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The kinds of risks to consider, depending of course on nature of your business, include:
=> Health and Disability
Check with any trade or professional associations of which you are a member for health insurance packages. Many such associations will have negotiated insurance packages for their members and this can be a good way of getting good cover for a cost-effective price.
Other types of insurance to consider are disability insurance in case you can't work due to illness or disability and workers' compensation (remember, you may be an employee of your business). Depending on your personal situation, you may also want to consider key man insurance which protects your business in event of your death. The business becomes beneficiary under this type of policy and this cover is intended to enable business to replace you.
This covers your physical assets - furniture and equipment, inventory and supplies including, where required, cover for equipment taken away from premises such as laptop computers.
There are three main types of liability insurance. Depending on your business you may need only one or two or all three. The three types are (a) general liability which covers you for accidental injuries sustained by business visitors; (b) professional liability if you are a member of a professional occupation such as a lawyer or an accountant; and (c) product liability which protects you against damage caused to a third party as a result of a defective product.
=> Business Interruption
This type of insurance covers your lost profits as a result of some insured event which makes it impossible for you to carry on your business such as a fire or flood.
One expenditure you should definitely not try and avoid is an accountant to prepare your taxes. There are many home office tax deductions available but they are scrutinized carefully by IRS so make sure you get professional help in this area.
The types of deductions available to home business owner include a proportion of your housing costs and expenses if you use a part of your home exclusively for your business; use of your car for business purposes; health insurance; postage; trade magazines and other business-related publications; and capital equipment.
The best way to save money on accountant's fees is to keep accurate, organized and complete records. Keep your receipts organized so that when tax time comes you can hand everything over to your accountant in a nice neat package.
In addition, do not hestitate to contact your accountant for advice if and when you intend to take on employees. A whole slew of responsibilities goes along with employing others in your business including withholding tax and social security benefits and workers' compensation to name just a couple.
Finally, a word about zoning. Zoning laws can be inconsistent so just because your friend Dave can run a business out of his garage in town X doesn't mean you can do same thing here in town Y. Some municipalities will give you a hard time if you're receiving clients on premises but will turn a blind eye if you're not. Others focus on detriment your business causes to amenity of your neighbors. If your neighbors find they can't park their car in their own street because of flood of traffic to your door, expect problems. Also, don't expect to be able to erect a sign in front of your house or, possibly, anywhere visible from street, advertising your business. Still other municipalities will restrict numbers of employees that can be employed in home business. In these municipalities you often won't have a problem if you're a solo worker but once you start hiring employees to work on premises you may have trouble.
So, before you start your business and invest a lot of capital in getting set up, check with your local authorities what, if any, zoning restrictions you need to be aware of.
These are just a few of major headache areas when you cut ties and set out on your own. By taking time to get these things in order before you get underway, you'll create a safety net for yourself and your business so that when things go wrong, as they inevitably will, your dream of a home-based business of your own will continue to be a happy reality and not a nightmare.
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Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for work-from-home entrepreneur. http://www.ahbbo.com
Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com