Protecting yourself and your loved ones with Insurance.

Insurance policy premiums are often the last thing a small or new business owner wants to spend money on. They can seem like an unnecessary expense, at a time when you cannot afford to pay unnecessary expenses; however, good insurance policies are actually some of the most important protections you can set up for the long-term success of your business. General liability insurance, life insurance, critical illness insurance, the list of options seems endless, but the key is to speak with an advisor you trust to get the information on each of the different types of policies available. A good insurance advisor will offer a variety of options, explain the details of each and will also be able to help you manage your costs by determining which policies are essential at which stage of your business development. 

Once you have your insurance policies in place, your bookkeeper’s job is to ensure expenses are allocated properly throughout the course of the year. When dealing with Life Insurance premiums, it all comes down to one question. Who is the beneficiary of the policy? If the beneficiary is a specific person, then the policy is considered personal and the premiums are a personal expense. If the company pays for the premiums, they will either be charged to your shareholder loan, or they will be recorded as a taxable benefit. However, if you set up the beneficiary of the policy as the company itself, that insurance policy is now a company expense. Where is the benefit for your family if you passed away? The company will receive the lump sum payment, and will be able to pay off or pay down any debt the company has, thus increasing the value of the company for disposal. Your estate will be larger, and your dependents will receive more.