Business Tools
Benefit Plans for Small Businesses
Description: If you own a small business, you may be finding it increasingly necessary to implement a benefit program to attract and maintain employees. For small businesses, benefit plans generally consist of some of the major insurance benefits, discussed here, as well as employer-sponsored retirement plans.
Disability Income Insurance for the Self-Employed
Description: Your ability to earn income is your most valuable asset. It allows you to buy and maintain assets such as your house, your car, and your jewelry. People routinely insure these types of property against loss, yet a lot of us neglect to buy insurance for the one cash source that makes it possible to maintain a particular lifestyle--the ability to earn income.
Business Automobile Insurance Basics
Description: You've worked hard to get your business off the ground (or to keep it going). So the last thing you want to worry about is a lawsuit. Business automobile insurance is designed to protect businesses against liability and property damage claims that may result when an employee has an accident.
Advantages and Disadvantages of Self-Employment
Description: You've grown tired of commuting to a job where you sit in a cubicle and do someone else's bidding. You've got a better idea, you can build a better mousetrap, you know you have the knack for being in the right place at the right time, and so you're thinking of self-employment. But how do you determine if this is a pipe dream or an idea worth pursuing?
Group Term Life Insurance
Description: Group term life insurance is simply term insurance issued to people who belong to a group that has a common interest or association, such as an employer, a trade, or a school affiliation. Premiums increase annually or in "bands" of three- or five-year periods. Group term life insurance offers pure financial protection against premature death (there is no cash value component with term insurance, as there is with permanent insurance). For an employer, group term life insurance is a convenient w
Commercial General Liability (CGL)
Description: A commercial general liability (CGL) policy will insure your business against general liability exposures, unless a possible liability is specifically excluded from coverage. Benefits are paid for actual damages and legal costs when the business is held legally responsible for bodily injury, property damage, or personal and advertising injury liability. If someone is injured on the premises of your business, benefits may be paid even if the business is not held legally responsible.
401(k) Plans
Description: A 401(k) plan is a type of employer - sponsored retirement plan in which you can elect to defer receipt of some of your wages until retirement.
Accelerating Deductions/Postponing Income
Description: If you'll be in a lower tax bracket next year, you may wish to accelerate your deductions into this year and postpone your income into the following year.
Accelerating Income/Postponing Deductions
Description: If you'll be in a higher tax bracket next year, you may wish to accelerate your income into this year and postpone your deductions into the following year.
What are health reimbursement arrangements?
Description: Health reimbursement arrangements (HRAs) are employer-sponsored health-spending accounts that allow employees to accumulate funds for health expenses.
What benefits should I offer to my employees?
Description: The benefits you offer to your employees should be as attractive as you can afford. They can help you recruit new employees and retain those who are crucial to your company's success. As a business owner today, you have a comprehensive array of basic, elective, and fringe benefits to consider
Can I change my business from a C corporation to an S corporation?
Description: Yes. A C corporation may elect S corporation status if it satisfies certain requirements:
Can I change my business from an S corporation to a C corporation?
Description: Yes. In general, you can convert an S corporation to a C corporation by voluntarily revoking the S election at any time.
How can I raise capital for my business?
Description: The two general categories of financing available for businesses are debt and equity. Debt requires repayment of a loan. Equity involves raising capital by selling parts of the business to investors.
Should I buy or lease assets for my business?
Description: This decision depends on several factors, such as the cost of the asset, your cash and/or credit position, and the asset's value to you now and in the future.
What are the stages of business development?
Description: Generally, businesses experience four stages: start-up, growth, maturity, and decline.
What is a family limited partnership, and will it help reduce estate taxes?
Description: A family limited partnership (FLP) is a partnership created and governed by state law and generally comprises two or more family members.
Group Health Insurance: A Valued Employee Benefit
Description: Two of the main reasons why employers offer group health insurance are to attract new employees and to retain existing employees. Unfortunately, many employees overlook the value of group health insurance until they have to find health coverage on their own. Almost without exception, group coverage usually offers better, more comprehensive benefits at lower cost than individual policies.
Health Insurance for the Self-Employed
Description: As a self-employed person, you need health insurance just as much as anyone. In fact, if you're a sole proprietor, your health insurance needs are probably greater than those of the average person. A lengthy illness or hospital stay could easily deplete your personal assets and endanger your business. Fortunately, it's possible to find affordable health insurance, if you know where to look.
Key Employee Life and Disability Insurance
Description: You've got a great group working for you now, and business is good. You know that much of that success is due to one or two key people with both skills and personalities that are hard to match. Suppose they were injured and out of work for a while, or suppose they died? Would your business survive? Key employee life and disability insurance coverage can help make sure that it does.
Life Insurance for the Self-Employed
Description: If you're like most people, you bought life insurance to provide for your loved ones in the event of your death. But because you're self-employed, you may have an even greater need for life insurance: You'll want to protect your family after you die, as well as protect the financial needs of your business.
Split Dollar Insurance Plans
Description: Let's say you want to reward a few key executives with low-cost life insurance. Can you do so without providing the same benefit to your other employees? You can with a split dollar life insurance plan. In fact, such an arrangement can provide your business with several benefits. It can help you attract and retain employees, reward key executives, and fund severance packages and certain other benefit plans.
What Employers Need to Know about Workers\' Compensation Insurance
Description: All states and the District of Columbia have workers' compensation laws designed to protect employed individuals who get sick, injured, or killed on the job. Employers pay the cost of workers' compensation by purchasing private insurance or state-sponsored insurance, or sometimes by self-insuring. Each state has its own workers' compensation system, so the rules vary. As a business owner, you should know the following facts about workers' compensation.
Business Interruption Insurance
Description: A natural disaster like a tornado or a fire can strike your business at any time, possibly resulting in a forced shutdown and an interruption of your normal business process. Such an event can lead to direct losses and indirect losses.
Business Liability Insurance Basics
Description: If you're in business for yourself, you know that your personal liability insurance won't cover losses related to your business activities. But what if you're sued? An expensive lawsuit could wipe you out before you get started or critically damage the valuable business you've built. Now is the time to talk to your insurance agent about business liability insurance.
Business Overhead Expense Insurance
Description: Business overhead expense insurance is a type of disability insurance that's designed to protect your business if you become disabled. Specifically, it provides monthly payments to your business for a specified period of time so that your business can meet its routine expenses and remain open while you're disabled. Though you're the insured under the policy, the business is the owner and the beneficiary.
Do You Need Crime Insurance?
Description: Unfortunately, businesses of all sizes and in all industries are vulnerable to dishonest acts. Crime insurance provides coverage that isn't part of general business insurance policies. It is designed to protect your business from losses that result when your employees or other third parties commit dishonest acts.
Income Tax Tips: Business Insurance
Description: Insurance serves many purposes for a business. You'll need insurance to protect your business from property damage, personal injury suits, and other forms of financial loss. In addition, you may want to provide your employees with certain types of insurance (e.g., group health and life insurance) to attract and retain them. One of the issues you'll face as a business owner involves the tax treatment of business-related insurance.
Insurance Tips for Business Travelers
Description: Do you spend your days hotel hopping? Do you see the inside of your car more than the inside of your bedroom? Many people spend a great deal of time traveling for business. If you're one of them, take a look at these insurance tips.
Insuring Your Home Business
Description: If you have recently started your own business and work out of your home, you'll probably need to upgrade your insurance program. At-home business owners often make the mistake of assuming that their homeowners policy covers their business equipment. In fact, your homeowners policy may include little or no coverage for your business property and business liability exposure.
Professional Liability Coverage
Description: Professional liability coverage protects you if you're sued for the work or advice provided by your business. You may also hear this coverage referred to as errors and omissions insurance or malpractice insurance. In more legalistic terminology, professional liability insurance covers you for things like breach of duty, negligence, misstatement, omissions, and wrongful acts.
Properly Insuring Your Business
Description: No matter how careful you are in running your business, accidents happen. And no matter how big or small your business, you'll have to plan for these and other risks if you want your business to thrive. One way to do this is with insurance.
Should You Self-Insure Your Business?
Description: If you're like most business owners, insurance is part of your cost of doing business. Like any other business expense, though, insurance costs must be managed and controlled. When it comes to handling your business's risk exposure, you basically have three choices: (1) transfer the risk to someone else (this is really what buying insurance does for you), (2) retain all of the risk within the business (self-insure), or (3) create some combination of these two strategies.
Understanding Your Business Owners Policy
Description: If you're a business owner, you probably carry insurance for financial protection and peace of mind. You don't need to be an expert on this type of insurance, but you should have a basic understanding of your own business owners policy (BOP). A little bit of knowledge may come in handy when you have to file a claim.
Choosing an Entity for Your Business
Description: Basically, three separate categories of entities exist: partnerships, corporations, and limited liability companies. Each category has its own advantages, disadvantages, and special rules. It is also possible to operate your business as a sole proprietorship without organizing as a separate business entity.Now that you've decided to start a new business or buy an existing one, you need to consider the form of business entity that's right for you.
Funding a Business
Description: Aside from using your own funds and borrowing from friends and family, there are numerous routes that you can take, and each has its advantages and disadvantages. Here are some of the major options available for funding your small business, and some of the pitfalls to avoid. You've got your business plan written. You're excited about your business idea, and now it's time to get started. One problem: You don't have the financing to fully realize your idea. What are your options?
Hiring Your First Employee
Description: As a sole proprietor, you handle all business matters--from producing and marketing your goods or services to fixing paper jams in the copier. Your business has grown and now you're stretched too thin. Business is being lost because you just can't do it all yourself. It's time to consider hiring your first employee.
Qualifying for the Home Office Deduction
Description: Working from home can certainly provide you with personal benefits, such as a flexible schedule and more family time. But increasing numbers of people are discovering the tax advantages as well. It's no secret that you generally can't deduct certain personal expenses (e.g., homeowners insurance, utilities, and home repairs) on your federal income tax return. But if you're using part of your home as a home office, you may be able to write off part of these expenses.
Record Keeping for Your Own Business
Description: Keeping good business records will not only help you stay in business but may also help you increase profits. Your business records let you analyze where your business is and where it's going. They point out potential trouble spots and serve as a guide to where you want your business to be.
Starting or Buying a Business
Description: Each option involves some element of risk and reward. Whichever option you choose, however, owning your own business offers a chance at more freedom and greater financial rewards.So, you're thinking of going into business for yourself. You have several options available, and all involve some degree of risk. Do you want to create a start-up operation? Perhaps you are planning on buying an existing business. Or, you may be considering the purchase of a franchise operation.
Tax Planning for the Self-Employed
Description: Self-employment is the opportunity to be your own boss, to come and go as you please, and oh yes, to establish a lifelong bond with your accountant. If you're self-employed, you'll need to pay your own FICA taxes and take charge of your own retirement plan, among other things. Here are some planning tips.
Funding a Buy-Sell Agreement with Disability Insurance
Description: You may have a great buy-sell agreement in place at the company where you are a partner or co-owner--one that clearly stipulates how much your family will be paid for your share of the business interest in the event of your death. It may also cover early retirement and the buyout terms under those circumstances. But what if you become disabled long before you are likely to die or retire?
Funding a Buy-Sell Agreement with Life Insurance
Description: As a partner or co-owner (private shareholder) of a business, you've spent years building a valuable financial interest in your company. You may have considered setting up a buy-sell agreement to ensure your surviving family a smooth sale of your business interest and are looking into funding methods. One of the first methods you should consider is life insurance.
Transferring Your Family Business
Description: As a business owner, you're going to have to decide when will be the right time to step out of the family business and how you'll do it. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die.
Individual 401(k) Illustration
Description: If you are a self-employed individual or small business owner with no full-time employees (other than your spouse), then an individual or "solo" 401(k) will allow you to maximize retirement contributions by combining 401(k) compensation deferral with profit-sharing plan contributions. Depending on the amount of self-employment or small business income you want to defer, an individual 401(k) may be an attractive option.
Workshop: Business life insurance needs
Description: As a small-business owner, you're working hard to make your business successful. Life insurance can help by providing the cash needed to sustain your business, your family, or your employees when tragedy strikes. It can also be used to fund incentive plans and buy-sell agreements.
Workshop: Number of policies needed with a cross purchase plan
Description: When using life insurance with a buy-sell agreement, either the company or the individual co-owners (shareholders or partners) buy life insurance policies on the life of each co-owner. In an entity purchase (or stock redemption) buy-sell agreement, the business itself buys separate life insurance policies on the lives of each of the co-owners.
Buy-Sell Planning Questionnaire
Description: Following are some questions for you to consider concerning what you would like to eventually happen to your business. While not every question will apply to every business owner, this list should provide you with a general framework. Your answers will help to determine if a buy-sell agreement will help in achieving your goals for your business and your family.
How can I get free publicity for my business?
Description: Free publicity may be the most cost-effective way of presenting your product to the public. Generally, it has more credibility than advertising since it gives the impression that the content was written by an independent third party. To get publicity, you have to create a reason why someone would want to know about your product. Then, you look around for a way to bring this information to the public's attention.
How do I know where to advertise my business?
Description: Often, the solution is both simple and obvious. You'll want to identify your target audience, and then decide how best to advertise your business to it. Defining your target market and figuring out how to reach it are crucial to spending your advertising dollars effectively.
What is the best form of advertising?
Description: The best form of advertising is the kind that generates the most business income proportional to the amount of money that can be spent (word of mouth costing the least). To determine this, you must first ask yourself what you want to achieve through advertising. Is your objective to increase business relative to one product or service? Or is it to get consumers into your store or office to buy any of the products or services you offer?
How can I boost the morale of my employees without incurring huge expenses?
Description: Often, the success or failure of your business can depend on the sense of satisfaction and well-being--the morale--of your employees. High employee morale increases productivity and reduces employee turnover, complaints, absenteeism, work errors, workplace harassment, and even violence. If your employees are discontented, try to figure out why. Then, begin a program to resolve the problem as best as you can.
What are incentive stock options (ISOs)?
Description: ISOs are a form of stock option that employers can grant to employees. A stock option is a right to buy a specified number of the company's shares at a specified price for a certain period of time. ISOs are also known as qualified or statutory stock options because they must conform to specific requirements under the tax laws to qualify for preferential tax treatment.
Can I deduct home office expenses?
Description: If you use part of your home to conduct your trade or business, you might be able to deduct certain related expenses. To qualify for the home office deduction, you must pass certain tests.
If I work at home occasionally, am I entitled to a home office deduction?
Description: To qualify for an income tax deduction for home office expenses, the IRS requires that you meet two tests--the place of business test and the exclusive and regular use test.
Should I incorporate my business?
Description: Operating as a sole proprietor is often the simplest and least expensive way to organize your business. Even so, many business owners choose to incorporate their businesses. But taking that step has both advantages and drawbacks.
A cell phone and laptop computer owned by my company were inside my briefcase when it was stolen. Will my company's insurance cover the loss?
Description: Maybe. Many employers' business insurance policies cover laptops, cell phones, and other company-owned equipment that employees use off the business premises. But other companies may not insure such items, so you'll need to ask your employer to find out for sure. If your employer's insurance does cover the stolen items, you've probably got nothing to worry about. Otherwise, you should call your insurance agent to find out what coverage (if any) your own homeowners or renters insurance provides.
I own a business. Are there any creative ways I can use life insurance in my business?
Description: You can use life insurance in several ways to help your business. You might consider purchasing a key-person life insurance policy that covers the loss of services when a key employee or partner dies. The benefits can be used to cover any lost profit and the cost of replacing the employee or partner. The insurance is owned by your business, which also receives the benefits.
use my laptop computer for my home business. Is it covered under my homeowners policy?
Description: Homeowners policies usually don't cover laptops used for business. Check with your insurer to find out what your other options are. You may need to purchase incidental business coverage, add a floater to your homeowners policy, or purchase a separate laptop policy.
I'm an independent contractor. Where can I get health and disability insurance?
Description: It depends on the laws in your state. In most states, you can purchase an individual or a one-person group policy for your health insurance. Both are available as managed care or indemnity plans. The big difference is guarantee of acceptance.
I'm thinking about opening a day-care business in my home. Does this raise any insurance issues?
Description: Operating a day-care business in your home presents an increased liability risk--the possibility that someone will be injured in your home or that your property will be damaged. Your standard homeowners insurance policy may not provide enough coverage for either of these situations. In fact, some policies specifically exclude coverage for home day-care businesses.
What is errors and omissions insurance?
Description: Think of it as malpractice insurance. Errors and omissions (E & O) insurance protects certain professionals from liability claims or lawsuits arising from their carelessness (errors) or failure to take proper action (omissions). It's an important part of a comprehensive professional liability insurance package.
What is stop-loss insurance?
Description: Some employers want to provide their employees with health insurance without having to pay for an expensive group insurance plan. One way to do this is by self-insuring. Typically, this means that the employer establishes a fund that it uses to pay the medical expenses of its workers and their families. Or, the employer pays the medical expenses as they arise out of current cash flow.
What kind of insurance coverage do I need for my small business?
Description: Your insurance needs will obviously depend in part on the type of business you operate. However, all business owners should consider at least three types of insurance.
I am buying a business. Can I make the seller sign a noncompetition agreement?
Description: Yes. A noncompetition agreement can be either a distinct agreement or part of a sales contract. Its purpose is to prohibit the seller from working in or starting a related or competing business in a specified geographic area for a specified period of time.
My employer wants me to sign a noncompetition agreement. What is it? Is it legally binding?
Description: A noncompetition agreement is an agreement between you and your employer stating that should you choose to leave the company, you will not go to work for a competitor or start a competing business within a specified geographic region for a specified period of time. Noncompetition agreements can be included within an employment agreement or may be a separate agreement.
Why does the buyer of my business want me to sign a noncompetition agreement?
Description: Noncompetition agreements are a customary part of a business sale. A noncompetition agreement is a contract between you and a buyer that prohibits you from competing with the business you have just sold. The scope and duration are mutually agreed upon between you and the buyer. The agreement may be written as a stand-alone contract or as a clause in the sales contract.
Can I borrow money from my wholly owned business?
Description: Yes, you can borrow money from your wholly owned business. Generally speaking, the terms of the loan must be reasonable and must be properly documented. Otherwise, you run the risk that the IRS could reclassify the proceeds of the loan as compensation or dividends, leaving you with an unanticipated tax bill.
Don't most small businesses fail?
Description: Although it's true that many new small businesses go under within their first year or two, there are usually reasons that can explain their failure. If you're aware of the pitfalls associated with the start-up of a new enterprise, you can take steps now to maximize the chances that your business will succeed.
How do I find good advisors such as lawyers and accountants to help with my business?
Description: To run your business successfully, you may need advice in a number of diverse areas such as fin`ancial planning, accounting, law, taxation, insurance, and investment management. For this you may have to hire one or more advisors. Before you hire an advisor, however, it is important to understand your needs, because a well-chosen advisor can point your business in the right direction and help you achieve your goals.
Is buying a franchise a good way to get into business?
Description: Though far from simple, franchising can be a good way for you to own a business with both a proven method of operation and a familiar name and trademark. Before choosing a franchise, consider your interests, experience, knowledge, and personality.
Should I buy an existing business or start from scratch?
Description: That will depend on the specific type of business you want to own and the area in which you choose to operate. An existing business may offer a familiar product or service with an established base of customers, suppliers, and employees. For some people, the simplicity of starting out in an established business outweighs the disadvantages, including a higher purchase price.
Can I transfer my business through my will?
Description: Yes, you can use your will to transfer your business interest after your death. You can also use your will to specify a long-term succession plan for your business if, for instance, you want one of your children (who may be currently active in the business) to take over and run it when you're gone. Without such a clause in your will, your interest could possibly be distributed equally to all of your children, even though you did not intend that result.
How can I keep my business in the family?
Description: There are several ways to keep your business in the family. The method you choose will depend on whether you wish to keep ownership and control of the business until your death, or begin transferring ownership (and possibly control) to your family during your lifetime. In addition, your options will be affected by the business entity itself.
What are some financing options for selling my business?
Description: Several financing options are available to you and the buyer of your business. The financing methods you consider and ultimately choose will be affected by many factors, including the identity of the buyer (e.g., family member, corporate entity, unrelated third party), the purchase price, and your own cash needs, tax considerations, and flexibility.
What is a buy-sell agreement?
Description: A buy-sell agreement is a contract that provides for the future sale of your business interest or for your purchase of a co-owner's interest in the business. Buy-sell agreements are also known as business continuation agreements and buyout agreements.
How can I determine what my business is worth for estate and gift tax purposes?
Description: Determining the value of your business is something you should not attempt to do on your own, especially because the IRS could challenge your valuation. Even the IRS acknowledges that no one true fair market value (FMV) exists for a closely held business. There are appraisers who specialize in determining the value of businesses. Your CPA may be one of these specialists or know someone who is.

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