attorney to defend himself--a process that might be more costly than the original debt.

If the deadline passes without resolution, I recommend you file a lawsuit if the amount of money you are trying to collect warrants that.

Other approaches include the small claims court, which is the least costly for you because you can represent yourself, but even if you get a judgment in your favor you will have to spend more time and money collecting on the debt. Some companies have good results when they hire agencies that will send out a series of intimidating letters to overdue debtors.

If you have frequent problems collecting overdue accounts, you may want to consider changing your business practices to minimize the problem, such as requiring payment to be completed when the job is finished or inserting a clause in your service contract that states that financial disputes must be taken to an arbitrator for resolution, with both parties sharing the costs.

--Donald Lucove

Lucove, Gastwirth, Say & Co.

Certified public accountants

Calabasas

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Q: Some friends and I are interested in starting a mortgage lender and brokerage firm. What agency must we contact to be licensed? Who regulates the action of such an entity? Would you please direct us to the correct agencies so we can get things started on the right track?

--Gavan B. Johns, Chino

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A: The California Department of Corporations regulates mortgage lenders under the California Residential Mortgage Lending Act. You should contact their Division of Financial Services for more information on getting started in this business. Some of their requirements include audited financial statements showing a net worth of at least $250,000 and a surety bond for a minimum of $50,000. All stockholders, principal officers and directors of your lending institution will have to undergo background checks to rule out previous fraudulent or other criminal activity.

You can reach the Department of Corporations in Sacramento at (916) 657-5448 or at its Los Angeles office at (213) 736-2741. Its Web site provides more information at https://www.corp.ca .gov

In addition to applying with the Department of Corporations, you should also plan to accomplish the other business start-up tasks, including incorporating your firm and finding an accountant to help you with financial matters.

--Steven J. Coker

Financial planner

West Los Angeles

If you have a question about how to start or operate a small business, please mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or e-mail it to [email protected]. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.