If you own a small business, you have business insurance. Depending on the type of business you own, the various kinds of insurance policies you need to carry may seem overwhelming. Fortunately, our team at Beyond can keep you organized with our insurance management services.
This article discusses the typical types of insurance a small business might need and how our insurance management services can give you some peace of mind.
What kind of insurance do you need?
Just as every small business is different, your insurance needs may be different based on the industry and size of your company. However, here are the most common types of insurance a small business may have
- General Liability – protects against claims of bodily injury or damage to property
- Auto Insurance – protects business vehicles in the event of accidents
- Workers’ Comp – provides medical expenses, lost wages, and rehabilitation costs to employees who become injured or ill while on the job
- Employee Insurances – this includes elective insurance for employees such as medical, life, disability, and others
Again, depending on the industry your small business operates in, additional insurance coverage may apply. For example, many professional businesses have errors and omissions Iisurance for additional liability protection. Medical and legal practices may need malpractice insurance.
We recommend working with a reputable insurance broker to gain insight into what coverage may be right for your business.
Allocating Premiums
Most insurance providers offer flexible payment options for their policies. However, in some cases, you may be required to pay the entire premium upfront. An average coverage period can run between 6-12 months.
There are at least two ways you can handle insurance expenses in your accounting. You could choose to recognize the expense when payment is made. The disadvantage to that, however, is it would overstate your expenses for the month that payment is made.
For most businesses, the best practice is to allocate the cost of your insurance premiums over the term of the insurance policy. This is where our insurance management services can help.
When allocating insurance costs for a business, we typically need the following information:
- Copy of the insurance policy, including the total premium amount
- The dates of insurance coverage
- Detail on the amount and number of payments required by the policy
Once we have these details, we calculate and strategically spread out your insurance expenses throughout the policy period. We also reach out in advance of your next renewal to verify any changes to your insurance policies and coverage.
Insurance Audits
Most insurance providers require annual audits to adjust your premiums for the coming year. This is especially the case with liability and workers’ compensation insurance plans.
What reports are required for a typical audit?
- Sales reports
- Profit & loss reports
- Payroll records
- Tax documents
- Subcontractor or independent contractor documents
Compiling all the reports necessary for an audit can be time-consuming and stressful. As part of our insurance management service, we efficiently gather these documents for you. Additionally, we will proactively reach out before your audit, just in case your insurance provider requires additional documentation.
Open Enrollment
For medical insurance, most insurance providers have an open enrollment period. This period gives your employees sufficient time to select their insurance benefits over the next 12 months. Our insurance management services can help you navigate Open Enrollment successfully.
We do this by focusing on the following areas:
Payroll – Depending on the payroll service your business uses, we verify that any insurance changes are updated for both employee deductions and employer contributions. (Hint – most payroll providers, such as Gusto, can update these changes automatically.)
Expense allocation – Many companies have corporate officers and employees enrolling for medical insurance. Depending on your entity type, officer benefits may need to be recorded differently in your accounting records. We can oversee the payroll mapping and expense allocation process to make sure owners and employees have their insurance expenses recorded in the correct place.
Managing insurance doesn’t have to be overwhelming. By partnering with our firm, you can feel secure in knowing that your insurance expenses are being handled correctly. Learn more about our ongoing bookkeeping services here.