Small Businesses and Liability Insurance.
What is liability insurance?
Liability insurance, also known as "commercial" or "general" coverage typically guards against lawsuits for bodily injury and property damage. It also helps protect your business from financial losses due to theft, vandalism, and natural disasters. Generally speaking, it protects your business if someone is injured or dies because of something you did wrong in the course of doing business.
How does it work?
If you're engaged in an activity that's covered under your policy and someone gets hurt as a result (or their property is damaged), you'll most likely be protected by your insurance company paying for legal defense costs and damages (both compensatory and punitive).
If you can't afford insurance, does that mean you can't start a business?
Even if you don't have much money, there are numerous things you can do. Of course, the best thing to do is to learn how to reduce your risk of lawsuits and claims; this means following the laws and making sure you're providing as safe products or services as possible. You should also consider getting liability insurance early in your business--as soon as possible--to protect yourself if something goes wrong. And when selecting an insurance provider, ensure they offer a range of policies fit for small businesses with limited capital. This will be important if your business has many risks and exposures or fluctuates in size.
What are the most important things to look for in liability insurance?
The type of policy you purchase depends on: How much money you have, how much risk you're taking on, and how much protection you want.
Whether you own your business or are an employee; whether your business is just starting to get off the ground or established but expanding; the magnitude of your exposure and the size of your business; and your age (you may not be able to get certain coverage if you're under 21).
If it's difficult to determine the right coverage for each of these different situations, it's a good idea to discuss these things with an insurance professional. But before you do, keep in mind that liability insurance is a good investment because it protects the people and the finances tied up with your business.
What other types of insurance are there for small businesses?
There are also:
General Liability
The most common form of this policy protects you against acts of theft, explosions, vandalism, and injuries. It also covers your business for property damage caused by a natural disaster or fire.
Property Insurance
Many insurance companies offer property insurance to help cover your assets (equipment, furniture, computers) if they're damaged or destroyed as a result of a covered loss . This policy can also protect you against liabilities arising from environmental risks such as a water leak or flood.
Errors and Omissions
Taken from the Latin for "I make a mistake," this type of policy covers previous errors (usually including omissions), as well as injuries caused by acts of omission.
Loss of Use
If your business can't operate, it may be a good idea to get this coverage. For example, if your business has an equipment failure or there's a fire in the building, you may incur expenses. As with many types of coverage, it's important to have enough in case losses occur.
Property Tax
Not all municipalities tax the same items. Some tax business equipment, furniture, and computers--but not, say, vehicles or office materials. This means that you may have to pay property taxes on something that your policy doesn't cover. If you're unsure what a municipality taxes and what it doesn't, ask an insurance professional.
Wrap-Up
To learn more about liability coverage, visit Insureon's Small Business Insurance Guide . This guide will give you information about how much insurance is right for your situation and help you understand how to make smart decisions when it come to liability insurance.
What else do I need to consider as a small business owner?
Other types of insurance you might want to consider include:
Life Insurance
Life insurance is essential in protecting your family and loved ones. It's also a good way to secure financial stability after you're gone, whether from death or disability. Many life insurance policies also provide special protection for businesses. This is often through the use of a beneficiary designation. You can also put yourself on the beneficiary list if you need special coverage, but it doesn't prevent the insurance company from paying out benefits in the future if you pass away due to another cause covered under your policy (such as cancer). To learn more, visit the Life Insurance section of our Small Business Insurance Guide .
Health Insurance
If you're self-employed, it can be hard to find good health insurance that fits your needs. There are, however, a few options. The first thing you'll want to do is look into finding an employer (or businesses in your area) that offer coverage for their employees. Some larger employers offer the option of taking on new full-time or part-time employees outside of the group insurance plan--a practice known as "cafeteria" plans . You may also want to consider a "group policy" through other small businesses in your area. These policies are offered by associations or certain trade groups. There are also options for purchasing individual health insurance policies.
General Liability Insurance
As we discussed earlier, this kind of insurance is one of the most common forms of protection for a small business. In fact, many states require you to have general liability coverage before you start a business. This is because it protects businesses from any financial or property damage that could occur in the line of work (and as a result, helps protect workers and customers as well). General liability policies offer protection against claims arising from bodily injury or property damage caused by your products or services.
For help with other types of insurance, visit the Insurance for Small Business page.
What is 1031 Exchange?
A 1031 exchange is a tax-deferred exchange of like-kind property. For example, if you sell an apartment building and buy another one (at the same time), the profit can be reinvested in the new property and taxes on it deferred until the new property is sold. This is possible because a 1031 exchange only refers to real property that has changed hands; it doesn't refer to personal property such as cars or equipment.
Conclusion
I hope this article gave you some good start on what is 1031 exchange. This article will give you the basic information about 1031 exchange since this is a new tax law in the tax world. The taxes are still being figured out by all of the tax agencies. It is very important to understand that the funds for these exchanges must be from your profit and not your expense in order for it to qualify as a 1031 exchange. If your funds were used for operating purposes such as buying new equipment or hiring new employees, it will be considered taxable income and will not qualify as a 1031 exchange.
If you have any further questions about Tax Services located at www.thompsontaxhelp.