Thursday, May 1, 2008

What 90% of All Small Business Owners Don't Know About Small Business Insurance!

There are several factors that you should take into account when determining what forms of insurance coverage you want: how large or small your small business is, how it's organized (partnership, sole proprietorship, corporation, LLC), the number of employees, how you get paid (commissions, salary, fees), whether your small business is service or product oriented, your exposure to liability and location.Things to ponder:Heaven forbid, but do you have more than enough insurance to protect your spouse and children? If you have a small service business, your small business is worth Zero when you die. For example, the spouse of a deceased doctor or lawyer can only sell the tools of the trade, not the clients (the true bread and butter of any small service business). If you can predict when you might die, you could sell it ahead of time. But that's not very likely, so you and every small service business owner should make sure that you protect your family with at least seven times your gross income. So, if you make $100,000 per year then you should have over $700,000 in insurance.If your goal is to have a member of your family take over your small business at your demise, are they capable (and licensed) to do so?What happens if you get ill or suffer an injury and can no longer run your small business? Do you have disability insurance? Disability insurance will generally pay about 60% of your income for a stated period of time. The benefit may be taxable or non-taxable (depending on whether or not you deducted the premium as a business expense.)Even more important is your answer to this question: Do you have "business overhead insurance"? Who will cover the costs of running your small business (utilities, insurance, salaries) while you're out of commission? Unless it is an add-on, your small business overhead expenses will not be covered by your disability insurance.Got business partners? Do you have a buy/sell agreement? Well, if you or your partner should suddenly die, your interest in the business will be protected. Here's a great example of this: your partner dies and his wife wants to claim her share of the business. What if your partner's relatives have no idea how to operate the business? Would they be asset or a liability? Well, if you have this type of insurance coverage, you could avoid all of this interference by outside parties by simply buying out your partner's share of the business.What about "disability buy-out coverage"? Do you have it? If your partner becomes severely disabled, what would you do? Would you simply keep paying him or her even though you are doing all of the work... possibly for months or even years to come? Well, when you have "disability buy-out coverage", you would never have to wory about this situation because after a period of time, your disabled partner would be forced to sell his share of the business to you.Of course, many of these situations may not occur, but it's your small business. Now, all you have to do is speak to a professional to determine what forms of insurance coverage you want to protect your small business.Edward Brancheau created The Bank of Green to advise small businesses about subjects like workers compensation insurance and to help individuals build wealth through their home equity.Article Source:

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