Medical billing services do not have special licensing at the state level; however, they must comply with local regulations. Contact your local (county, city, township) government offices for specifics regarding local licensing and regulations.

Medical billing has become a very popular form of home-based business and is sold as a business opportunity by several national companies. But before you part with your money, consider this: The Federal Trade Commission has brought charges against several companies for misrepresenting the earnings potential of medical billing centers, and failing to provide certain key pre-investment information the law requires.

You can find ads for pre-packaged businesses-known as billing centers-in newspapers, on television, and on the Internet. When you respond, you'll get a sales pitch. You'll hear that there's a crisis in the health care system, due partly to the overwhelming task of processing paper claims, that electronic claim processing is the solution, and that because only a small percentage of claims are transmitted electronically, the market for billing centers is wide open.

These promoters also may tell you that many doctors who process claims electronically want to "outsource" or contract out their billing services because it will save them money. They'll promise that you can earn a substantial income working full or part-time, providing services like billing, accounts receivable, electronic insurance claim processing, and practice management to doctors and dentists. They also may assure you that no selling or experience is required, and that they will provide customers or qualified salespeople to find clients for you. The reality: you will have to sell—these promoters rarely provide experienced sales staff or contacts within the medical community. Many medical practices have centralized these functions and are not seeking to "outsource" billing and claims filing.

The company will follow-up by sending you promotional materials that typically include a brochure, application, sample diskettes, a contract (licensing agreement), disclosure document, and in some cases, testimonial letters, video cassettes, and reference lists. For your investment of $2,000 to $8,000, they promise software, training, and technical support. And the company will encourage you to call its references. If you do make the phone calls, be aware that you may be talking to a "singer" or a "shill"—a person hired by the promoter to give a favorable report on the business.

The FTC has found that few consumers purchasing a medical billing business opportunity are able to find clients, start a business, and generate revenues, let alone earn a substantial income and recover their investment. Competition in the medical billing market is very strong among a number of large and well-established firms.

How to Protect Yourself
Taking certain precautions can help you minimize your risk of losing money to a medical billing business opportunity:

Check out the company with the Attorney General, consumer protection agency, and the Better Business Bureau where you live and where the business is headquartered. These organizations can tell you if there are any unresolved complaints about the company. While complaints may alert you to problems, the absence of complaints does not necessarily mean the company is legitimate. Unscrupulous companies may settle complaints, change their names, or move to avoid detection.

Call the Secretary of State where the company is headquartered to determine how long it has been in business. Get all earnings claims in writing. Insist that the promoter give you written substantiation. Be sure it includes the number and percent of others who have earned at least as much as the promoter claims. If the promoter hesitates or refuses, walk away from the deal. Don't believe what was said about sales, profits or income.

Be skeptical of past success stories. Don't rely solely on the names given to you by the promoter. Fraudulent companies sometimes hire "references" to speak to potential investors about earnings claims. Ask the promoter to give you the names of all or many previous purchasers so that you can pick and choose whom to call. When speaking to references, ask them for the names of their clients and details of their operations. You also might consider meeting with references in person. If the promoter or the references hesitate or refuse, walk away from the deal. Consult an attorney, accountant, or other business advisor before you sign any agreement or make any payments upfront. Entering into any business opportunity may require a significant financial investment. Your attorney can review the company's contract and advise you on how best to proceed. If the company requires a deposit, you may want your attorney to establish an escrow account where the money will be maintained by a neutral third party.

Where to Complain
If you think you've been defrauded in a medical billing business opportunity, contact the company and ask for your money back. Let the company know you plan to notify law enforcement and other officials about your experience. Keep a record of your conversations and correspondence. If you send documents to the company, make sure you send copies, not originals. Send correspondence by certified mail—and request a return receipt—to document what the company received.

If you can't resolve the dispute with the company, several organizations may be able to help you. Check your phone book for the complete names, addresses, and phone numbers for these organizations.

• The Missouri Attorney General's office (800-392-8222) or the Missouri Secretary of State (573/751-3200) as well as in the state where the company is headquartered. The staff can tell you if you are protected by any state laws that regulate business opportunities.
  
• Your local consumer protection office.
  
• Your local Better Business Bureau (BBB) and the BBB where the company is located.
  
• Your local Postmaster. The U.S. Postal Service investigates fraudulent mail practices.
  
• You can file a complaint with the FTC by contacting the Consumer Response Center by phone: 202-FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, Washington, DC 20580; or through the Internet, using the online complaint form. Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.

The FTC publishes free brochures on many consumer issues. For a complete list of publications, write for Best Sellers, Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580; or call: (202) FTC-HELP (382-4357), TDD (202) 326-2502.

Legal Structure

Anyone conducting business in the State of Missouri under a name other than their own legal name (e.g., John Doe), must register the business name with the Missouri Secretary of State. Missouri law allows businesses to operate under four forms or organization:

• Sole proprietorship
• Partnership - general and limited
• Corporation - C-Corp; S-Corp; Professional, Not-for-Profit; Foreign Corporation
• Limited Liability Company - LLC

Each structure has its own advantages and disadvantages and there are many modifications and variations within these forms. The key to selection revolves around the concept of liability and taxation. You must decide which of these structures best suits your business. In choosing your business structure, consult with a qualified accountant and/or attorney who are familiar with your resources and objectives.

A description of the forms of organization and some of the advantages and disadvantages are discussed in Legal Structures, Licenses and Taxes and Starting a New Business in Missouri [256k].

The Licenses and Registration Checklist is a guide to help you with the licensing and registration requirements for starting your new business.

You can download forms on the web at: www.sos.mo.gov/business/corporations/forms.asp or request from the Secretary of State's Office at (573) 751-3200.

Taxes

Understanding the taxes that apply to your business and how to meet the legal requirements of those taxes is critical. Consultation with an accountant or attorney is advisable.

Tax considerations are essential during the formation of a new business and during its entire life. When a business is just starting out, it may have little or no income or assets and the choice of structure may not seriously affect its tax liability. However, as the business grows, the tax implications become more significant.

Choosing a particular structure does not necessarily determine how the business will be taxed. The table found in Starting a New Business in Missouri [246k] identifies the state and federal forms that must be filed for different business structures and compares the tax liabilities for the most common business structures.

Tax responsibility includes federal, state and local taxes. As a business owner you will be responsible for income taxes, payroll taxes, property tax and other miscellaneous taxes.

Any business making wholesale or retail sales must obtain a Missouri Retail Sales License from the Missouri Department of Revenue. A bond, based on projected monthly gross sales is posted at the time of application. An application form (Form #2643) can be obtained from the Dept. of Revenue on the web at www.dor.mo.gov/tax/business/forms/ or by calling 1-800-877-6881. Generally, a wholesaler or manufacturer will present a Sale/Use Tax Exemption Certificate (Form #149) to the seller showing the sale is exempt from sales tax.

For more information on taxes and access to printable copies of the required forms visit: Doing Business in Missouri: Taxes [531k] and the IRS/SBA Small Business Resource Guide.

Hiring Employees

Obtain a copy of "Employer's Tax Guide" [340k] from your local IRS office or call 1-800-829-3676. "Circular E" explains federal tax withholding and Social Security tax requirements for employers as well as containing up-to-date withholding tables for you to use to determine how much federal income tax and Social Security tax is to be withheld from each employee's paycheck.

What Is Involved?

• Once you begin paying salary or wages to employees, you must collect taxes from your employees. The primary taxes are: federal and state income taxes, Social Security (FICA) and Medicare taxes.
• If you have not already done so, you must apply for a federal employer identification number (EIN) -- Form SS-4. This number is used to identify your business on payroll and income tax returns, as well as for other federal tax purposes. Corporations and partnerships must file Form SS-4 even if they have no employees. The IRS now offers an online EIN application.
• Each employee completes an I-9 Employment Eligibility Verification Form and a W-4 form [53k].
• Missouri require that all employers in Missouri report each newly hired employee to the Department of Revenue within 20 calendar days of hire.

For more information on your responsibilities as an employer, please contact your local Missouri Career Center (formerly Job Service). To locate the nearest office, check the phone book or call 1-888-728-JOBS or visit www.greathires.org/cgi-bin/career_centers.cgi.

For a complete discussion on hiring employees, your responsibilities, and access to the required forms, refer to: Doing Business in Missouri: Hiring Employees [432k].

Business Resources

You may also find the following information helpful as you begin your business:

• Starting a New Business in Missouri [246k] is an excellent publication on the process of starting and operating a business in Missouri.
  
  
• Evaluating Your Business Idea [587k] is a simple questionnaire-formatted document that helps you think through the elemental considerations in starting a business.
  
  
• Guide to Writing a Business Plan [382k] provides a short, but thorough introduction to the process of writing a business plan and provides a simple outline of the contents of a standard plan.
  
  
• MissouriBusiness.Net is a network of key business resource providers in Missouri. The Web site contains a vast array of helpful documents, links and information on starting and operating your small business as well as a calendar of upcoming training and educational events throughout Missouri. To find a business counselor near you, refer to www.missouribusiness.net/sbdc/centers.asp
  
  
• The Missouri Environmental Assistance Center helps businesses. improve business efficiency and save money through reducing or eliminating waste understand and navigate the complicated area of environmental permits and regulations. The Web site offers information on environmental compliance, pollution prevention and energy efficiency.
  
  
• Contact your local (county, city, township) government offices early in the planning stages of your business. The requirement for local licenses and permits vary by county and city. Most cities, and some counties, require businesses to be licensed. Check with the city business/merchant license office and/or the county collector's office for the requirements in your area. Be sure to check with the local city and/or county planning/zoning department to make sure that the site you have selected for your business is zoned to accommodate the activities of your business. These offices can be found in your local phone directory.
  
  
• Missouri Lawyer Referral Service
  - Kansas City: (816) 221-9473 (Clay, Jackson, Platte & Ray counties)
  - St. Louis City & County: (314) 621-6681
  - Springfield/Greene County: (417) 831-2783
  - Rest of Missouri: (573) 636-3635
  Web: www.mobar.org/fa9a5c63-a2c3-4c6e-a86a-de191b13e501.aspx
  
  
• Missouri Society of Accountants 1-800-959-4276
  Web: www.missouri-accountants.com