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What Insurance Do I Need For My New Business?

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Every business owner needs some form of insurance. Think of insurance policies as safety nets that you can land on if you slip off the business ladder. There’s a lot that can go wrong when running your company and the recovery could cost you a fortune. Everything from theft to a lawsuit is a possibility that you may need to consider. With the right insurance policy in place, you can soften the blow of any financial issue.

You also need to understand that some forms of insurance are not optional. Small businesses are legally required to have certain insurance policies in place to protect the business, their employees, and the general public. Here are some of the insurance policies that you need to have in place before your new company opens on the market.

General Liability

General liability protects you if your business injures another individual or causes damage to property. With general liability, you can make sure you are covered with a defense and if you need to pay damages. As such, it is crucial for any and all business owners, whether working from home, a factory or in an office. There are lots of instances where general liability insurance could come into play. For instance, a member of the general public might be injured on your property due to tripping over a wire in your office. If this occurs, the insurance may help you pay for any legal costs or compensation.

Worker’s Compensation

Excluding Texas, all states require business owners to have workers compensation insurance in place if they have more than five employees. This form of insurance provides compensation to workers who are injured on the job, at work, usually on the property. In some states, it is possible for workers to claim on injuries that they suffered from while away from the business property within business hours. The insurance can be used for anything from paying medical bills to covering lost wages. By having worker’s compensation, business owners can avoid the possibility of injured employees suing for damages due to an injury. Penalties for not having the right workers compensation in place are costly and should be avoided.

Professional Liability

Any business that offers services to clients or customers will need to consider getting professional liability insurance. This protects a company in the event of errors or negligence while offering a service. For instance, doctors have this insurance to in case they are sued for malpractice. It is useful for a wide range of companies from hair salons to law firms.

Product Liability

Product liability relates specifically to products being sold by your business. If you sell products, this will protect you if the product in question is argued to be defective or causes injury to customers. For instance, in the past, there have been toy firms that have been sued for using lead paint on their products. With product liability, these firms were able to avoid expensive legal costs.

Data Breach

Business owners often hold a lot of sensitive data about clients and customers. Usually, if a hack does occur in your business, customers will be the targets rather than your company. As such, it is important to protect yourself from the cost of losing sensitive data. With data breach insurance you will be covered for any legal damages related to this issue. It is important to realize that this insurance protects a business whether the data was lost electronically or through a paper file.

Property Insurance

Property insurance will protect your business from any damage to your property or any items inside it. For instance, it ensures that you are covered if computer hardware is stolen from your office. Or, if a fire destroys part of your building. It is also possible to increase the insurance policy to ensure that loss of earnings are protected if your business is not able to function due to the damage that has occurred.

Commercial Auto Insurance

You might want to think about personal automobile insurance if you are using a fleet of vehicles for your company. This is going to be particularly important for any business that has transportation as a major part of their business model. For instance, a logistics business owner should make this insurance a top priority. It protects you from bodily injury, physical damage and liability in the event of an accident on the road involving a car your company owns.

Homeowner’s Insurance

If you are running your business from home, homeowner’s insurance is going to come into play. This will protect you from the loss or damage of any property in your home. It can also ensure that you are covered if any injury occurs in your home or an accident that you may have caused.

Renters Insurance

Renters insurance is specifically for business owners who are renting their home or their property. Similar to homeowner’s insurance it protects the renter in the event or property damage, a personal injury or damage to the property itself.

Life Insurance

It’s possible that your business is going to have the potential to make you a lot of money in the future. If you passed away, you would want to make sure that your loved ones still benefited from the potential earnings of your company. With a life insurance policy, the insurance company pays out a certain amount of money to your beneficiaries. This amount is based on how much you would have expected to make if you had lived a full life. As such, it can give new business owners peace of mind and guarantee that the potential for their business earnings are protected.

Personal Umbrella Insurance

Finally, you should consider looking into personal umbrella insurance. This gives you an extra level of protection from legal claims, property damage and any other financial loss that you might incur. Often, this form of insurance is sought out when all other forms of coverage have been used. As such, it is commonly used by larger corporates and bigger businesses. You probably won’t need it straight out of the gate.

Additional Resources

5 Key areas to look into when looking into business insurance
25 Expert Insurance Tips When Starting a Business
Business insurance when you’re self employed

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Finance

Financing A Business With A Home Equity Loan

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Finding funds for a business is no easy task. Qualifying for a business loan is not guaranteed; therefore many companies leverage their owners’ assets like the family home to raise the funds they require in their enterprise.

There are many ways to use personally guaranteed funds too and one option is what’s called a home equity loan or home equity line of credit, These loans can also be ideal for debt consolidation of say high-interest borrowing like credit cards, personal and short term loans but in this blog post we’re focusing on how these loans work for businesses.

There are many more obstacles or hoops to jump through when seeking an actual business loan and often it’s the financial statements of the business that fail to pass the lending criteria due to the startup phase requiring more investment and not showing a profit.

Entrepreneurs starting out, are therefore renown for sourcing investment from wherever they can get it. The credit card has been the go-to source for funds, but the interest rates are very high, so it’s not a long term borrowing solution for a business.

Before long, the owner is seeking other sources to keep the business afloat or to grow it. They may take out personal loans but before long their requirements exceed what they borrow without additional security so this is where many use their home.

As a business owner, it may make perfect sense to use a home equity line of credit to draw down funds for the business and then repay them when in lump sums and repeat as and when required. So what is a HELOC?

HELOC

This type of loan allows you to have an open line of credit on the equity you have in your property.

HELOC’s has longer repayment periods that can be 10 – 20 years much like a usual mortgage and as the property owner you can borrow up to 85% of the home’s value minus what you may owe it. For example, if your home is valued at $750,000 and you have a mortgage of $250,000 on it already. Your line of credit may be as much as $425,000.

HELOC rates are higher than your standard mortgage rate, so it’s very much ‘caveat emptor’ or buyer beware, get professional expert advice from your accountant, financial advisor and maybe also your lawyer. Remember all loan agreements are legal documents, and they have terms and conditions that the borrower must comply.

There are many other ways to fund your business, including angel investors, offering shareholdings, so while using the equity in your home is an option it may not be the best way forward as the risk is your business cannot pay back what it’s borrowed, and you are personally liable to repay it or lose it.

Remember it is your equity and if your business borrows too much of it and can not repay it, and the lender calls in the loan it could be that you are forced to sell your home. It’s a dreary thought, but it’s better to know the pros and cons when borrowing money for any venture.

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Finance

Young Money: How To Fund A Startup

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Have you got a great idea for a business and now you want to make it happen? You’re not alone. While every business with the idea, commercialising it is a whole new site of skills. Getting a startup business up and running is a challenge for anyone who has not done it before.

Entrepreneurs don’t usually have the ideas, i.e. they’re not the creative talent. They’re the people, the ideas creators turn to, when they want to see how far they can take the idea and turn it into a viable business.

The start up phase of any business involves a lot of working hard, but not exclusively, it also requires investment. Seed money can come from various sources. Without the money, to get started and provide ongoing investment as the business shows promise, your venture may take too long to mature and a competitor takes your place in the eye of the consumer. So where can the investment come from?

What’s Available?

There are a lot of different funding options available for small businesses, and they all offer their benefits. You can find some examples of the most popular methods below, along with some additional information to help you choose which route might be best for you.

Personal Finance/Loans

You will need to invest in yourself, i.e. put some of your own money in. If you have not got savings, consider other options, like your home loan. This is a hugely popular option for start ups that fail to get funding from other sources. Caveat Emptor: Always seek professional advice from your accountant, lawyer etc before taking on debt.

So if you have money saved up or can get a loan from a bank, funding your business will be a fast process. As aforementioned, there will be a personal risk here, but you won’t have to prove to anyone that your business will work, making it great for those who can’t get further than a concept without some capital.

Business Loans

Some banks and governments will offer loans to new businesses. In most cases, you will have to have existing cash flow to make this work, limiting the successful startups will have with it.

Angel Investors

If you can convince an investor with the money to back your idea, you won’t have to look at other types of funding for business, as you will have both money and support. This isn’t always easy to find, and you will have to prove that your idea is worth their time, making it hard for those with nothing but a concept.

Personal Risk vs. Sacrificing Freedom

The choice you make when you’re choosing how your company will be funded largely rests on what is more important to you.

If you are willing to take on personal risk, using your own money can be a great way to go, as it will give you all the freedom you need to build the business you’ve been dreaming about.

For those who would rather keep their money safe, making a couple of compromises along the way can be a small price to pay for an investor or venture capital. This is a very personal decision to make.

Why Isn’t The Bank An Option?

A lot of startups find disappointment when they approach a bank for a loan to get themselves off the ground.

Unfortunately, history has shown that being too willing to offer new businesses money can result in heavy losses, and banks have learned for their mistakes. Before you can convince a company like this to support your venture, you will need to prove that it can make enough to pay it back, and most startups just don’t have the income.

Choosing the funding option which you use for your startup has always been a challenge. It’s becoming more common to find businesses which cost nearly nothing to get started, opening the doors to another idea for you to consider.

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Finance

Best Cryptocurrency to Buy – Which Is Best?

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A lot of people might say that cryptocurrency’s big moment has ended. After the sharp rise and precipitous fall of bitcoin, many strait laced investors soured on the idea of crypto investment. Crypto’s 15 minutes of fame were over, the thinking was, and it was time to move your money back to safer, and more standard commodities.

This, however, is just not true. Cryptocurrency continues to be a sound investment, if you know the best cryptocurrency to invest in. We’ve compiled a list of four great picks below.

Ethereum

Ethereum is sometimes thought of as bitcoin’s chief rival, which perhaps makes it the second-most famous cryptocurrency. Ethereum is also commonly thought of as an expansion of blockchain technology beyond bitcoin. It is traded as a cryptocurrency, but it also has value as a decentralized computing platform.

Ethereum includes a programming language that runs on blockchain. So, it is used by developers to create apps, including health and security infrastructure, music licensing services, and even anonymous browsers. Ownership of an Ethereum token is recorded on the shared blockchain ledger, as it would be on any cryptocurrency.

However, Ethereum expands this practice to record the ownership of copyrights, music, documents, financial instruments: anything imaginable. By purchasing Ethereum, you are investing in this network, rather than the security as such. For this reason, Ethereum is an excellent investment and one that the savvy investor should be scoping out.

Bitcoin

For fame and notoriety among the cryptocurrencies, none can match bitcoin, the original cryptocurrency in many people’s minds. Now more than a decade old (the mysterious Satoshi Nakamoto published the bitcoin white paper in 2008), bitcoin has had its share of ups and downs.

For the savvy investor, though, bitcoin can still be a sound investment. After the massive — and massively famous — December 2017 peak, the price of bitcoin has held steady between $3,000 and $6,000 per coin. As bitcoin matures as a security, it is looking more and more like a place to park your money, rather than the white-hot investment it was two years ago. This is not a downside, because investors need (and will take) both options.

Dogecoin

It started as a joke — a play on the classic “doge” meme. But since its inception in 2013, Dogecoin has grown to a market cap of over $312 million dollars in April 2019, with values soaring as high as $2 billion in January of 2018. Dogecoin’s value fluctuations will be familiar to anybody who has traded in penny stocks. It maintains a steady mean value, punctuated by regular spikes in its price.

The trick, as it were, is to buy it just after a spike in its price, and to sell it during the next spike. While Dogecoins are not a strong long-term investment, they can be a decent swing investment if you have the time and energy to monitor them. The origins may be silly, but the money is very real.

Litecoin

Litecoin is a cryptocurrency specifically developed for zero-cost payments. Litecoin was developed to have a faster transaction confirmation than Bitcoin. This emphasis on fast, secure transactions has made Litecoin one of the most popular coins with businesses interested in security.

For this reason, the value of a single Litecoin has risen from $30 to $78 in the past six months, well below the mean value. This is the perfect opportunity for an investor to swoop in. As security becomes increasingly important to businesses across the board, Litecoin begins to look like a better opportunity than ever.

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