Self Employment Liability Insurance - Why Protect Your Business?
Based on the U.S. Department of Labor statistics, some states have reported unemployment rates of 12% or higher. As jobs continue to vanish, job-seekers are looking for ways to replace their income. What better way to accomplish this endeavor by embarking on a new business or becoming an independent contractor? As you consider the advantages of working for yourself, self employment liability insurance becomes one method by which you can protect your business from the potential risks such an undertaking can bring. As an entrepreneur, professional liability is a priority when planning your business to ensure against loss of everything you have worked so hard to build.
Why should you protect your business? After all, you are just starting out and revenues have yet to be generated. The fact of the matter is that you cannot afford not to protect your business. The purpose of self employment liability insurance provides protection when you or an employee fails to meet the full standards of skill and caution for your industry due to anticipated or unforeseen exigencies of entrepreneurism. For example, a lawsuit could ensue as a result of negligence or direct injury to a client. You could omit a material fact to a customer that may have influenced their buying decision, and it comes back to haunt you. There are countless reasons that your business could potentially be exposed to danger but the key point is that one lawsuit can result in financial ruin and loss of your personal and business assets.
Self employment liability insurance is not the only safeguard to consider. To organize your business under a sole proprietorship or DBA ("doing business as") makes no provision for protection for you or your business if a lawsuit is filed against you. If your business is structured under an S-corporation or C-corporation, and you're sued personally or directly, all of your assets could be attached to the lawsuit. The legal effect could result in taking all of the shares of your company whereby someone else would now own your company. The best way to establish your organization for maximum protection of your business assets and profits would be to set up your company with a limited liability corporation (LLC) which would reduce your risk of loss significantly.
Seek out a reputable insurance agent or agency that will provide all the information you need to know about self employment liability insurance. Additionally, you need professional advice to help you organize your limited partnership and to see whether this would be best course of action for your company, depending on the industry of your business.
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