Links to Tax Information for Small Businesses

Tax information for individuals starting or operating small businesses from the Internal Revenue Serivce

Business Insurance & Liability Insurance

Many business owners erroneously believe their business liability insurance contains all "standard provisions" and that because most states have a department of insurance are approved by that agency.  NOT TRUE.  There are no such things as standard insurance policy provisions or state agency approval.

An insurance policy is a contract between you and the insurance company.  There are wide variations between the standard clauses and the exclusions in many policies would amaze you (if you bother to read it). Before you buy insurance, ask for a copy of the policy and read it.  If it does not specifically cover potential problems, you should immediately ask the agent to add language covering such events (usually called a rider).

Also, keep in mind, that in most states insurance agents are actually the agent of the insurance company that they represent and are selling its insurance. They are not agents of their customers and often (such as California) have little legal liability to their customers (since they are agents of the insurance company).

It is up to you to protect yourself and do not just assume the"agent" is protecting your interests.

Incorporate Your Business?

If you are currently in business or plan on starting a business you should considering using a Limited Liability Company (LLC) or Corporation for legal purposes. If you have a properly formed corporation or LLC and operate it correctly, you will protect yourself from personal liability should someone sue the business and you lose in that lawsuit.  If you do not incorporate and the business is sued, you stand to lose all of your personal assets and possessions if the lawsuit goes against you.

Even if incorporated (or you have an LLC), the legal protection will only continue if you:
                1. Sufficiently capitalize the entity
                2. Comply with all income and other tax filing requirements
                3. Do not co-mingle your personal assets with those of the entity
                4. Do not have the corporation pay your personal expenses or mix up your personal receipts
                    and disbursements with those of the corporation.
                5. Conduct all required annual meetings and keep minutes.
              
Though these procedures seem simple, if you fail to follow them, attorneys regularly pierce the corporate veil in lawsuits and get at the owners and shareholders personal assets. You should seek legal advice to make certain you are running your LLC or Corporation correctly to maintain its liability protection for you the shareholder.