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How to Deal With Insurance and Taxes

Professional Assistance and Personal Persistence

Fear not... it's common for home-based business owners to cringe when the subjects of insurance and taxes are mentioned. Unless you're an accountant, insurance salesperson, or lawyer, it's likely that you've never had to deal with these issues other than on a personal level. How then do you decipher all of the details and avoid drowning in your own despair?

First, don't hesitate to ask for help. This area of your business requires your undivided attention, even if it is with the assistance of professionals. If you're having a difficult time justifying the expense of paying an accountant or lawyer to guide you through these issues, consider the alternative financial risks of being underinsured or failing to pay the proper taxes. Consider using the services of an expert at least to help you "get up to speed." Ask friends, family, and/or other business owners for recommendations about whom to consider for such assistance.

Another way to acquire important information is to enroll in classes and/or to attend lectures pertaining to small business insurance and/or tax issues. Most of these educational sessions are conveniently conducted outside of "normal" business hours.

Reams of helpful online information are also available with a simple mouse click; just be sure to sort the fact from the fiction. A great place to start your search for tax information is the website for the Internal Revenue Service (www.irs.gov); this site also contains a page (www.irs.gov/taxpros/article/0,,id=100236,00.html) listing the links to other Federal and State tax agencies.

Tips for the Home Based Business

Other suggestions and tips to keep you on track with insurance and tax matters include the following:

• Anticipate tax increases - Your tax expenses can change due to a number of factors. Hire more employees, pay more taxes. Increase profits, pay more taxes. Understand the variables that can affect your tax liabilities and anticipate their effect on the bottom line of your business finances.
• Budget your tax payments - Once you understand your tax responsibilities, it's critical that you budget for such expenses. Knowing that you'll owe state sales tax on a quarterly basis is merely one part of the equation. Having the money on hand to make the payment is the other critical part of the equation. This type of budgeting isn't about simply writing a check for the same amount of money every time a specific bill becomes due; it's about keeping track of multiple pieces of a puzzle and making accurate estimates.
• Get insurance quotes - Take the time to compare prices for the various insurance policies that you'll need to protect your business. Not only will you get varying price estimates, but also you'll likely get additional input about the policies and coverage that you should consider.
• Keep a tax calendar - If you're making your own tax payments, you might learn the hard way about how easy it is to forget to file the almost endless array of tax forms associated with owning a home business. To avoid missing a payment and being subject to what can amount to substantial penalties, it's a good idea to have a designated calendar hanging above your office desk to remind you of upcoming tax deadlines.
• Reevaluate your insurance coverage on a regular basis - As your business evolves, so too will your insurance needs. If possible, meet face-to-face with your insurance brokers(s) at least once a year to review your current coverage and to make any necessary adjustments to your policies.
• Request tax information from state and/or federal sources - Regardless if you have professional assistance or not, it's helpful to have certain tax information on hand (e.g., filing deadlines, rates) when you have general questions about procedures, policies, etc. Many of these tax guides and information packets can be requested via email (refer to the above-mentioned websites), fax, or automated telephone lines; no need to be put on hold for an hour or to track down your accountant or lawyer for answers.
• Understand your insurance coverage - Don't just let an insurance salesperson decide what's best for you and your business. Have at least a basic understanding about business insurance... deductibles, claims, exclusions, etc. Regardless if the policy pertains to insuring people, places, or products, the final decisions and responsibilities are yours.
• Understand your tax write-offs - Know what tax credits, deductions, etc that you're entitled to take. This will ensure that you maintain the necessary records to validate such write-offs. It will also assist you in making important business decisions such as what purchases to make and when, how to best set-up your home office, etc.

Don't let pride or poor planning get in the way of your home business success. Insurance and taxes simply aren't everyone's area of expertise. Rely on the help of others and do your part to ensure that all of the details have been tended to properly. Enduring a tax audit or the theft of your office equipment is much easier when you've already done your homework.

Take care of your business insurance and your business insurance will take care of you. Deal with your tax responsibilities and your tax responsibilities won't deal you any surprises. Insurance and taxes will simply become more pieces of the business puzzle that fall into place.

Good luck finding the perfect home business opportunity!

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