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Cabot Assignment

I surveyed three businesses in the city of Cabot located in Arkansas. I chose Cabot because it has an active business community that continues to have a growing economy with a large trade area that surrounds it. With 25,587 people, Cabot is the 19th most populated city in the state of Arkansas out of 541 cities. It is only a 29-minute drive from Little Rock and the median resident age is 35 with a medium household income of $61,305. The first business I surveyed is a Limited Liability Company (LLC) that specializes in pest control.

The owners are referred to as members and consist of a wife and husband team. They are protected from personal liability for business decisions or actions of the LCC, however, they are not exempt from wrongful acts, including those of their employees. Pest control companies in Arkansas must adhere to rules and regulations of the Arkansas Pest Control Law Act 488 of 1975. The other two surveys were completed by sole proprietors of a daycare and a Christian book and gift store. The daycares organizational structure is in the scheduling of activities, staffing and adherence to child care regulations.

Cabot has 5,432 households out of which 47. 1% have children under the age of 18 living with them. Cabot is also known as having a ‘commuter culture’ because many residents, that have children in Cabot schools, make the commute to Little Rock to work, therefore, daycares are a lucrative business in Cabot. The Christian bookstore is family owned and operated. With Cabot having 42 churches offering a person to church ratio of 609 people per church, there is a demand for copies of the Gospel and other sacred books and gifts. Business Resources

The Cabot Chamber of Commerce is a major resource for businesses in the Cabot community. They provide a tremendous amount of networking opportunities having over 400 members to advertise and help grow businesses, especially during their multiple yearly festivals in which local businesses line the streets. They offer small business development, business support, publications, plus much more. Each of the three businesses also had their own resources which they utilized. The day care was the only business that shared ideas and used certain resources for decision making.

They have frequent communication with other professional organizations in their field such as the National Association of Child Care Resource & Referral Agencies (NACCRRA) and the local Department of Human Services (DHS), Office of Childcare. Surprisingly the pest control company was only aware of half of the resources available to them and only had limited communication with the resources provided on the survey. They verbally expressed utilizing the Arkansas State Plant Board for pesticide licensing and recertification exams and training sessions.

Most of their business resources are utilized from the Arkansas Pest Control Board and the National Pest Management Association for education, public policy initiatives, and market development. The bookstore had a very well rounded knowledge base of all the resources available to them. Being a Christian book store they get much support from local churches and the police department. They are members of the Association for Christian Retail where they receive training on marketing and retail, as well as, attend events and get marketing strategies. Survey Results and Summary

Two of the three surveys were retrieved on Friday, March 11, 2017. One from my daughter’s daycare owner who has been in business for ten-years, another from a co-worker who also runs a pest control service with her husband for the past six years. The third was retrieved Friday, April 14, 2017 from the owner of a Christian book-gift store I was buying a birthday gift from. Surprisingly, almost all the legal issues were thought to have no effect or minor effect to their businesses even though two of three have had previous legal issues with collections and theft.

The bookstore and daycare prefers to seek legal counsel and mediation on many legal issues. This is most likely due to these businesses also having received some training in business law within the last three years. The pest control company has never received any formal training in business law and chooses to settle legal issues informally. The survey also brought them some perspective of possible legal issues they never really thought about. For example, when asked “what will happen to the business if something happens to you? they responded with, “no idea. ” A legal business class would help explain that since her business is a two-member husband-wife LLC in which they hold their LLC memberships as joint tenants, would avoid probate upon her death by automatically transferring her membership to her husband as well as possibly stronger asset protection. The other two businesses already have trusts in place to protect their business in the case of a death. Top Issue and Existing Literature Review

The top legal issue appears to be collections as two of the three businesses have already experienced collection issues and the third business felt more concerned about collection issues more than any of the other issues presented. Business can either sue in small claims court, hire an attorney, or hire a collection agency to collect debt. The McHughes Law Firm, located in Little Rock Arkansas, feels that debt collection attorneys for small businesses in Arkansas have an advantage over collection agencies in three major areas. First, they help small businesses keep customers by not losing their small business personal touch.

Secondly, hiring a debt collection attorney helps protect small businesses from unknowingly violating any collection laws. Statutes of limitations and enforcement processes often differ by state, city, and county. Third, hiring a debt collection attorney sends a message to your debtors that you are taking their debt seriously. It is often easy to ignore phone calls and unofficial bills, but a legal document drafted by an attorney, and backed by a firm makes a statement of intent. (mchugheslaw, 2017) If a small business cannot collect a debt they may be able to take a tax deduction for the loss.

Bad business debts are deducted on business returns as an ordinary write-off. (Weltman, 2013) Tax rules on deducting bad debt can be found in IRS Publication 535. (IRS, 2016) If collections continue to be a major issue the businesses could change payment arrangements so that payment is due at time of service or before service is provided. Case and State Laws The Fair Debt Collection Practices Act (FDCPA) enacted in 1977 governs how debts may be collected. This law mainly regulates collection companies, however, if a business is acting as a collection agency themselves, they too must follow these regulations.

Arkansas Statute 17-24-101, states that “a “collection agency” means any person, partnership, corporation, association, limited liability corporation, or firm which engages in the collection of delinquent accounts, bills, or other forms of indebtedness owed…” (“Arkansas Code,” 2010) From 1977 to 2010, the FDCPA was enforced by the Federal Trade Commission (FTC), however, the Dodd-Frank Act of 2010 moved this enforcement to the Consumer Financial Protection Bureau (CFPB), giving it power to issue rules and regulations.

Beginning January 2013, the CFPB started overseeing debt collection. The small businesses themselves, however, have no rights or protection under the FDCPA. Business owners have fewer options for fighting debts than their customers. If a business feels they are being harassed by debt collectors, they could file for a declaratory judgement to determine that they do not owe the debt. Other than that, hiring an attorney as a scare tactic to the debtor is the only other option.

Conclusion with Recommendations Conducting this survey has shown me the astronomical benefit of taking a legal business course not only for a business owner but also for consumers. Both sides need equal protection and both sides should know their rights. If they have taken a legal business course they could have learned what we did in Chapter 19 Consumer Protection that the FDCPA requires the debt collector to send certain information to the consumer within five days of initial communication.

My recommendation to these businesses to avoid the hassle and lost revenue of dealing with collections is to first try to convince customers to pay up front or agree to an auto pay system. Accepting all methods of payment including cash, check, credit, and debit card to make this possible would offer customers more flexibility to agree. If this is not an option, knowing the FDCPA rules and following them is necessary to avoid lawsuits and loss of customers.

Finally, since businesses are not protected by the FDCPA be aware of who your business purchases from and keep detailed records of all purchases and amounts paid. I would also network with other local small businesses and ask them who they recommend as a lawyer for your business. You should have someone picked out and well researched before a legal issue arises as time may be pertinent with your legal concern.

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