Another critical aspect of financial planning and your small business is insurance—what kind, how much and at what cost. The following are a few considerations to keep in mind:
•Liability insurance. The type of liability insurance you need depends on the industry you’re in, and liability laws are constantly changing.
•Property insurance. Review your coverage to make sure it reflects recent building improvements or additional property. Determine if the coverage will rebuild or repair according to current building codes, and if it will cover replacement costs at current prices, or only at a set limit or depreciated value. Also learn what kind of disasters your insurance will—and will not—cover. Consider whether inventory coverage is appropriate for your situation.
•Business interruption insurance. This insurance covers lost income and overhead expenses when a business must temporarily close its doors due to a covered disaster.
•Health insurance. Health insurance premiums have become a major expense for business owners, but there are ways to keep costs under control and still offer this important benefit to your employees (and yourself). One example: Establish a less expensive, high-deductible health plan and supplement the plan with a tax-advantaged health savings account (HSA).An employee’s contributions to an HSA are tax deductible, and tax-free distributions can be used to pay for current medical expenses or save for future health insurance premiums.
