Why Every Startup Needs Workers’ Comp Insurance

May 16, 2019

And while every U.S. state mandates that startups carry workers’ compensation insurance in some form, it may seem tempting to skirt the limits on what is legal.

But that is just as much of a mistake as thinking that you can just start a business without the expense of ever consulting a lawyer or an accountant. Worker’s compensation insurance is mandatory, with strict penalties for noncompliance. And even if there was no such law, a smart startup needs a solid policy. Here are some reminders about why workers’ comp insurance is so important, as well as some tips for getting the best policy with the lowest premiums.

Explaining Workers’ Compensation Insurance

Every business, even ones mostly behind a desk, will have workplace accidents, injuries and illnesses. Workers’ compensation insurance kicks in during those instances, and provides benefits and compensation such as reimbursing medical expenses or lost wages. If a worker is killed on the job, insurance will provide death benefits to the employee’s family.

Unfortunately, there is no easy way to estimate how much your startup may have to pay for insurance. Insureon reports that a 2012 study of workers’ comp found that it could range from $.75 in Texas to $2.74 in Alaska. But those numbers are an average across all industries. For example, construction and mining businesses can pay a great deal more for worker’s comp compared to professional practices.

Pie Insurance points out that before workers’ insurance became commonplace in the late 19th and early 20th centuries, employers and especially employees would be stuck in lengthy and costly legal battles to determine whether the company had to pay. As a result, workers’ compensation insurance is no-fault, which means that it will kick in even if the employee is partially responsible for the injury as long as it …

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The Small Business Owner’s Guide to Insurance Coverage

May 2, 2019

But what if you overcome these hurdles only to watch as a customer slips and falls in your store and sues you for the resulting medical bills? What if a cybercriminal steals customer credit card information – a crime that could result in lawsuits from angry patrons? These incidents, and a host of other crises, could wipe out your savings and shut down your business.

This is why it’s essential that small business owners invest in the right insurance protection. At a minimum, it must include general business liability and property insurance to protect you financially and help keep your business open.

But that is just the start. Depending on your business, you might need everything from a commercial auto insurance policy to business income insurance to an overall umbrella policy that will protect you from the most expensive lawsuits. If you’re worried that your business isn’t adequately protected, call your insurance agent. He or she can study your business and determine just how much insurance you need.

Here’s a brief look at some of the coverage options small business owners might need to keep their doors open, should the unexpected happen.

Business general liability insurance

All small businesses must invest in general liability insurance. This policy covers any financial damages you suffer if someone is injured while visiting your business and sues you for the resulting medical treatment. It also protects you if your business’s products or services injure customers or make them ill.

For instance, say you are using a ladder to stock cans of paint on a shelf at your business. If a can falls and injures a customer, and the customer sues you and wins, liability insurance would pay for the costs of any medical treatments that customer receives. Or, as another example, consider what …

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How to Fire a Partner or Co-Founder

May 2, 2019

Running a small business is a complicated endeavor, and it can complicate otherwise healthy personal (or even professional) relationships. If you’re in a partnership with someone and it’s not working out, it’s important to take the right steps to ensure your business and financial future are safe.

If you decide you want to move on with your business without input from your partner, it’s important to work directly with an attorney to determine the best course of action. Each business situation and partnership is different, and you want to have all your ducks in a row before you confront your business partner about your plans. It’s also important to understand that if you don’t have predetermined exit strategies or dissolution plans, firing your business partner is likely going to be expensive and potentially difficult.

If you’ve decided you want to move on with your business on your own, it’s important to understand the legal and professional implications and processes before you move forward.

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Build in legal mechanisms at the outset of your business

If you’re entering a partnership or starting a business with other individuals, you need to work with a lawyer to set up your business properly. By defining ownership stakes, exit strategies and day-to-day responsibilities, you can eliminate any potential issues where many problems arise. Walter Gumersell, a partner with Rivkin Raddler, said general partnership law is not deeply defined in many states and can involve statutes that are only “six pages.” This can create a lot of gray area.  

“There’s a lot of gaps to fill,” he said. “You don’t want a court filling the gaps.”

By sitting down at the …

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Preparing for the Worst: How to Make Sure you Are Ready for Unforeseen Bumps in the Road

April 17, 2019

“Hope for the best and prepare for the worst” — wiser words were never spoken when it comes to maintaining a sustainable business.

As a small business owner, being your own boss has many benefits; you get to call the shots and make all the decisions. But it also comes with a lot of responsibility, and risk management is one of the most important responsibilities you’ll be shouldering.

As you probably know, running a business always involves a certain level of risk. That’s what makes entrepreneurship such a leap of faith. With a little foresight and smart planning, though, you can reduce those risks — or at least create a solid plan for dealing with them in order to minimize the negative effects they may have on your business or your income. Small business risk assessment is an essential part of setting up and running your business, and you should make sure to give it some consideration.

Possible Risks

Some of the risks involved in running a small business include:

Financial risk

No matter how well you plan, there is always a risk that the business won’t run as well as you hoped. You may not be able to find as many clients as you anticipated, or your return on investment may not be as high as you predicted. You might encounter an unforeseen expense that depletes your budget or face issues with cash flow. According to a U.S. Bank study, 82 percent of businesses fail because of cash flow mismanagement

Property loss or damage

Many entrepreneurs need specialized equipment for the work they do, and that equipment can be expensive or hard to replace. No matter how carefully your guard your property, there’s always a chance something will break or get stolen. Another type of property that may …

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