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Author Topic: Business insurance  (Read 169 times)

Offline Patricio

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Business insurance
« on: September 26, 2012, 10:53:32 PM »
Curious,  where do you get your liability insurance from,  limits & yearly & monthly costs.
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Online LowSL2

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Re: Business insurance
« Reply #1 on: September 27, 2012, 01:30:32 PM »
I'm curious too. I want to start doing this for myself soon and I don't have a clue where to start looking for business insurance.

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Offline andersenappliance

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Re: Business insurance
« Reply #2 on: September 27, 2012, 01:58:50 PM »
You can get business insurance from pretty much any insurance company (except perhaps auto ins. co's like AAA or Geico).

They'll want to know what you're doing business wise, what your gross income is so they know how much business you're doing (thus their exposure).  they need to know what level of liability you want.  $100K?  $1M?  This amount is often dictated by how much coverage you need.  Do you have buku assets you need to protect?  If your business is a sole proprietorship they'll come after you.  If you have an LLC or Corp, they can still come after you if you do the work, and you can be made to be personally liable.  Do you work for commercial firms (property management) that have minimum ins. requirements?

Do you have a business location that needs to be covered?  tools and other property?

We are working with electricity, gas, and water.  These can cause significant damage, and so you need coverage. 

On the other hand, it is not always your fault, even if it is.  You have to be held liable, and your insurance co. will fight to prevent that.  Home owners insurance will often kick in, and so do other liabilities. 

Accidents happen, but never, never leave an unsafe condition (bypassed thermal protectors, gas/water leaks, etc.).  Any unsafe condition that you cannot correct, either don't do the job (if it is w/in the appliance) or specifically note on your invoice the nature of the condition (if it is related), what should be done to correct (even if its just "call an electrician), and how urgent it is (its always urgent).

If you can show that you are competent, safe,  and never negligent, then you'll be in good shape.

I'm sure others on the board can add quite a bit to this (and even dispute what I've put here :D ).

Offline Wedgeman55

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Re: Business insurance
« Reply #3 on: September 28, 2012, 02:13:45 AM »
     I agree with everything that Anderson said.  First off,  in addition to Bus. Ins.  you have to determine what way your company will be set up.   I had a lawyer set everything up for me,  including getting my business name,  vendors license, and all necessary paperwork done.    It was worth it for me not to have to go through the hassle myself.   
     
     I carry a policy with 1 million in blanket liability.   I pay about 850 a year for mine,  and if you figure the cost of roughly 70 dollars a month, it is the best peace of mind you will spend.    State Farm, Acuity, and others all supply this coverage.    Before I did job one on my own,  I made having the business insurance policy mandatory.   Think about it - You move a refrigerator and ruin a floor ,  lawsuit.   You work on a stove and it burns up a room or a house,   even if not your fault,  lawsuit.    Work on a dishwasher,  it leaks shortly thereafter even if it is not your fault,  lawsuit.   You get the idea.
   
     Make sure you get details of what they will and will not cover.    For example,  I am covered under "Major Appliance" category from the insurance company.   If I do too much out of category,  I may or may not be covered.   That is why it is important to talk to insurance agent to clarify all of this.   
 
     Good luck,  and I would advise against doing even side work without insurance.  It could be a disaster.   People can be your best friend,  but as soon as something goes wrong,  BOOM,  your screwed.   With no insurance, you could loose personal savings,  a house,  etc.    With insurance,  you have a big company that will fight for you,  without it,  your on your own.   

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Offline andersenappliance

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Re: Business insurance
« Reply #4 on: September 28, 2012, 10:55:49 AM »
That is another thing,  the business license, etc. 

The first thing you must decide is what form of business you want to have.  Sole proprietorship is the easiest, but that means that you (and all of your assets - everything) is doing business.  There is no limit to what you can lose except the extent of your possessions.  Corporations (Co., Inc, etc), Partnerships, Limited Liability Partnerships (LLP) or Limited Liability Corporations (LLC) are other ways to form a business entity.

The business entity is considered by law to be a "person."  In a Sole Proprietorship, that "person" is you, in a partnership, you and your partner(s).  In a corporation, it is a different "person" that is directed by you (or whoever).  The corporation or LLC provides a "corporate veil" between you and the corporation that prevents liabilities of the corporation from attaching to its stockholders personally.  Your only liable to the extent of the value of your stock.  If the company goes under for whatever reason, the stock can go to zero, but they can't come after you or your stuff - in theory.

"Piercing the Corporate Veil" is making directors, managers, and owners of the company personally liable for the actions (losses) of the company.  While this is rare, it is less so if you are working for yourself.  If you do the repair negligently, and should have known better, you can be held personally liable for the damage after they eat up company assets.  Generally, lawsuits seek to go after the "person" with the "deepest pockets."  Often, an appliance repair person starting out can be considered judgement proof because he has no assets to go after, and so it is a waste of time.  But you don't need that headache if you can get ins. for less that 1k per year.

The business license is easy to get.  Go to city hall of the city you plan to work in, and pay them.  They need to know what name the business will use, what it will do, where it will do it, and what the physical and mailing address is.  The cost is usually between $20-$40 per year, and they will send you renewals.

The name you are using usually requires a Fictitious Name Statement filing.  If you are a sole proprietorship, and the business name includes your name and business activity (Bob's Appliance Repair, Bill's Plumbing, etc.) you don't need one.  If it is not a sole proprietorship, or if it does not contain your name and bus. activity (Los Angeles Appliance Repair, Avanta Industries, etc.),  you will.  The people you get your business license, or the county recorder's office will help you with this.  All it requires is filing, with the city or county, a statement that you (a corp, llc, sp) are doing business as (fictitious name) and a few details.  This statement is published in the legal notices  section of the local newspaper for a period of time.  Take your copy of the filing to the bank, and open a business account in that name.

You can do everything yourself, if you want.  Even form a corporation or LLC.  Nolo press has diy kits for that stuff.  I think the filing for a corporation is about $800, not sure for LLC.  The corporation pays corporate tax rates (35%) on profits, and you will pay tax on your income, the paycheck or profits you receive from the company (double taxation, but there are ways to minimize)  LLC's pass the profits through, so avoid the double taxation.  I'm not sure of the details.  There are benefits to both forms.

Getting a lawyer to help is a good idea.  He can do everything for you.  You'll get a lot of info from him, and some very good advice.  Plus you are starting to make business contacts that can be very useful in the future.  Such as insurance and accountant referrals, and other benefits.

I think that by far the biggest challenge to starting your own business is breaking free from the paycheck mentality.  Sears does not get a pay check.  They get lots of microscopic ones from each of their millions of customers.  You can do the same thing, and if you are working for the man, you already see how the billing goes, and how those little paychecks flow in.  Your marketing task is to divert a stream of that flow through your business.  Simple as that.



Offline andersenappliance

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Re: Business insurance
« Reply #5 on: September 28, 2012, 11:20:09 AM »
A couple of more things.  (I know, I can really go on, can't I?  ::) )

It only takes a phone call to the IRS to get a taxpayer ID number (TIN) for your business.  Never use your social security number (SSN) for your business.  You should probably get an employer id number (EID) to use as your TIN.  It lets you hire employees (BOO! HISS!!)   if you ever need to.  I must stress again that you must not use your SSN for your business.  You will need to give you TIN to large customers in W-9's and for other purposes.  People will try to get your TIN in the hopes that you will have used your SSN for ID theft purposes.  Keep them separate!

Get a reseller's permit.  This allows you to buy parts wholesale, tax free.  You can then sell them at retail to your customers, collect sales tax on the retail amount, then remit the tax to the authorities.  Don't spend this tax, borrow from it, or use it in any way.  That will keep you out of jail.  It is not your money.  It comes from the customer & goes to the state.  You're simply forced to collect it.  Keep it separate!   Depending upon your mark up and cost, the retail price of parts can be one of the major profit centers for your business.

Offline JWWebster

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Re: Business insurance
« Reply #6 on: September 28, 2012, 11:42:21 AM »
I was baby sitting a business one day for my neighbor. He went to get some burgers and left me to answer the phone and hold things down till he got back. A dude in a suit walks in and asks me if I am Such and such and I says no he just stepped out for a moment. He handed me a card and told me to lock the doors and leave. Not to reopen till he was taken care of. I later asked my friend what the hell that was all about. He told me he had forgot to send in his tax money for the previous months sales to the revenue comm.
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Offline AJ

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Re: Business insurance
« Reply #7 on: September 28, 2012, 01:21:24 PM »
Quote
A dude in a suit walks in...

Was he wearing a black suit and sun glasses? lol...

One day at the place I use to work at a guy in a suit and sunglass walks in, flashes a badge that was on his belt next to his firearm and ask if so and so has ever purchased anything from our store.

He was with the FBI and was investigating something with ID/CC fraud. It was just like you see in the movies and on tv.
The secretary started looking things up for him and printing off copies. We tried to be friendly and joked around a bit and he was like...

"Just the facts ma'am, just the facts..."



Insurance, just about as bad as taxes...
The big american rip off.

What can't you buy insurance for now days. Everyone and their brother sells insurance around here. I often wonder if I should become a insurance agent myself. :)

This is how I see insurance, pay pay pay and then pay some more.
Never use your insurance, good for you. Your rates are going up anyway, pay pay pay...

I did my LLC, businesses name, etc... all myself.

Offline Wedgeman55

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Re: Business insurance
« Reply #8 on: September 29, 2012, 02:54:20 AM »
You got that right AJ with the insurance.  Don't want to use it unless you have to or rates go up.   Just got my yearly business insurance in.    Went up again by 73 dollars a year.   But must have incase of disaster.   
Commercial Laundry repair Tech and Installer  1973 to 1980
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