Business Insurance

December 4, 2019

How To Sell At A Farmersâ Market (Plus 7 Clever Tips To Succeed Before You Even Get Started)

It’s a beautiful spring day, the sun is shining, and the birds are chirping. Out in the fresh air, you’re surrounded by vendors selling the freshest local produce, natural products, and unique handmade gifts. No, this isn’t a dream — it’s a trip to your local farmers’ market.

Farmers’ markets are growing in popularity across the nation, so it’s no surprise that farmers, artists, and other local vendors are capitalizing on this money-making opportunity. Perhaps you’ve even pondered the idea, or maybe your family and friends have suggested you make some extra cash by selling your handmade or homegrown wares.

In this guide, we’ll explore how to become a seller at a farmers’ market. While it may seem as easy as grabbing your goods, setting up a table, and bringing in customers, there are actually tips and strategies to keep in mind to improve your odds for success … and increase your profitability. From selecting your products to marketing to buyers, we’ll cover it all to help you get started on the right foot. Read on to find out how you can start selling your goods at your local farmers’ market.

Why Are Farmersâ Markets So Popular?

From small towns to big cities, farmers’ markets are quickly popping up everywhere and attracting people of all ages. What makes a farmers’ market so appealing? It might be easier to ask what’s not to love about these local stops!

There are a number of reasons that more people are frequenting farmers’ markets. One of the top reasons is that these are places where you can purchase fresh local produce, most of which is organic and isn’t genetically modified. Compare this to your local supermarket where you aren’t sure of when the produce was picked and shipped or how it was grown. Farmers’ market produce is the freshest, and often the healthiest, that you can find.

Buying locally isn’t just good for your body — it’s also better for the environment. Produce at farmers’ markets usually comes from small family farms, which use fewer pesticides and chemicals. Because these products aren’t being shipped around the country, shopping at your local farmers’ market also conserves fossil fuels.

When you shop at your local farmers’ market, you’re supporting small businesses, whether it’s a small family farm or a local artist peddling paintings, pottery, or other handmade art that you won’t find in your local department store. In addition to supporting your local economy, attending a farmers’ market is a great way to meet new people. Farmers’ markets are family-friendly (and sometimes, even pet-friendly!) events that let you meet and socialize with people in your community. Some farmers’ markets even offer live music, classes, and other special events that only add to the fun. Add in local food trucks serving delicious meals and treats, and it’s not hard to see why farmers’ markets are truly the place to be.

Now, it’s pretty easy to see why you would visit a farmers’ market, but what are the benefits for sellers? In a 2015 survey, the USDA found that over $700 million of goods were sold at over 8,000 farmers’ markets around the United States — and the majority of that money is being funneled directly back into local economies. The USDA also found that farmers and ranchers make less than 16 cents for every dollar when selling to retailers. On the flip side, they can retain nearly 100% of their profits when selling locally through farmers’ markets.

10 Kinds Of Products You Can Sell At A Farmersâ Market

Despite its name, you don’t have to be a farmer to sell at a farmers’ market. There are lots of ways that you can connect with the community while earning a profit. Items to sell might include:

Produce

Sure, you don’t have to be a farmer to sell at a farmer’s market, but if you are, you can certainly bring your freshly grown produce to sell to your customers. Seasonal local fruits and vegetables really sell, but don’t forget about unique products you won’t find in most supermarkets (think colorful heirloom tomatoes or purple cauliflower). No matter what you bring, make sure that you only provide the freshest, highest-quality produce for your customers.

Don’t feel stuck to just fruits and vegetables, either. Mushrooms and fresh herbs that you’ve cultivated yourself are also big sellers at farmers’ markets, providing you with additional opportunities to earn some extra cash.

Milk, Meat & Eggs

If you raise cattle and chickens, it’s a no-brainer to bring your milk, meat, and eggs to the farmer’s market to share with your community while making a profit. These are popular items at farmers’ markets because of freshness, but also because many people prefer buying from small farms that treat their animals humanely, as opposed to large factories that may have questionable practices.

Not a rancher, but you enjoy hunting? Venison, bison, and other wild game can be sold at the farmers’ market. And it doesn’t stop at fresh meat, either. You can always sell your dried meats and jerky that you’ve marinated, cured, and dried yourself.

Baked Goods

Your family and friends think you could be the next Betty Crocker, so why not bring your baked goods to the masses? If you love to bake, there are endless possibilities and a whole lot of money-making potential at your local farmers’ market. Bake your homemade cookies, cakes, pies, scones, and cinnamon rolls and sell them to customers during your free time. Again, you can think outside of the box to boost your profit potential by selling unique items such as dog treats or treats for customers with special dietary needs (i.e. vegan or gluten-free).

Flowers, Plants & Seedlings

From season to season, people spruce up their homes inside and out with colorful flowers, outdoor plants, and houseplants. From flower baskets that add a touch of color to your front porch to common and unique species of plants, many customers bypass big-box home improvement stores and instead purchase from local growers.

You don’t even have to wait to have fully grown plants and flowers. Some shoppers may prefer to buy seedlings that they can plant and grow themselves. Succulents and herbs are also popular options to consider.

If you grow roses, tulips, lilies, or other beautiful flowers, you can also create unique arrangements that shoppers may snap up for weddings, prom, Valentine’s Day, or even “just because.”

Honey

If you’re a beekeeper, cash in on the benefits of your (and your bees’) hard work by selling your delicious honey at the farmers’ market. Customers can purchase high-quality honey for use as a natural sweetener, but there are also additional benefits of eating local honey. Local raw honey is often marketed as a natural home remedy used to help with seasonal allergies, soothe sore throats, kill bacteria, or even help you get a good night’s sleep.

Want your honey to stand out from the rest? Switch up the way you process your honey to create creamed honey, or consider adding natural flavors to make your own unique honey blend.

Also, don’t overlook the value (for health and your wallet) of pollen granules. These tiny pellets contain a mixture of nectar, saliva, and pollen and are rising in popularity due to their perceived health benefits. Pollen granules are used for treating inflammation, strengthening the immune system, reducing stress, and other ailments.

Soap & Skincare Products

As we learn more about the chemicals in everyday household items, more people are stepping away from these potentially harmful ingredients and going a more natural route. If you’ve created the perfect recipe for homemade soaps, lotions, or other skincare products, set up a display at your local farmers’ market to peddle your natural concoctions.

As more people move to natural products, the farmers’ market in your area gives you the perfect platform for selling your goods. There are lots of opportunities in this space, from creating your own natural (and great smelling!) bug repellent to homemade sugar scrubs and natural deodorants.

One thing to remember is that you can be multi-dimensional at a farmers’ market. For example, if you keep bees, not only can you sell honey and pollen granules, but you can also sell natural beauty products made from pollen, honey, or beeswax.

Beverages

Need some inspiration for what to sell at the farmers’ market? Look no further than the neighborhood kid with a lemonade stand. And the great news is that you aren’t just limited to lemonade, although selling freshly squeezed lemonade to hot shoppers is an easy way to make some extra cash.

If you make your own local wine or mead, brew your own craft beers, or even make a mean cup of hot apple cider, selling beverages can help draw in customers. Your booth or display can serve as a showcase for your homemade brews, or you can sell beverages in addition to other products. Many people that frequent farmers’ markets are looking for products that are unique and can’t be found in the local grocery store, so think outside the box. Flavored lemonades made with freshly squeezed lemons and natural flavorings, kombucha, and other tasty beverages can be sold by the glass, bottle, or jug.

Prepared Foods

Spending a long time at the farmers’ market can leave shoppers feeling famished. Why force hungry customers to drive to restaurants when you can bring the food right to them? If you operate a food truck, consider bringing your tasty fare to the farmers’ market. If you have openings in your schedule, a partnership with a local farmers’ market can fill your weekends with customers and the profits they bring with them.

Arts & Crafts

Whether you’re a professional or just an amateur artist, locally-made arts and crafts are big sellers at farmers’ markets. No matter what type of art you make, a farmers’ market is the perfect platform for selling your creations.

Paintings, drawings, embroidered items, crocheted blankets, hand-painted t-shirts, pottery, wood carvings, sculptures, and homemade greeting cards are just a few of the arts and crafts you can peddle at your local farmers’ market.

Other Unique Goods

Don’t see anything on the list that appeals to you? Then tap into your own unique talents. The great thing about the farmers’ market is that there are relatively few limitations when it comes to what you sell. While you can’t sell anything illegal or dangerous, you can let your creative flag fly and bring something truly unique to the table. What can you offer that is different and unique? Exotic spices, ethnic goods, homemade candles … the list goes on.

One way to be a successful seller is to think about what your customers want or need. For example, if you live in an area known for its tasty barbecue, consider selling your own dry rubs or barbecue sauce. Whatever you decide to sell, make sure that it’s unique to attract the most customers. Homemade, natural products are popular, but items like vintage clothing and shoes may also sell quickly. Whatever you do, just make sure that what you’re selling is allowed by your chosen market.

7 Ways To Prepare For Selling At A Farmers’ Market

Once you’ve decided that you want to sell at your local farmers’ market and you’ve decided what products you’ll be offering, the hard work is over, right? Not exactly. Whether your goal is to sell on occasion to earn some money on the side or you dream of bringing in a steady income by selling your goods to the community, there are some steps you need to take to help boost your chances for success.

Find Farmers’ Markets In Your Area: Once you know what to sell, the next step is to figure out where to sell it. And just like the unique products you’ll find from sellers, not all farmers’ markets are the same. Get a good idea of the culture, people, and products at each farmers’ market by visiting them yourself. Keep your eyes open for markets that have a need for what you’re offering, but don’t forget to find a farmers’ market that’s a good fit for you. For example, if there are no other artists and you’d feel uncomfortable selling your art, keep searching. If you’d like to bring your four-legged friend with you, look for a dog-friendly market. You can also turn to the internet to learn more about the farmers’ market in your city and surrounding areas. Look for official websites and social media profiles that feature pictures, posts, and information about each market. Finally, you should get an idea of the registration process. While this process varies across markets, you need to be aware that vendor registration windows aren’t always open, and you may have to sign up weeks, months, or even longer in advance to secure a spot. You can find this information online or talk to a manager in-person to learn more about signing up as a vendor.
Research Local Ordinances & Health Regulations: Nothing can bring your business to a halt faster than getting shut down by the health department or local authorities. Do your research to learn about local ordinances and health regulations, such as how produce and prepared food must be stored or how baked goods are prepared. Laws and regulations vary, so contact your local health department to learn more.
Make A Business Plan: Even if selling at a farmers’ market feels more like a hobby than a business, it never hurts to create a business plan before you get started. This business plan can be used to outline your goals, how you plan to finance your business, and your marketing plan. If you’re panicked at the thought of a business plan that’s an inch thick, don’t — a one-page plan is sufficient for keeping you on track. Don’t know where to get started? Learn how to create your one-page business plan in no time.
Get Startup Capital & Set A Budget: While selling at a farmers’ market can certainly be one of the more inexpensive ways to make money off your homemade goods, there are still some expenses to consider. One of the most common expenses is a booth rental fee. You need to consider other expenses, too — think signage for your booth, tablecloths and other items to spruce up your display, price stickers, and the cost of materials and packaging for samples. It sounds like a little, but these small expenses can add up quickly if you don’t watch out. Determine if you need to get financing before you start selling, set a budget, and stick to it. Want more tips? Check out our guide, How To Start A Side Hustle.
Look Into Business Registration: Depending on local regulations, you may be required to register your business before you take part in a farmers’ market. Some farmers’ markets require you to provide an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN) when you register as a vendor. If an EIN is required, it’s easy to obtain one for free from the Internal Revenue Service. Contact the farmers’ market you’re interested in to learn more about the requirements for sellers.
Research Business Insurance: Some farmers’ markets require their vendors to have their own business insurance. Even if this isn’t a requirement, though, you still want to research your options to protect yourself from liability. If you’re unsure of how to get started, check out our article on general liability insurance for your business and contact your chosen farmers’ market to determine if insurance is a requirement. They may even be able to recommend local insurance companies that other vendors use.
Get Accounting Software: Even if you’re just making a little extra money on the side, do you really need accounting software? Yes, you do, and though it may seem like a pain now, you’ll thank us later. No matter how much you’re bringing in from your sales at a farmers’ market, it’s important to keep track of your finances. The best way to do that? Accounting software. The good news is that there are many options available that are low cost (or even free!) and easy to use, even if you have no prior accounting experience. Tracking your finances will help you see how much money you’re making, as well as where you’re spending it — allowing you to determine where you can make changes to increase your profits. You’ll also be glad that you kept track of finances when it’s time to pay your taxes. If you don’t know where to get started, take a look at some of our top accounting software choices for small businesses.

Should You Accept Credit Card Payments At Your Farmers’ Market Booth?

In a world where paying with plastic is quickly becoming the standard, you might be wondering if you should accept credit cards at your farmers’ market booth. Unfortunately, there isn’t a clear answer, but here’s what you should consider before making your choice.

Mobile point-of-sale (POS) apps make it easier than ever to accept credit cards. With your smartphone or tablet and a card reader provided by your chosen provider, you can accept debit and credit cards with ease without a bunch of heavy equipment and complicated systems. Some credit card readers are even available for no cost, and you could even score extras like stickers that advertise that your booth accepts debit and credit cards. There are lots of POS apps to choose from, so do your research on top choices like Square, SumUp, and PayPal Here.

On the flip side, though, you don’t have to accept credit card payments. Many farmers’ markets are prepared for customers that are paying with plastic, so they allow customers to purchase tokens which can be used to buy products from vendors. At the end of the day, these tokens can be redeemed so the seller gets their earnings. If you’re thinking of going the cash-only route, check out our article, Can You Really Run A Cash-Only Business?

If the farmers’ market you’ll be attending does not offer this service, you definitely want to consider getting a POS app and card reader so that you can serve all customers, regardless of how they’re paying. Mobile POS apps come with additional features that may be beneficial to your business, such as inventory tracking and sales reporting.

Another consideration to keep in mind is whether or not you’ll be taking larger orders or custom orders. If this is the case, you’ll need to have the ability to create invoices for tracking your orders and getting paid by your customers. Let’s say that the holidays are coming up, and you’ve been commissioned to make baked goods for a Christmas party. Before you invest your time and money into fulfilling the order, you can make sure you get paid by sending your customer an invoice that can even be paid online. Some mobile POS systems like Square Invoices allow you to create and send invoices, or you can use your accounting software if that feature is available.

Can You Accept Food Stamp/SNAP Benefits At A Farmers’ Market?

Statistics show that the Supplemental Nutrition Assistance Program (SNAP) helped 40 million Americans each month in 2018. This program — formerly known as food stamps — provides benefits that allow low-income households to afford food. SNAP participants are provided with an Electronic Benefits Transfer (EBT) card, which is used like a debit card at participating retailers. This includes grocery stores, convenience stores, and, yes, even farmers’ markets. This system makes it easy for you to accept EBT without having to jump through hoops.

Most farmers’ markets have a system in place that allows SNAP participants to purchase tokens with their EBT cards. These tokens can then be used to make purchases. Many states even reward SNAP participants for shopping at farmers’ markets with “double-up” programs. These programs match each dollar spent (up to a certain amount), allowing these households to receive more healthy and nutritious food using their benefits.

5 Clever Marketing & Promotion Tips For Your Farmers’ Market Stand

You’ve decided what to sell and where to sell it — now, it’s time to sit back and wait for customers, right? Wrong! While you won’t have to have a huge (and expensive) marketing campaign for your farmers’ market stand, there are some steps you need to take to make your business more appealing to shoppers.

Business Cards: A customer that isn’t interested in what you’re selling now may become a customer in the future, or you might have a customer that wants to spread the word about your business. Make sure that they can get in touch with you by passing out business cards. You can easily create business cards online and have them shipped to your door for a low price. Make sure to include critical contact information, including your name, the name of your business, your email address, social media or website links, and any other relevant information.
Email List: Allow your customers to sign up for an email list. There are lots of options for the emails you send, including new product announcements, upcoming sales, or your schedule if you attend multiple farmers’ markets and events. Mailchimp is one good option that’s free for small businesses.
Social Media: Social media isn’t just for connecting with overseas relatives and old classmates. Social media is a great outlet for advertising your business. Create a social media profile for your business and provide contact information, photos of your products, customer reviews, and important updates. You can also join groups in your area that allow you to interact with customers, take preorders, answer questions about your products, and more.
Dress Up Your Display: You can’t just throw your products on a table and expect them to sell. Sure, you may make a little bit of money, but to maximize profits, it’s time to pimp out your display. For this technique, you’ll have to invest a little bit of money, so make sure you budget and plan before implementation. Use signs, tablecloths, and decorations to make your space stand out. Arrange your products neatly and make sure that everything is labeled and priced correctly. This is your chance to really show off your personality, so take advantage of the opportunity to attract customers.
Offer Free Samples: Nothing in life is free — unless you’re a customer and businesses are giving out free samples. While providing samples of your products does come with some expenses, allowing your customers to try before they buy is a good way to get them interested … and have them reaching for their wallets. Provide small bites of your baked goods or testers for your natural lotions and body products. Before distributing your samples, make sure that you’re aware of all health regulations to keep your business in operations and provide a sanitary shopping experience for your customers.

Are You Ready To Start Selling At Farmers’ Markets?

On the surface, selling at a farmers’ market seems easy, but as you can see, there’s actually quite a bit of work that goes into planning, prepping, and selling your products. While it may take a lot of hard work and expense to sell your products and make a profit, there are many benefits to peddling your goods at farmers’ markets, including low costs, more personalized interaction with your customers, and creative freedom.

It’s up to you to determine if selling at a farmers’ market best fits your business goals. Once you’ve made the decision to move forward, we offer plenty of great resources to help you launch and operate your small business. From learning how to apply for a small business loan to choosing the right accounting software and POS systems, you’ll find everything you need to make your business dreams a reality. Good luck!

The post How To Sell At A Farmersâ Market (Plus 7 Clever Tips To Succeed Before You Even Get Started) appeared first on Merchant Maverick.

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November 19, 2019

Accounting 101: Understanding Small Business Accounting

You’ve done it. You’ve come up with a business idea, you’ve drafted your business plan, and you’ve started estimating costs and seeking funding to get your small business off the ground.

Or maybe you’re further along in the process. You’ve launched your business, and you’re working hard to ensure it’s a success. Good for you!

But wait … are you sure you’ve thought about all the key components of running a profitable business? For example, have you thought about how you’re going to do the accounting for your new business? If your doors are already open, do you have an accounting system in place?

If your answer is no, this article is for you. While it’s important to create a business plan, shop around for vendors and suppliers, and deliver exceptional products or services to customers, few things are more important than accounting for your business. Without good accounting, you’re putting your business at risk of failure by not keeping a close watch on your financials.

As a new business owner, you already have a lot of expenses that can pile up quickly. Adding an accountant to the mix just isn’t feasible for most businesses in their beginning stages. Fortunately, there are options available that make accounting simple … and are easy on the wallet. In this post, we’re going to talk about small business accounting. We’ll start off with the basics, then take a step-by-step look at how to use accounting in your business. We’ll explore accounting software options, the financial statements your business needs, and the tax deductions that can save you money come tax time.

Whether you’re a new business owner or haven’t gotten off the ground yet, whether you know a little about accounting or you’re completely in the dark, you’re in the right place. Welcome to Accounting 101.

What Is Accounting?

Merriam-Webster defines accounting as:

The system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.

In other words, accounting is a process used by business owners and entrepreneurs to keep track of the financial transactions of a business, from purchasing supplies and inventory to the revenue that the business makes. Accounting allows you to analyze the financial health of your business to determine where money is being spent, how money is being made, and how these numbers affect the business.

The Basics Of Accounting

Whether you’ve dabbled in accounting in the past or you’re brand new to it, every business owner should have an understanding of the basics of accounting. These concepts may be very new to you or seem confusing at first. However, take the time to learn them so that you can tackle your company’s finances head-on and reap the benefits of good accounting.

The Accounting Equation

We can’t discuss the fundamentals of accounting without first discussing the accounting equation. Knowing and understanding this principle is essential for double-entry accounting, which we’ll discuss a little later. For now, though, let’s familiarize ourselves with this basic equation.

The accounting equation states that:

Assets

Liabilities

Owner’s Equity

Now, let’s break down each of these terms to ensure that you have a full understanding of the accounting equation.

Assets: Assets are everything that your business owns. This includes the cash in your business bank accounts, commercial real estate, equipment, inventory, and accounts receivable.
Liabilities: Liabilities include everything that your business owes. This includes accounts payable, loans, and other debts.
Owner’s Equity: Owner’s Equity (also known as shareholder’s capital) includes all investments of capital by the owners of the business.

The accounting equation keeps everything in balance. Each side must be balanced. If each side isn’t balanced, there is an error that must be found and corrected.

The Importance Of Double-Entry Accounting

Many businesses use what is known as double-entry accounting. Double-entry accounting simply means that transactions are recorded to two or more accounts. This system of accounting provides more accuracy and helps keep your books balanced. The accounting equation we discussed earlier is the foundation of double-entry accounting.

Double-entry accounting gives you a better view of your business finances. Single-entry accounting only uses income and expenses, whereas liabilities and assets are recorded using double-entry accounting. Not only does double-entry accounting give you a better understanding of the net worth of your business, but it offers additional benefits. Double-entry accounting makes it easier to spot errors and also comes in handy when it’s time to run financial reports.

This is a very basic overview of double-entry accounting. To learn more about how it works and why your business should use double-entry accounting, check out our post, What Is Double-Entry Accounting (And Do You Need It)?

Debits & Credits

In double-entry accounting, transactions are recorded as debits or credits.

You’re probably already familiar with debits and credits if you use a debit card from your bank or a credit card. That said, you’ll need to forget everything you think you know when learning accounting, because these concepts are completely different.

If this sounds like a foreign language to you, don’t worry. Let’s break it down so it’s easier to understand.

Debits: A debit increases assets and expenses and decreases liabilities.
Credits: A credit decreases assets and expenses and increases liabilities.

Total debits must equal total credits or there is an error that needs to be found and corrected.Â Remember, it’s all about balance.

Let’s take a look at an example. Say your business has purchased a piece of equipment at a cost of $15,000. You borrowed the money to purchase the equipment. Because you gained an asset, this is recorded as a debit of $15,000. However, you have to pay back the money you borrowed, which creates a liability. Therefore, you will record a credit of $15,000 under accounts payable (liabilities).

Account	Debits	Credits
Equipment	15,000
Accounts Payable		15,000
Totals Debits = $15,000 Total Credits = $15,000 â

Both sides are equal and balanced.

Debits and credits are not used in single-entry accounting. While it may seem easier to simply skip this and forego double-entry accounting, remember the benefits that we discussed earlier. Using double-entry accounting gives your business a clearer, more complete view of your finances. And before you get too worried, most accounting software handles the double-entry accounting for you behind the scenes, so you won’t have to do everything manually.

Ultimately, understanding these concepts may be difficult, but you’ll find that the benefits of balanced books are well worth the effort.

Journal Entries

An important piece of the accounting pie is the general journal. This is where all business transactions are recorded in order by date. Each journal entry should include four things. Those are:

The date of the transaction
The account(s) and amount(s) credited
The account(s) and amount(s) debited
A memo describing the transaction

When recording a journal entry, debits are recorded in the left column, while credits are recorded in the right column. Each side will be balanced, meaning that the total amount of debits on the left should equal the total credits on the right. Let’s look at a quick example.

You purchase $500 worth of inventory for your business. This inventory was purchased with cash. You have inventory (an asset) in your possession, so $500 is recorded in the left column of the journal since this is a debit. Because you paid with cash, your cash account is decreased by $500. Therefore, a credit in the amount of $500 is posted in the right column.

The Chart Of Accounts

Another key accounting concept to remember is the chart of accounts. A chart of accounts lets you see exactly where your company’s money is going. While it may seem confusing initially, understanding how a chart of accounts is organized helps the numbers make sense.

While we won’t dive too deeply into this concept, you should walk away from this article with a basic understanding of what a chart of accounts is. Typically, a chart of accounts is divided into five sections: assets, liabilities, equity, income, and expenses. These categories are further divided into accounts, such as utilities, advertising, accounts payable, cash, and materials and supplies.

Here’s an example of what a chart of accounts looks like:

Your chart of accounts is important for a number of reasons. In addition to breaking down your expenses, your chart of accounts helps you have a clear picture of where your money is going to and coming from. Your chart of accounts also helps you track inventory and can be extremely beneficial come tax time. If you remember our journal entry example from earlier we spent $500 cash on inventory, you’ll see this reflected in the chart of accounts above where the “cash on hands” account reads -$500.

To learn more about this accounting concept, check out our post, How To Set Up A Chart Of Accounts.

Now, let’s pause, take a breath, and let all of this information sink in. Understanding these concepts and key accounting terms certainly helps you dive into your company’s accounting with more confidence. Rest assured, however, that you don’t have to know everything about accounting to balance your own books. Gone are the old days of paper journals and ledgers and manually writing down every transaction. Today, there are lots of accounting software options available. While you do have to learn how to use your chosen software and may still have to do some tasks manually, accounting software does a lot of the heavy lifting for you, from automatically posting transactions from your business bank accounts to calculating depreciation on assets to sending out recurring invoices.

How To Do Small Business Accounting

With an understanding of basic accounting concepts under your belt, it’s time to put that knowledge into practice. From the first steps you need to take before launching your business to picking the right software for your business to hiring an accountant, we’ll cover it all in this section.

Set Up Your Business Entity

Before you start your business, you must set up your business entity. This determines your legal structure and influences how you file and pay taxes, your personal liability for the debts and liabilities of the business, how you can raise money for your business, and various requirements that your business must meet. Consider the needs of your business and future goals when selecting your legal structure. The main business entities include:

Sole Proprietorships:Â A sole proprietorship is an unincorporated business that is owned and operated by one person. This is the easiest entity to set up and does not require formal registration. Business profits or losses are reported on the owner’s personal income tax return. A sole proprietor is held liable for the debts and obligations of the business.
Partnerships:Â Partnerships are legal structures for businesses with two or more owners. Formal registration is not required to form a partnership, although there should be an agreement between partners. Business profits and losses are passed through to the owners and filed on their personal income tax returns. The owners in a partnership may be responsible for the debts and obligations of the business based upon the type of partnership that has been formed.
Corporations:Â Corporations are the most expensive and complicated of all legal entities. Corporations have regulations that other legal structures don’t have, such as establishing bylaws and holding meetings. Corporations may also be subject to corporate tax rates and may face double taxation. However, there is limited liability on the owners, and corporations also have more opportunities for raising large amounts of capital through the sale of stock.
Limited Liability Company:Â A limited liability company (or LLC) combines the benefits of multiple entities. Owners of LLCs have limited liability, so personal assets aren’t at risk if the business goes under. The owners of the LLC can also determine how business revenue is taxed.

Check out our post, Types of Business Structures: The Complete Guide, to learn more about the different business entities, and consider speaking to an attorney to determine which choice is best for your business.

In addition to setting up your business entity, there are a few other steps you need to take in these early stages. The first is selecting a name for your business. As a sole proprietor, you aren’t required to register your business if you’re using your own name. However, some small business owners opt to file a Doing Business As, or DBA. A DBA is a fictitious name that is registered with the county or state where the business will operate. If you select another legal structure, such as an LLC or corporation, you’ll register your business name when you file other paperwork with state and local authorities.

The next step is obtaining any licenses and permits required to legally operate your business. Your local chamber of commerce or Small Business Administration office can help you find out what your business needs and how to obtain these licenses and permits.

If you plan to hire employees for your business, you will need to obtain an Employer Identification Number (EIN). This is available at no cost by registering with the Internal Revenue Service.

Other steps that you may need to take before opening your business may include purchasing business insurance, hiring employees, buying or leasing commercial space, and advertising your business to bring in customers.

Open A Business Bank Account

When you start your own business, you need a business bank account. This should always be one of the first steps you take before launching your business. However, if you’ve already gotten your business off the ground and don’t have a separate account, it isn’t too late to head to your local branch to open a business account.

There are a few reasons why opening a separate bank account is so important for your business. First of all, it simplifies bookkeeping and filing taxes. You won’t have to pick apart every transaction to determine which ones were personal and which were for business purposes.

Speaking of taxes, keeping a separate business bank account could prove to be extremely helpful in the event that you’re audited by the IRS. Sloppy bookkeeping and jumbled expenses could very easily turn a simple audit into a drawn-out nightmare.

Finally, if you plan to apply for any type of business funding, such as loans or lines of credit, a lender typically only deposits funds into a business bank account. By opening a business bank account, you also establish a relationship with a bank, which could provide you with low-interest funding further down the road.

Choose Your Accounting Method

Now, if accounting didn’t seem confusing enough, we’re about to throw another curveball your way. There are actually two different methods of accounting. Before you get frustrated, though, just know that the two types are very easy to understand and differentiate from each other.

The first (and most common) method is accrual accounting. Accrual accounting recognizes revenue and expenses or sales or bills are incurred, not when the cash switches hands. With this type of accounting, accounts payable and accounts receivable are recorded.

Accounts Payable: Expenses that you owe but haven’t yet paid (think bills).
Accounts Receivable: Revenue that your customers owe but haven’t yet paid (think invoices).

Let’s take a look at an easy example. Let’s say that you’ve received $5,000 in payments from your customers and $1,000 in outstanding invoices. You also have paid bills totaling $500 and $100 in unpaid bills.

Using the accrual method, your total profit for this time period would be $5,400. You would add the revenue you have received ($5,000) plus your accounts receivable ($1,000). Then, you would subtract your expenses ($500) and your accounts payable ($100) because your accounts receivable (unpaid invoices) and accounts payable (unpaid bills) are already recognized as part of your profit/loss.

The benefit of using the accrual accounting method is that it gives you a clear view of your income and expenses.Â On the flip side, though, it doesn’t give you a clear picture of the cash flow of your business. While your books may show that you have earned a bigger profit, you might not have as much available cash because of unpaid invoices.

The other method that you may use for your business is cash basis accounting (or simply cash accounting). Cash basis accounting recognizes revenue and expenses when cash changes hands. This method does not use accounts receivable or accounts payable. Instead, only revenue that has been received and expenses that have been paid are calculated.

Let’s go back to the previous example. Remember, we have $5,000 in revenue, $1,000 that we haven’t yet received, $500 in expenses, and $100 that we owe. Using the cash method, your total profit would be $4,500. You would simply subtract your expenses that have been paid ($500) from the revenue that your business has received ($5,000) because cash basis accounting does not include your accounts receivable (unpaid invoices) or accounts payable (unpaid bills).

The benefit of using the cash basis accounting method is that you can more easily track your cash flow at any time. However, you won’t get the longer-term overview of your revenue and expenses through the accrual method and most accountants do not recommend this form of accounting.

There are some other differences between the two methods of accounting, such as how income is reported for tax purposes, but this is just a basic overview. If you want to learn more to help you decide which method is right for your business, check out our post, Cash VS Accrual Method: Which Is Better For Your Business?

Find The Right Accounting Software

Our modern, tech-filled world makes it easier than ever to operate a business. This includes accounting software that eliminates the tedious tack of paper accounting. While this software doesn’t do all the work for you, it does keep your financial information organized in one spot, automates some tasks, and simplifies the accounting process. In other words, you don’t have to have a degree in accounting to do your own books if you have the right accounting software. If you don’t have the funds to hire a bookkeeper or accountant for your business (and most new businesses don’t), accounting software is a cost-effective way to keep your finances on track.

So, how do you know which software is best for your business? There are a few considerations to keep in mind:

Price:Â Before searching for accounting software, have a budget in mind. What can your business comfortably afford? In some cases, you may not be able to afford anything — and that’s okay! There is free accounting software available. However, free software may come with lots of ads, fewer features, or allow for no more than one user. If you have complex accounting needs, multiple users, or have other specific needs, there are options available at all price points.
Features:Â Consider the needs of your business when choosing accounting software. If you’re running a larger business, for example, or need software specific to your industry, free software with basic features won’t be a good fit. You may want the whole gambit: invoicing, contact management, accounts, payable, time tracking, project management, and more. However, if you run a smaller business, have only a few clients, and don’t need a ton of added features, a basic and easy-to-use program is a good choice.
Online & Offline Options:Â Most business owners and entrepreneurs these days use online accounting solutions. There are many benefits, including no installations required, automatic updates, integration with apps, and access from multiple devices, such as your smartphone. However, there are also desktop-based options that may work for you, such as in locations that don’t have fast and reliable internet connections.
Your Accounting Skills: Before choosing accounting software, keep in mind your accounting skills. If you’re new to the game, look for software designed with the beginner in mind that offers an easy-to-use interface and has great customer service. If you have some experience in accounting, you can certainly dive right into one of the more complex programs.
Add-Ons:Â Some accounting software offers additional add-ons for an extra fee. Payment processing, for example, may be an additional feature that benefits your business. Again, consider the needs of your company and shop around your options for software that best fits these needs.

Not sure where to start? Compare some of the top options available to your business.

Stay On Top Of Bookkeeping

Accounting software certainly simplifies accounting and bookkeeping tasks, but it’s important to remember that it doesn’t do all the work for you. You will still have to keep on top of certain bookkeeping tasks. The specifics of your bookkeeping requirements vary based on the needs of your business, but some common bookkeeping tasks you may have to perform include:

Creating and sending invoices to customers
Reconciling bank statements
Reviewing expenses and income
Reviewing aged receivables
Sending payment reminders or setting up automated reminders
Analyzing and updating inventory
Reviewing and paying invoices to your suppliers and vendors
Scanning receipts
Running and reviewing financial statements

Run Financial Statements

Running and reviewing financial statements is made easier with accounting software. Financial statements not only help you stay on top of your business finances but also help when filing your taxes and may be required if you apply for a loan or other funding.

Let’s discuss some of the most common financial statements you need to run for your business.

Balance Sheet:Â A balance sheet reports assets, liabilities, and equity for a set period of time. This report provides an overview of owner investments, what the company owes, and what the company owns. The balance sheet uses the accounting equation we discussed earlier and is used in conjunction with other reports to analyze the financial health of the business. The balance sheet can also be used to calculate ratios, such as the debt-to-equity ratio.
Profit & Loss Statement:Â A profit and loss statement (also known as P&L or income statement) shows the profit or loss of a business over a specific period of time, such as quarterly or annually. The cost of doing business — including cost of goods sold and operating expenses — are deducted from the revenue (or top line) of the business. The difference between the two is known as the net income, or the bottom line, and shows whether the business had a profit or a loss.
General Ledger:Â The general ledger contains every financial transaction that occurs within a company. Transactions are broken down into accounts, which include assets, liabilities, equity, income, and expenses. The chart of accounts that we discussed earlier is typically the first page of the general ledger.
Statement Of Cash Flows:Â A statement of cash flows (or simply cash flow statement) shows how money comes into and goes out of the business. Cash inflows from operations, financing, and investments are recorded on this statement. Cash outflows are also recorded. This includes investments and expenditures for business activities. A statement of cash flow gives you a view of the financial health of your business, helps you analyze how your money is made and spent, and helps you plan for the future to ensure you have cash available to keep your business in operations.

These are just a few of the financial statements that you can run using accounting software. While these are the major reports that every business should run, the software you select may also offer additional reports that are important for your business like job costing reports, annual budgets, reports of sales by product, and other financial documents.

Don’t Forget Tax Deductions

It’s time to discuss the moment that most small business owners dread: filing and paying taxes. With good accounting, though, filing your taxes (or getting through an IRS audit) won’t be quite so painful.

The rates and requirements for filing taxes are based on the legal structure of your business. For example, a sole proprietor simply files the business income or loss on their personal tax return, while certain corporations may face double taxation wherein tax is paid on the income of the business and on the dividends received by the owners.

While filing your taxes can be scary, especially if your business made a profit, you can ease your tax burden by taking advantage of the tax deductions available to small business owners. This can include:

Furniture & expenses
Employee benefits
Travel expenses
Loan interest
Insurance premiums
Marketing & advertising expenses
Salaries & wages
Vehicle expenses

These aren’t all of the tax deductions available to small business owners. Working with an accountant or tax professional can ensure you take advantage of all the deductions available to your business.

Know When To Hire An Accountant

While it is possible to handle much of your own accounting for your small business, there comes a time when many businesses need to enlist the help of an accountant. There are a number of reasons that business owners choose to hire an accountant. As the business grows, you may become too busy to handle the financial side of things and would prefer to focus on other activities within the business. An accountant is also extremely beneficial to have on board when it’s time to file your taxes. If you plan to acquire or sell a business, an accountant can provide advice and help determine if the transaction is a smart financial move. When you want to expand your business, an accountant can give advice and help you create a business plan.

There are several situations where hiring an accountant is in the best interest of your business. Even though this is an additional expense, it is often a critical move if you want to grow a successful and profitable small business. Learn more about when you should hire an accountant for your business.

The Benefits Of Good Accounting

We’ve established that every small business should have an accounting system in place. But why is it important to have good accounting? At the risk of sounding melodramatic, the success of your business depends on it — quite literally. Here are the benefits of good accounting:

Budgeting & Planning:Â Good accounting can help you set company budgets for your business and plan for upcoming projects.
Financial Health:Â As previously mentioned, having your numbers organized allows you to assess the financial health of your business to determine what you’re doing right … and what needs to be changed.
Track Payments: Without good accounting and bookkeeping, it’s difficult to keep up with customers that haven’t yet paid you for your products or services. By staying on top of your accounting and bookkeeping, you can easily send out invoices, payment reminders, and even collect payments.
Tax Time Benefits:Â Keeping accurate records makes it easier to file your taxes or go through an audit by the IRS.
Funding Opportunities:Â If you seek capital from investors or lenders, having accurate financial statements is critical to securing funding — and some lenders (like Fundbox) even require that you use accounting software to be approved.
Major Purchases:Â If you’re considering a major purchase to grow your business, the numbers can help you determine if it’s the right time to make the purchase, or if it makes more sense financially to hold off on spending the funds.
Cash Flow:Â Good accounting lets you assess the cash flow of your business to determine where you need to make changes to boost profitability.
Revenue Forecasts:Â With the right financial reports, you can more accurately forecast future revenues of your business.
Maximize Business Growth:Â Accounting allows you to track the growth of your business, allowing you to make important decisions and changes to help maximize growth.

The Bottom Line

Every business is different, but one thing should remain constant: good accounting. Whether you’re a sole proprietor running a business from your home office or you visualize running a large international corporation, all business owners and entrepreneurs should make accounting a priority. With so many great software programs and tools at your disposal, it’s easier and more affordable than ever to track your company’s finances. Take a look at the Best Accounting Software For Small Businesses to start your journey on finding the perfect accounting software.

Ready to learn more about accounting? Check out our eBook, The Beginners Guide To Accounting. It’s free to download and is a must-read for any business owner or entrepreneur that’s ready to master the basics of accounting.

The post Accounting 101: Understanding Small Business Accounting appeared first on Merchant Maverick.

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November 14, 2019

Your Step-By-Step Guide To Starting A Successful House Flipping Business

If you’re intrigued by the thought of making money by flipping houses, you aren’t alone. Flip through the TV channels (pun intended), and you’ll see home improvements that lead to a five- or six-figure payday. You may have even received an email promising frozen cocktails on the beach while raking in the dough … all because of house flipping.

What these TV shows and emails don’t tell you is that there is a lot of hard work involved in starting a house flipping business. I know, I know. The idea of a burgeoning bank account without having to do much work is appealing, but it isn’t the reality of the industry. That said, don’t be entirely discouraged — you can build a successful business that centers on flipping houses for a profit. You simply have to be prepared to put in the hard work — just as you would with any other business.

In this guide, we’re going to look at how to start your own house flipping business, step-by-step. While this isn’t a get-rich-quick scheme or even a guarantee of profitability, understanding the industry and what it takes to open and operate your business can increase your chances for success. Whether you’re brand new to house flipping and toying with the idea of becoming an entrepreneur, or you’re ready to hit the ground running, this guide is a must-read before you get started.

Why Start A House Flipping Business?

If you’re reading this, you probably already have at least some idea of what a house flipping business does, but let’s briefly review what this type of business entails. A house flipper buys a property at a low cost. This property could be distressed and in need of repairs, a foreclosure, an older home that needs to be updated, or a house that is located in an up-and-coming neighborhood. Once the home is purchased, it is renovated and resold to another buyer at a higher price.

So, why are people jumping into this industry? One reason that many people choose to flip houses is the potential for profits. If a property is purchased and renovated at a price that’s low enough and resold at a much higher price, you have the potential to pocket thousands of dollars per house. For example, let’s say you purchase a house for $120,000. After putting $20,000 into the house to replace floors, cabinets, counter tops, and make other cosmetic repairs, you are able to resell the house for $150,000. You have only invested $140,000 in the house, so you make $10,000 on this flip. Of course, there are circumstances where a flip doesn’t work out exactly as planned (which we’ll cover a little later), but there is the potential for big profits with a house flipping business.

A house flipping business may also be a great opportunity if you’re somehow already familiar with the industry. Maybe you have experience as a real estate agent or contractor, and you’re familiar with how the business works. You might have even flipped a house or two to make extra cash in the past, but now want to make it a full-time career. If you have experience — whether it’s selling properties or fixing them up — you can put these skills to work for your own house flipping business.

Finally, right now may be the perfect time for you to flip houses. We all remember the housing crisis of 2008, but more than 10 years later, the real estate market is hot again. Housing prices are on the rise, and investors are grabbing up properties to flip. According to Realtor.com, mid-sized cities in the South and Midwest with strong economies, growing populations, and an abundance of older properties in need of rehab are prime markets for flipping. If you live in these areas, house flipping may be the right business opportunity for you.

No matter what your reasoning, you must be prepared to work hard to make your business a success. From finding and securing financing to marketing and reselling your properties, you’ll need to be fully involved every step of the way (at least at first) and be prepared to encounter bumps in the road on your path to building a business.

6 Steps To Starting Your Own House Flipping Business

Whether you’ve already set your mind on flipping houses or you’re still on the fence, it’s important to understand what this business requires to be a success. We’ve outlined six steps to starting your own house flipping business to help you determine if this business is right for you. If so, these tips can help you get you on the right track. Let’s jump right in.

#1 Write Your Business Plan

Every business should have a business plan, and a house flipping business is no exception. A business plan is important for a few reasons. The first is that it acts as a road map for your business. It outlines the purpose of your business, evaluates the industry and your competition, projects profitability, and states the goals of your business.

In addition to outlining your goals and how you’ll achieve them, a business plan is also necessary in most cases to obtain funding. Flipping houses requires capital — capital that you obtain from traditional lenders, investors, or other sources. Your business plan shows that you know what you’re doing, you’re familiar with the industry and your competition, and you have a good chance for success, all of which add up to a lower risk investment for lenders.

There are several ways to write a business plan. A traditional business plan spans several pages and is more complex, containing in-depth analyses of your market and competition, financial projections over the next three to five years, your business strategy, and information about the members of your team. However, more businesses are scaling back on these lengthy documents and opting to create a one-page business plan. A one-page business plan is a condensed version of the traditional plan, offering information such as your objectives, a financial summary, and your industry experience. Learn more about whether a one-page business plan is right for your business.

No matter which plan you choose, there should always be a few things you include about your house flipping business, such as basic timelines, projected budgets, your market, and the types of properties you plan to flip.

#2 Set Up Your Business

Once you’ve written your business plan, it’s time to set up your business. At a minimum, this includes choosing your legal structure, registering your business name, setting up a business bank account, and acquiring any required licenses or permits. Taking these steps allows you to legally operate your business, determines how you pay taxes, and gives you credibility with lenders and investors.

The first step is to choose your legal structure. As a quick summary, a legal structure for a business may take the form of one of the following:

Sole Proprietorship:Â A sole proprietorship is the easiest and cheapest to set up. It does not require registration. Sole proprietors are taxed at the personal tax rate and file business earnings or losses on personal tax returns. This structure does not offer liability protections.
Partnerships:Â A partnership is a structure for a business with two or more owners. Partners are taxed at the personal tax rate and file earnings or losses on personal tax returns. Limited partners have liability protections, whereas general partners do not.
Corporations:Â A corporation is the most expensive to form and has the most requirements, such as annual meetings and a board of directors. Depending on the type of corporation, taxes may have to be filed using the corporate tax rate. Corporations can raise money through the sale of stock. There are also liability protections in place for owners.
Limited Liability Company (LLC): An LLC offers features of several legal structures. There are no requirements, and owners can choose how they are taxed. There are liability protections under an LLC.

This is just a brief summary of each type of legal structure. To learn more and to help determine which is right for you, check out our in-depth guide on choosing your business structure.

Once you’ve determined your legal structure, you’ll need to register your business name with the state in which you’ll operate. Depending on the legal structure you select, additional fees and or paperwork may be required.

Next, you’ll need to find out the types of licenses you need to operate your business. If you’re operating in an office outside of your home, for example, you’ll need a general business license and business insurance. As a house flipper, you’ll also need permits and insurance on each house that you flip, so it’s best to establish a relationship with an insurance agency early in the game. Some house flippers opt to get their real estate license. While this isn’t a requirement for flipping houses, it can certainly help you along the way.

Finally, you’ll need to set up your business bank account. This is necessary for keeping your business and personal finances separate, which especially comes in handy when tax time rolls around. If you seek business funding, this account will also be where your funds are deposited.

#3 Know How To Find & Secure Funding

You’ve taken all the steps of setting up your business and your new bank account. Unfortunately, your new business bank account is probably looking pretty empty … and in most cases, there certainly isn’t enough cash to buy and flip a property. The good news, though, is that this isn’t uncommon for new house flippers — or new business owners in general. It’s rare to find someone with their own cash to start and fund their own business, so that’s why new business owners turn to lenders or investors to get capital they need to start and operate their businesses.

There are a few funding options for flipping houses. The type you select is based on a number of factors, including time in business and your credit history. Not all funding will be right for your business. For example, if you have a low credit score, hard money loans may be an option for you. Hard money lenders base lending on the deal itself — not your personal or business credit or lack thereof — but are usually very short-term and have high fees.

Once you’ve been in business for at least a few months, you may need a flexible funding option to purchase properties, pay for renovations, or cover operating costs. In this situation, you may qualify for a business line of credit. Even if you have a low personal credit score, you may still qualify with lenders that consider the performance of your business over credit history.

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If you own your own home, you could use a home equity loan or home equity line of credit (HELOC) to fund your flips. If you have equity in your home, a low debt-to-income ratio, and a good personal credit score, you could qualify for one of those options, which come with low rates and favorable terms. If you have a retirement account, you could also consider a Rollovers as Business Startups plan (ROBS), which allows you to leverage your retirement funds without penalties.

For unexpected expenses or operational costs, consider applying for a business credit card. You can also get creative by bringing on a business partner or launching a crowdfunding campaign. Whether you’re new to the game, have some experience, or have credit challenges, there are options available to you. You just have to connect with lenders to find them.

No matter what type of funding you seek for your business, there are a few things to keep in mind. First, understand that borrowers with the highest credit scores typically qualify for more options that are also more affordable. So, one of the first things you want to do prior to submitting your application is pull your free credit score, access your credit report, and dispute any errors. You can also take steps to boost your credit score.

Once you apply for funding, make sure that you fully understand the terms, fees, and interest rates associated with your financial product. Don’t be afraid to shop around your options if you aren’t happy with a lender’s offer.

If you do secure funding, make sure to always pay as agreed and meet all conditions put in place by the lender. By doing so, you can not only raise your credit score, but you can also establish lasting relationships with lenders and investors that will serve you well as you build your business.

Unsure of which funding option to choose? Learn more about the best loan products for your house flipping business.

#4 Connect With Contractors & Other Professionals

In addition to lenders, you’ll also need to establish relationships with contractors and other professionals that will help contribute to the success of your business. Even if you plan to get hands-on with the renovation of your properties, you’ll still need a team of contractors to help with the work, particularly when distressed properties are involved. Not only will a contractor complete the work required to flip a house for profit, but a good contractor will know about licenses, permits, and other local requirements. You can also discuss your timelines and budgets with your contractors so you don’t have extended timelines or unnecessary expenses cutting into your profits.

When seeking contractors, don’t be afraid to ask for references or a portfolio. Also, don’t forget to shop around your options to find a reputable contractor that works with your budget. If you’re new to the industry, developing a working relationship with a reputable contractor can even help you score hard money loans from investors.

Another professional that you need on your team is a real estate agent. If you opt not to get your real estate license, a realtor has access to resources that will be essential for your business. This includes access to properties on the multiple listing service (MLS), as well as prospective homeowners that could be interested in purchasing your properties. A realtor can also help market and sell your renovated properties.

Someone else to keep on your speed dial is an attorney, and not just any attorney — one that specializes in real estate. There are some legalities of flipping houses that you don’t want to overlook, so it’s wise to have a real estate attorney on your team. An attorney is especially critical during your first flip. Overlooking important legal details, errors in contracts, and other issues could not only derail your deal but could also damage your reputation in the industry.

Over time, there may be additional professionals you’d like to have in your corner, such as an accountant and investors. For now, though, focus on finding the right contractors, attorneys, and realtors for your house flipping team.

#5 Understand The Importance Of Market Research

Knowing your market is key to maximizing profits as a house flipper. Buying the wrong property in the wrong neighborhood could result in a low profit that’s not worth the time invested in the property, or worse, a loss.

Working with a realtor can really help when it comes to knowing your market. Realtors have the inside scoop on the hottest neighborhoods, information on recently sold properties, and other data that can help you find the right homes for flipping. You can also take advantage of the vast amount of information you can find on the internet, where you can do a lot of your market research for free.

With market research, you’ll soon learn where buyers are buying, how much they’re paying, and what they’re looking for. While there are some variances depending on where you live, there are a few markets that are always hot, including neighborhoods with great schools, neighborhoods with homes that are at least 20 years old, areas with low crime rates, and houses that are close to amenities. Once you understand the market, you can begin further narrowing down the areas you wish to target and begin preparing for the next step: buying and flipping a property!

#6 Buy, Renovate, & Sell Your First Property

You’ve set up your business. You’ve connected with a team of reputable professionals. You’ve found and secured funding, or are at least aware of a few potential options. You know your market, you’ve researched recent selling prices, and there are properties on your radar. Now, it’s time to pick a property, buy it for the right price, renovate it, and then flip it for a profit.

This is where your team will really come in handy. For instance, your realtor may have information on properties before they hit the market, giving you an early edge over other flippers and buyers. Your attorney can help with the paperwork and walk you through the steps of purchasing and flipping a house — think, walk-throughs, insurance requirements, and negotiating contracts.

Once you’ve purchased the property, it’s time to start your renovations. Work through your budget and timeline with your contractors, and put the research you did earlier to good use. Look at comparable properties when determining what renovations need to be completed. For example, if recently sold houses in the same neighborhood have updated granite counter tops, add granite counter tops to your “to-do” list. Finally, be prepared for the unexpected. Deadlines may be missed, or there may be additional expenses that weren’t accounted for in the budget. It happens to even the most experienced flippers — the key is learning to roll with the punches.

After the renovations are complete, it’s time to put your house on the market. Your realtor will be a valuable asset by listing the property and helping you market it to buyers. Then, once a buyer is interested, work with your attorney to make sure all of the i’s are dotted and t’s are crossed. Once the property is sold, any amount that exceeds what you’ve put into the house is pure profit.

Final Thoughts

Let’s make one thing clear: flipping houses isn’t easy, no matter how simple it looks on TV. But if you’re ready to put in the work, you’ll find that house flipping is extremely rewarding. As you flip your first few houses and begin to find your groove, you’ll find that the process gets easier, just as it does with any other business.

You don’t have to go at it completely alone, though. We have a load of great small business resources right here, so check them out and get ready to build your business. Good luck!

The post Your Step-By-Step Guide To Starting A Successful House Flipping Business appeared first on Merchant Maverick.

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August 21, 2019

The Best Side Hustle Ideas You Can Start On Your Own

Has the 9-to-5 world of gainful employment left you unsatisfied, either emotionally or financially? If so, have you ever given thought to starting a side hustle?

Maybe you have talents you want to monetize but you just haven’t come up with a concrete business idea to properly tap them. Maybe you’ve been longing to start a side business for a while but just haven’t gotten to the planning stage yet. Or maybe you’re just looking to make some extra cash on the side to supplement your income. Whatever your inspiration, if you’re considering launching a side business, it never hurts to be presented with a list of ideas — and that’s what we have for you in this article!

But first, let’s establish a few things.

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Whatâs A Side Hustle, Anyway?

When we refer to “side hustles” and “side jobs”, we’re referring to ways you can make money that don’t involve quitting your day job. After all, if your hustle fails, you don’t want to be left high and dry without the means to support yourself.

However, we’re choosing to focus on side business ideas over other methods of supplementing your income. For one thing, our focus here at Merchant Maverick is on the needs of small businesses. For another thing, many of these alternate means of support leave a lot to be desired.

A Side Hustle Doesnât Have To Mean Entering The Gig Economy

When you start a side business, you’re building something that potentially can bring you life-changing revenue in the future and open up new professional opportunities. However, the typical gig economy job cannot offer this.

Gig marketplaces often end up paying below minimum wage after you factor in the uncompensated expenses involved. For instance, Uber and Lyft drivers are on the hook for car maintenance, gas, and rideshare insurance, all of which combine to limit a driver’s take-home pay. These (and other) gig platforms also take a service fee out of what you earn for each job. The gig economy may provide opportunities for you to make some money on the side, but these opportunities tend not to be very empowering.

Likewise, you may have considered launching a blog or becoming a YouTube personality as a way to make money on the side. There’s nothing wrong with building an internet presence and monetizing it — in fact, I wrote an article a while back about how to monetize a website/blog — but it’s not what we’re focused on with this article. It’s true that with some talent and a lot of persistence, you can build your online presence up to the point where you can monetize it and generate substantial revenue. Don’t expect a lot of success in the immediate future, however.

Side Hustle & Side Job Ideas That Anyone Can Start

Let’s explore some side hustle ideas that can empower you to take your future into your own hands — all without quitting your day job.

Caregiving For The Elderly

As our population skews ever older with time, demand for caregiving services is only going to increase. If you have an affinity for the elderly and a generous heart, you could try setting up a side business caring for seniors. Of course, it helps if you have some experience in this field, as you’ll need plenty of credentials to get started — licenses, training certificates, first aid/CPR training, etc.

You’ll also need to undergo a background check and have some quality referrals. For more information, here is a list of caregiver training requirements by state.

Babysitting & Child Care

As parents work longer and longer hours to cover the cost of raising children, demand for childcare services is higher than ever. With this in mind, you might want to try opening a daycare center, either from your home or from a dedicated daycare facility.

As daycare regulations are state-specific, you’ll need to check with the relevant agency in your state to determine what training and credentials you’ll need to run a daycare facility. You’ll likely need CPR and child-specific first aid training. If you’re operating a daycare somewhere other than your home, you’ll need liability insurance, and you’ll likely need to be licensed by the Department of Health and Human Services.

If you’re running a daycare center from your home, you won’t need liability insurance to get your license, but you should consider getting some type of small business insurance anyway.

Pet Services

We are a pet-loving people. However, we also tend to spend a lot of time at the office, which means there is plenty of demand for services that care for our pets in our absence. Why not start a pet-related side hustle and cash in on this growing market?

Here’s just a sampling of the pet-related side jobs you could look into:

Pet-sitting/doggy daycare
Pet grooming
Obedience training
Dog walking
Pet photography
Dog pooper-scooper service
Pet toys/clothing
Pet treats

Licensing and certification requirements obviously aren’t going to be as stringent as they are if you’re in the business of caring for people. However, having the proper credentials for things like obedience training can make your side business more appealing to your target audience — after all, people love their pets!

Don’t be too shy to distribute flyers advertising your services to other pet-related businesses in your area.

Arts & Crafts

Here’s a side hustle you can start with some skill — and without the need to earn certifications or licenses. Sites like Etsy have shown that there exists a massive market for handmade arts and crafts.

If you have a talent for creating arts and crafts, you might have the makings of a side hustle. The most important aspect of setting up such a business is determining where you should sell your works to best target your market. Does the demographic you’re targeting attend community events and craft fairs? Or would you be better served offering your products on Etsy (or even your own online storefront)? Once you sort this out and you’ve generated a decent amount of works, you can make some money doing what you love.

Direct Sales

Did you ever get taken to a Tupperware party or an Avon party as a kid and think “hey, I could sell this stuff”? If so, you could try your hand at being a direct sales representative. If you’ve got a little salesperson in you and you want to avail yourself of some free products, it’s not a bad side hustle idea. No licensing or certification required!

It’s true that there are plenty of shady multilevel marketing (MLM) companies operating in this space. However, companies like Usborne, Scentsy, and Pure Romance are relatively reputable. But remember: becoming a direct sales representative is a good way to earn some extra money on the side, but it’s not likely to grow into something that can replace your day job.

Offer Your Freelance Services

Let’s say you want to make some money using the skills you’ve developed at your day job. Or perhaps you’ve got some latent skills just waiting to be monetized. Why not try freelancing in your spare time?

Whether your specialty is writing, graphic design, bookkeeping, tutoring, or hairstyling, there will always be a demand for freelancers. You can freelance independently, though you’ll need some solid professional connections. Alternately, you can join a freelance platform in which individuals and organizations can search for freelance workers based on their skills and experience. Just be aware that these platforms can take significant cuts of what you earn at the end of the day. Research the platform beforehand so you know what to expect in this regard.

Furniture Restoration & Flipping

Here’s an idea out of left field. Did you know you can make money finding cheap/old pieces of furniture (garage sales and Craigslist are good sources for that), restoring them, and selling them for a profit?

With a little experience and some good paints and sealers, you, too, can turn discarded pieces of furniture into items people will gladly pay for. Just make sure the furniture you’re refurbishing is structurally sound and is made of actual wood. When furniture has a quality skeleton, it’s ripe for flipping.

You can sell your restored furniture on your own — perhaps from a Facebook Business page. You can also sell at flea markets or even work on consignment.

What Do You Need To Start A Side Business?

I laid out the steps you should take when developing your side hustle idea in How To Start A Side Hustle: A 7-Step Guide, but here are some essential points:

Get some honest feedback regarding your side business idea from somebody with experience in the field in question before going through with it
Plan out how you’d like to promote your side hustle
Determine what training, certifications, and insurance — if any — will be required in the pursuit of your side business
Determine how much money you’ll need to invest upfront (and make sure that investment won’t put you in the poor house)
Don’t be discouraged if you don’t find immediate success

Software For Your Side Hustle

If you’re going to run a successful side hustle in today’s world, you’re almost certainly going to need business software. You’ll want to create a website to promote your services (and to offer ecommerce if that’s the nature of your side hustle), accounting software, and possibly email marketing software.

When preparing to run your side business, consider the following programs, each of which Merchant Maverick has tested and reviewed for business suitability. (Business software happens to be our specialty)

Wave: Cloud-based software for accounting, expenses, and invoices â the base software is free, while the payroll, payment processing, and bookkeeping components are paid services
QuickBooks Online: Cloud-based accounting software with payroll, payment processing, workerâs compensation insurance, and a custom invoice template
QuickBooks Self-Employed: Cloud-based tax software for freelancers
Square: App-based software with invoice, mobile POS, inventory, and website creation features
Weebly: Easy-to-use website builder with ecommerce support â works seamlessly with Square
Canva: Cloud-based design software â easier to use than Adobe products; doesnât require much design knowledge
MailChimp: Cloud-based email marketing software

How To Finance Your Side Hustle

Business credit cards are probably the most common means of financing a side business. You can also try obtaining a loan, though you should be wary of taking on too much debt at this stage. You don’t want your side hustle to end up causing lasting damage to your personal finances.

Here are some links to help you in your quest for financing!

The Best Business Credit Cards Of 2019
20 Tips To Improve Your Business Loan Application
How Much Money Do You Need To Start A Business?
How To Start A Pet-Sitting Business
How To Start And Fund An Online Boutique

Is It Time To Get Your Own Side Hustle?

Whether for personal fulfillment or just to earn some additional revenue, more people are attempting side hustles than ever. We put together this article to show you that side hustle opportunities extend far beyond the exploitative “gig economy”.

When done right, a side hustle can not only supplement your income, it can also develop into a bona fide self-sustaining business that can eventually replace your day job.

Now go out there and do the hustle!

Square is a great way to accept credit cards for a side hustle

Reader	eCommerce	Retail	Food Service

Free App & Reader	Square eCommerce	Square for Retail	Square for Restaurants
Get Started	Get Started	Get Started	Get Started
Free, general-purpose POS software and reader for iOS and Android	Easy integration with popular platforms plus API for customization	Specialized software for more complex retail stores	Specialized software for full-service restaurants
$0/month	$0/month	$60/month	$60/month
Always Free	Always Free	Free Trial	Free Trial

The post The Best Side Hustle Ideas You Can Start On Your Own appeared first on Merchant Maverick.

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July 18, 2019

How Much Money Do You Need To Start A Business?

Startup capital is a necessity for virtually all businesses. However, the cost to start a business varies widely depending on what kind of business you are starting. For example, a home-based endeavor such as a dropshipping company or an Amazon business can cost less than $1,000 to get off the ground; the same goes for a business that doesn’t require an office or much equipment, such as a pet sitting business. On the other hand, opening a business that requires more equipment and office space—such as an autobody shop or a coffee shop—could cost $100,000 or more.

In this post, I’ll go over the main costs associated with starting a business and what you can expect to pay for each of them.

Surprisingly, there aren’t too many official statistics available on how much it costs to start a business, probably because the costs vary so much. There was a study conducted by the Ewing Marion Kauffman Foundation way back in 2009 that found the average cost to start a business at that time was $30,000.

Below, we’ve put together our own startup business cost figures, but keep in mind that the amount you’ll spend will vary greatly depending on various factors, such as your industry and location.

Common Small Business Expenses

Startup Expense	Estimated Cost
Business Licenses & Permits	$200
Business Insurance	$1,000 (annually)
Equipment & Supplies	$10,000
Inventory	$1,500
Office Space & Utilities	$5,000 initially, then $2,000 monthly
Employees	$8,000 (monthly)
Marketing	$700 initially, then $200 monthly
Business Software	$200 (monthly)
Professional Services (e.g., legal services)	$600
Misc. Other	$1,000
Total estimated cost: $28,200

Business Licenses & Permits

As a new business owner, you will need to register your business in your state and apply for a local business license/permit in your city or county. Depending on your industry, you may also need to obtain an industry-specific business permit. These initial business registration costs are usually minimal (less than $500).

There are several types of business insurance for startups and which type(s) you need depends on various factors. Insurance is a significant, ongoing business cost. Most businesses will need general liability insurance and business property insurance, and if you have employees, you will also need to pay for workers compensation insurance and health insurance. Commercial vehicle insurance and product liability insurance are some other business types you may or not need.

Equipment & Supplies

All businesses require some sort of equipment or supplies, but these costs vary significantly depending on what type of business you have. Examples of equipment and supplies include:

Restaurant kitchen equipment
Office furniture
Office supplies
Business vehicle(s)
Medical equipment & supplies
Computers
Product manufacturing equipment
Point of sale equipment (cash register, credit card reader, etc.)

The type of equipment and other materials you need to run your business really depends on your industry—for example, if you’re starting a wedding planner business, you’ll probably just need a computer and office supplies, whereas a trucking company will need commercial vehicles, etc.

Office Space & Utilities

If you need to rent or buy an office space, this will be a significant ongoing expense, and a big startup cost too, as you will need to pay a security deposit, first and last month’s rent, etc. Internet, gas and electricity, a business phone, and data plans will also factor into the infrastructure costs of your office space. Most businesses start out as home-based or rent a business space initially, instead of purchasing or building property.

Inventory

If you sell a physical product, you need a certain amount of inventory to start out with (and have on-hand on an ongoing basis). Retail stores need a certain number of finished products on hand, while food-based businesses such as food trucks, for example, need to stock up on raw ingredients before they can open up shop. This, of course, does not apply to information-based businesses, such as consulting businesses or various other service-based businesses.

Employees

You may or may not start your business with any employees. If you do have employees, you need to factor in payroll costs, payroll taxes, insurance costs (workers comp. and health insurance), and training costs.

Marketing

Modern business marketing includes not only business cards, advertisements, signage, etc., but also digital marketing costs such as SEO, social media marketing, and website maintenance costs. As far as your digital marketing, at the very least you will need a website and social media presence. Tip: Be sure you register your domain early on in the process of starting your business, as your website will be the foundation of your online marketing.

Business Software

Some different types of business software you might need to launch and run your business include:

Accounting software
Booking software
POS softwareÂ
eCommerce/shopping cart software
Invoicing software
Inventory software
ERP software
Website builder software
Project management software
Shipping software
Email marketing software
Industry-specific business software (for example, specialized software for dentists, auto mechanics, etc.)

Some small business software programs combine multiple functions. For example, a restaurant management software system might include POS functionality as well as accounting, inventory, employee management, and maybe even email marketing functions. An accounting program like QuickBooks combines accounting, payroll, and invoicing functions, with POS functionality as an add-on.

Generally, most business software apps are no longer large programs that you install onto a computer as a one-time expense; rather, today’s business software is usually app/cloud-based, meaning you can sign in from any internet-connected device. And rather than paying for the software as a large, one-time expense, today’s software-as-a-service (SaaS) model is based on monthly payments with no down payment or long-term commitment. So, initial investment for business software will likely be much less than you would have paid for a comparable program 15 or 20 years ago. Some business software is even free to use.

In addition to software, don’t forget to factor in the cost of the associated hardware you’ll need to run the software into your equipment costs. For example, most businesses will need point of sale equipment, a laptop or iPad, a wireless router, etc. For very small businesses requiring only a basic app to take payments, it’s possible that the only hardware you might need is your smartphone.

Professional Services

This category can include legal fees, consultancy fees, accountant fees, and fees for any other professional services you use to help launch your business. While some businesses require minimal professional services, most businesses should at least consult a lawyer and/or professional accountant during the startup phase.

Other Costs

You’ll more than likely find out that there are more startup costs than you initially anticipated. Thus, it’s important to have a certain amount of your budget set aside for miscellaneous expenses that will inevitably come up. Some various costs you’ll need to include in your budget may include:

Organizational dues
Travel costs
Shipping fees
Loan interest
Repairs/renovations
Credit card processing fees (once you start making sales)

Of course, you’ll also need to make sure you have enough money to support yourself before your business becomes profitable, so make sure this cost is included as well.

How To Calculate Startup Costs

The SBA has a very useful startup cost worksheet that outlines common business startup costs with sample figures that you can personalize to calculate the true cost of starting your business. Simply enter the estimated cost for each category (rent, utilities, inventory, employees, etc.) and you’ll be able to get a rough estimate of how much money you might need for your initial investment.

It’s also a good idea to make a sales forecast, in which you estimate how much you will sell in the first 6â12 months of opening your business. How long will it take for your business to make a profit? How long ’til you can pay off your startup expenses? With your prospective revenue in mind, you’ll have a better idea of how much you can afford to spend on ongoing expenses such as payroll and inventory.

If the total seems unaffordably high, look for areas you might be able to cut costs. For example, could you operate your business out of your home for the first six months? Could you subcontract workers instead of hiring employees? Could you use dropshipping to deliver goods to customers directly from the manufacturer, instead of buying inventory upfront?

Once you have a good idea of how much startup capital you might need for your first 6â12 months in business, you can decide how you will finance your venture.

What To Do If You Donât Have The Money

Startup funding can be difficult to procure from a traditional bank, especially if you don’t have any significant assets or previous experience owning a business. However, that doesn’t mean you don’t have any options. Online technology has actually made it a lot easier to find small business funding. Here are some options you might try to finance your business.

Online Loan: This category includes both online business loans and online personal loans. Generally, online business loans for startups are limited to short-term, high-interest loans; you won’t qualify for better terms unless you’ve been in business at least two years. Still, it’s definitely worth looking into to see what kind of loans and rates you might qualify for. Some online lenders might even offer access to SBA loans for entrepreneurs, such as SBA microloans. Look at our startup business loan comparison chart to find some startup-friendly loan options.
Business Credit Cards: If you just need a few thousand dollars to get started, a business credit card can be a smart choice. You can use a business credit card to charge startup expenses, and/or to get a cash advance (though make sure you check the terms on the advance because they usually charge high interest). You could also use a personal credit card, though business credit cards typically have more business-specific benefits, such as cash-back for common business expenses. Look at our best small business credit cards comparison to see some of the top business cards’ requirements and perks.
Equipment Financing: If your main startup expense is the equipment you’ll need to run your business — for example, restaurant kitchen equipment, manufacturing equipment, office equipment, etc. — then you can simply finance the equipment itself, in the form of an equipment loan or lease. Similar to automotive financing, equipment financing involves monthly payments (either to lease or own), and does not typically require good credit or any collateral other than the equipment itself. Check out our equipment financing comparison chart to see your best options.
Line Of Credit: A business line of credit is similar to a credit card in the sense that you can have it on hand to pay for expenses, but you only have to repay what you use. Like a business loan, you can get a line of credit from an online lender or a traditional bank. However, startups will have better luck finding a line of credit online; there are several online line of credit providers that only require only 6 or fewer months in business, whereas banks typically will not extend a line of credit to startups. Check out our line of credit comparison page to find some startup-friendly LOC options.

Other startup financing ideas:

Loan from friends/family
Crowdfunding
Seed investors
Business grant
Nonprofit lenders
Personal retirement savings— rollover a retirement account using a ROBS (rollovers as business startups) plan

Our team at Merchant Maverick has also written many informative articles about startup financing that can help you on your journey:

Crowdfunding For Startups: 8 Tips For Launching
Don’t Let Bad Credit Stop You From Getting A Startup Loan
The Best Business Cards For Startups And Entrepreneurs
SBA Loans For Startups
How To Find A Startup Grant
14 Types Of Alternative Financing For Small Businesses
The Best Business Credit Cards For People With Bad Credit

Tax-Deductible Startup Costs

If your total startup costs are $50K or less, you can write off up to $10,000 of startup costs on your taxes in the year that you start the business, including up to $5,000 in business startup costs and another $5,000 in organizational expenses (legal fees, state incorporation fees, etc.). If your startup costs exceed $50,000, the amount of your allowable deduction will be reduced by that dollar amount, and if your startup costs are more than $55,000, you are not eligible for the deduction.

Certain startup expenses are not tax-deductible—for example, the costs to qualify for doing business in your industry, such as real estate licensing costs, are not deductible as a startup expense. Additionally,Â business assets (one-time business expenditures such as vehicles and equipment) are not deductible as startup expenses, but may be deductible in a different category (amortization).

(In case you were wondering, business loan interest is, indeed, tax-deductible.)

Final Thoughts

It may be a cliche, but it is also true that “it takes money to make money.” Startup business costs can range from under $10K to over $100K, depending on a number of factors. It’s okay if you don’t have all the money right now: the important thing is to put together an accurate estimate of how much you will need, what you will spend the money on, and how/when you’ll be able to repay any borrowed monies with your revenue. You can then incorporate this estimate into your business plan and the loan proposal you will use to demonstrate to lenders that you are a good candidate for financing.

With the numerous financing options available to entrepreneurs these days, there is a great chance that if you have a sound business plan and accurate, reasonable startup cost estimate, you will be able to find a lender that can meet your startup financing needs.

The post How Much Money Do You Need To Start A Business? appeared first on Merchant Maverick.

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July 16, 2019

The Small Business Guide To Employment Practice Liability Insurance (EPLI)

In the business world, you want your employees to be happy, healthy, and safe. But all too often workplace situations can grow tenuous and an employee might sue based on inappropriate employment practices (like discrimination or wrongful termination). Employment practices liability insurance (EPLI) covers claims by workers of wrongful acts by employers in the employment process.

Read on to learn how this insurance policy can protect your business.

What Is Employment Practices Liability Insurance?

Liability insurance policies protect your small business when you encounter a lawsuit and claims against your business. Employment practices liability insurance (EPLI) is a policy that specifically helps your company cover claims of workplace discrimination based on age, sex, race; wrongful termination; harassment; or failure to promote. Most insurance policies will also provide assistance with legal and human resource needs, and help you design company policies that mitigate opportunities for workplace harassment and discrimination to occur.

Insurance companies, like Nationwide or Coverwallet, provide their clients with risk management tools — lessons on creating company culture, websites to host HR resources, and free legal advice.

What EPLI Covers

Employment practices liability covers lawsuits and damages that arise from wrongful workplace processes. An employee might sue you for some of the situations listed below, and EPLI will cover the cost to litigate these claims, provide you with legal assistance, and help pay damages. As with all insurance, if it is discovered you broke the law purposefully or set out to treat your employees illegally, your EPLI insurance will not help. Here are the situations an EPLI policy will help you navigate in a legal setting if you are sued for:

Discrimination:Â The law dictates that you cannot discriminate in your hiring practices on the basis on race, sex, ethnicity, age, or sexual orientation and that workplace environments must be safe places for people all races, sexes, ethnicities, ages, and sexual orientations. It is the expectation that you protect your employees from hiring practices or workplace practices that discriminate.
Retaliation:Â Tale as old as time: Someone speaks to HR or the boss about shady behavior of a supervisor or a co-worker, and receives retaliatory measures meant to intimidate.
Wrongful Termination:Â If an employee feels as though he/she was fired unfairly, they might bring a wrongful termination suit. An EPLI expert will help with employee documents and the law, to help you understand your state’s termination policies.
Failure to Promote/Employ:Â If an employee is being held back in a position or not promoted on a timeline that matches his/her peers, then your company might be in violation of labor practices.
Sexual Harassment:Â Sexual harassment is an issue all employees should be trained to understand. Unwanted lewd humor or sexual advances by employees of all levels could end up in a lawsuit.
Harassment:Â Workplace harassment comes in all shapes and sizes, but if you have a bully working on your team, prepare for a harassment lawsuit.
Invasion of Privacy:Â Leaking private information about employees is illegal and insured under this policy.
Negligent Evaluations: Proper paperwork of employees is necessary to show transparency in hiring and firing practices.

What EPLI Doesn’t Cover

An EPLI policy is specific in covering liability related to employment practices. Any other liability claim is excluded from this specific policy. Here are some things an EPLI won’t cover:

Employee Injury Or Accident: If your employee is injured on the job, that injury is covered under worker’s compensation insurance, not professional liability insurance policy.
Property Damage:Â Third-party property damage is covered under a general liability plan or a commercial property plan.
False Advertising:Â A general liability policy would also be enough to cover your business against a false advertising claim.
Bodily Injury To A Client:Â Once again, general liability, also called “slip and fall” insurance, is the coverage needed to protect yourself from a lawsuit if someone is injured on your property.
Data-Breach Protection:Â If you have access to private client information, protecting that information is crucial. Data-breach insurance or cyber insurance are the policies to look for to protect your business from irresponsibility with information.

Who Needs Employment Practices Liability Insurance?

According to Insureon, the average EPLI claim is over $125,000. Human resources and discrimination-related lawsuits often settle for large amounts of money. If you have employees, employment practices liability insurance should be a must for your risk management plan.

Large corporations and larger businesses have the luxury of coverage and a legal department to deal with potential lawsuits resulting from employee practices. However, a small business without a hefty legal department needs another avenue of protection. If you purchase employment practices liability insurance, you may also receive legal and human resource help to navigate potential lawsuits. All businesses should look into this policy.

How Employment Practices Liability Insurance Works

The first way employment practices liability insurance works is by offering your company resources so you can make sound decisions regarding your company’s employee practices. Fortunately, you are not entitled to treat your employees however you wish. There are legal consequences for falling short in protecting employee rights. If you are sued, employment practices liability covers the damages and costs to litigate the claim.

Education is the key to eliminating or mitigating issues of workplace harassment. Your insurance company will help in the event that you are sued, but their first action is to try to prevent lawsuits. Most EPLI plans include work with lawyers and human resources experts to help you build a business on solid legal footing.

The second way the policy works is by covering you in the event of a lawsuit. There are many scenarios that would fall under an employment practices liability claim. If a woman is terminated because her boss learns she is pregnant, that employee would sue for wrongful termination. Issues of sexual harassment and discrimination based on race, age, sex, or sexual orientation would also fall under employment practices liability. At that point, the policy will help with a legal defense and claims.

Additional Types of Liability Insurance

There are many different types of liability insurance options for your company. Each policy is designed to cover a specific area of need for your business. Here are the main liability insurance policies available:

Insurance Type	What It Does	Who It’s For
General Liability	Often called “slip and fall” insurance, this insurance protects your business from the threat of a lawsuit.	All businesses
Directors & Officers Liability	This insurance protects the company and its directors from frivolous lawsuits.	A business with figureheads that could attract legal attention
Cyber Risk	Protects your business from the costs of a data breach or hacking or other cyber crimes.	Businesses that gather information about clients and store it online
Commercial Property	Protects your buildings and things inside your buildings from damage and accidents.	Businsses with a physical property site and products located in those physical locations
Product Liability	Protects a business from a lawsuit related specifically to the product it sells.	Any business that manufactures, sells, or distributes a product
Worker’s Compensation	Pays your workers salary and medical bills in the event of an on-the-job accident or injury.	All businesses with one or more employees
Business Interruption InsuranceÂ	If your business has to stop because of property damage, this will cover the cost of moving your business to a new location.	Businesses that need a specific location to keep open

Talk with an insurance expert to see which policies are right for your business.

How Much Does Employment Practices Liability Insurance Cost?

Employment practices liability insurance isn’t cheap. While a general liability policy can cost you roughly a dollar a day to protect your business, most lawsuits involving employee practices are extremely costly with substantial payout of damages. Without insurance, a business is unlikely to recover.

Depending on your insurance provider, you may be able to include employee practices liability as an endorsement to your business owner’s policy (BOP). However, the price of your policy will come down to the following factors:

How many people you employ
Any prior lawsuits brought against your company
Percentage of employee turnover
What kind of standards and procedures you have in place at your company

The average for small business can run anywhere between $300-$5,000 annually depending on risk and company size. Contact an insurance expert for more information.

Final Thoughts

The process for finding a great policy boils down to research. Knowing the averages for your industry and comparing competing rates will help you make the best decision for your business. Start with an idea of the risks your business might face and then come equipped to your first meeting with an insurance company with the knowledge of what type of coverage you need. Because EPLI policies are technical and deal with many legal matters, don’t settle for the cheapest policy without doing research. Check insurers ratings and see if they provide extra help (legal advice, HR compliance advice).

When you meet with an insurance expert, discuss whether it is cost effective to bundle your business insurance policies with a business owner’s plan. If not, go shopping for the best policy! Many sites like Coverwallet, Coverhound, and Insureon will comparison shop for you and walk you through the steps required to make an insurance purchase.

But as always, protecting your company from these lawsuits starts with educating employees and supervisors about their rights. Train your staff regularly and insist upon maintaining ethical standards.

The post The Small Business Guide To Employment Practice Liability Insurance (EPLI) appeared first on Merchant Maverick.

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July 16, 2019

What Is Third-Party Liability Insurance And Do You Need It?

When you first start dreaming about your small business, it’s fun to think about grand openings, happy customers, and meeting your financial goals. However, before doors open or those first paychecks go out, it’s important to address some of the less-fun parts of your business, like risk management.

One of the most basic types of business insurance you can purchase to protect your business is third-party liability insurance. Read more to find out if third-party liability insurance is the right fit for your needs.

What Is Third-Party Liability Insurance?

A third-party is a person unrelated to your business. So, third-party liability insurance protects your business from lawsuits, claims, and damages when a third-party is injured at your place of business. A third-party liability plan might be included in a business owners plan (BOP) which bundles general liability, commercial property, and sometimes business interruption service.

According to the government, up to 53% of small businesses experience a lawsuit. If a third-party — customer, visitor, contractor — injures him/herself at your business, this is the insurance coverage you’ll need to avoid devastating financial claims against your company. Liability insurance is sometimes referred to as “slip and fall” insurance because slips and falls are the most common third-party liability claim. If your business is held liable for damage and medical bills, this policy protects against the financial damage of litigation.

Third-party liability insurance is an add-on to your general liability, commercial property, or commercial auto plan. Ask about third-party liability coverage when you meet with an insurance professional to discuss your needs.

What Third-Party Liability Insurance Covers

Third-party liability insurance is a specific policy that covers third-party injuries, and damages and claims relating to a third-party injury.

Bodily Injury To Someone Or Property Damage Because Of Your Business/Employees: If a customer slips and falls on a spilled margarita or your contractor breaks a client’s toilet while working at their home, this insurance will cover the medical bills for your customer, legal costs to defend yourself in a lawsuit, and repairs.

What Third-Party Liability Insurance Doesn’t Cover

Third-party liability is a special add-on bundled into a business owners policy, commercial property plan, or a commercial auto plan. However, there is a lot that a third-party plan doesn’t cover. Here are some of the things that should be covered through other insurance policies:

Negligence:Â If it’s proven that accidents happened because of your own negligence, it is quite possible the insurance company will not pay the claim.
Fire/Flood/Property Damage Sustained From A Natural Disaster:Â Some natural disasters are covered under commercial property insurance. (Flood and earthquake are often extra endorsements.)
Protection From Giving Bad Advice:Â If having clients and giving advice is part of your business model, this insurance protects you from a lawsuit that’s a result of your bad advice. Honestly, why doesn’t this insurance exist for everyday life? I don’t know.
The Loss Of Income If You Need To Close Your Doors:Â Business interruption insurance will help with lost income and the cost of relocation if a disaster causes you to shut down your business (or if a leader property suffers damage).
Vandalism:Â Damage to your building as a result of vandalism is covered under your commercial property insurance.
Employee Injuries:Â While general liability will protect clients and customers, it’s not there to protect workers from the financial burden of an injury on the job. Any business with a single employee (state laws apply) needs worker’s compensation insurance to cover employee injuries.
Car Accidents:Â If you use your car for business or if you have a fleet of vehicles you use, you will need commercial auto insurance.

Who Is Considered A Third-Party?

A third-party is a person unrelated to your business. Every day, there are customers, contractors, and non-employees who might interact with your business. Essentially, a third-party is a legal term that represents someone affected by a company’s actions but not directly related to the company itself. Any insurance issues that involve members of your staff would not be covered a third-party liability policy.

How Third-Party Liability Insurance Policies Work

Let’s say someone slips and falls on your property and sues you. The third-party liability policy will pay for medical and legal bills. Your insurance company will provide lawyers and assistance to guide you through the process.

Assuming you’ve insured your small business for one million dollars of third-party liability coverage, and the medical bills and the legal defense (including judgments and settlements) is more than one million dollars, you would only owe any balance over your policy limit. If it was one million, three-hundred dollars, you’d only owe the three-hundred dollars. (This would be after your deductible is paid — you will set your deductible limit with your insurance expert.)

If something happens that you think might lead to a lawsuit, it’s never a bad idea to call your insurance company immediately and make a record of the incident right away — including the date, time, and names of any witnesses.

Which Insurance Policies Include Third-Party Liability Insurance?

Every insurance provider is different and the various bundles will vary. However, you may typically find a third-party liability endorsement as an addition to a commercial auto policy, a business owner’s policy, a general liability policy, or, sometimes, under your renters/homeowners insurance policy.

How To Buy Third-Party Liability Insurance

When you are ready to make a purchase, there are quite a few places to secure a general liability policy for your business. If you already have an insurance policy through a carrier, check with a broker or insurance agent there to see about bundling a third-party liability policy into your plan.

But with thousands and thousands of insurance carriers, how do you know which one will work well for you?

Most insurance companies carry a basic form of commercial general liability insurance with third-party liability. You can use a website like Coverhound, Coverwallet, or Insureon to enter your business information and receive comparison quotes.

Additional Types of Liability Insurance

Insurance Type	What It Does	Who It’s For
General Liability	Often called “slip and fall” insurance, this insurance protects your business from the threat of a lawsuit.	All businesses
Directors & Officers Liability	This insurance protects the company and its directors from frivolous lawsuits.	A business with figureheads that could attract legal attention
Cyber Risk	Protects your business from the costs of a data breach or hacking or other cyber crimes.	Businesses that gather information about clients and store it online
Commercial Property	Protects your buildings and things inside your buildings from damage and accidents.	Businsses with a physical property site and products located in those physical locations
Product Liability	Protects a business from a lawsuit related specifically to the product it sells.	Any business that manufactures, sells, or distributes a product
Worker’s Compensation	Pays your workers salary and medical bills in the event of an on-the-job accident or injury.	All businesses with one or more employees
Business Interruption InsuranceÂ	If your business has to stop because of property damage, this will cover the cost of moving your business to a new location.	Businesses that need a specific location to keep open

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Talk with an insurance expert to see which policies are right for your business.

Who Needs Third-Party Liability Insurance?

While only you will be able to decide what insurance packages are the right fit for your business, third-party liability insurance is an important foundation for risk management. If you run a business that has customers, has a storefront, ships goods, or provides services, then adding a liability policy is a must.

We live in a society that is quick to litigate and assumes businesses are covered by insurance when, in fact, many are not. At the bare minimum, consider a general liability policy with a third-party liability endorsement.

How Much Does Third-Party Liability Cost?

As with all insurance policies, the cost will be determined by the type of business you run and the amount of coverage you think you’ll need. However, since third-party liability is the most basic and foundational form of insurance, it is not terribly expensive.

According to CoverWallet, the average monthly price for general liability is between $40-100 per month. Some of the things that may affect that monthly premium are:

Your specific risks
How much liability insurance you need
What type of business you run
The size of your business
How many employees you have
The location of your business

Final Thoughts

According to the Insurance Journal, in 2015 the average cost of a “slip and fall” lawsuit was around $20,000. If you don’t have that sort of money lying around to pay for medical and legal fees, then a policy for as little as $400 a year is not just a needed business expense, it is imperative. Third-party liability, which protects others from your mistakes, is a crucial part of your risk management plan.

The insurance industry might be in the business of worst-case-scenarios, but a liability insurance policy doesn’t have to set you back significantly and the protection it provides is priceless. This is especially true if you live in a state that is known to favor plaintiffs over small businesses in a court of law. Do your homework, research the best policy for your business and industry, and get covered today!

The post What Is Third-Party Liability Insurance And Do You Need It? appeared first on Merchant Maverick.

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July 13, 2019

The Complete Guide To Bobtail Insurance

If you run a commercial trucking business, there are many things to organize before you can actually get on the road. When your trucks are out on the Interstate with a trailer hauling goods, it’s a given that you’ll have specific insurance policies to cover accidents and mistakes. However, when your truck is driving around without its trailer, a practice otherwise known as bobtailing, you may not be covered for accidents that occur. Fortunately, there’s an insurance policy for that! Since driving around without a trailer is a specific risk, if you ever find yourself behind the wheel of a truck without a trailer, bobtail liability insurance is for you.

Read on to learn everything you need to know about bobtail insurance.

What Is Bobtail Liability Insurance?

Bobtail liability insurance covers damage to a truck when it’s driving without a trailer. It is essentially gap insurance, a policy that fulfills a gap in coverage. Once a trucker is done unloading a haul and is bobtailing their way home, the trucking insurance provided by an employer may not cover accidents. This inexpensive add-on is an extra layer of security that provides truckers with insurance on the way home, between runs, or during off-hours.

What Bobtail Liability Insurance Covers

Liability insurance is the most basic form of insurance available. If you are at fault for an accident, liability insurance will cover the costs to fix vehicles or pay for medical bills. It’s important to understand that a bobtail liability plan would only cover your vehicle when your truck is without a trailer and driving home or between jobs.Â Here are the details of what bobtail insurance covers:

Bodily Injury Coverage:Â If your truck injures someone, this policy will cover medical treatment and assistance.
Third-Party Property Damage Coverage:Â If your trailer-less truck causes damage to a third-party, your policy will cover damage or replacement costs.
Legal Costs & Attorney Fees: Need to defend yourself in a lawsuit? Liability covers the legal costs associated with a lawsuit brought to you regarding third-party bodily injury and third-party property damage.

What Bobtail Liability Insurance Doesn’t Cover

First and foremost, bobtail liability insurance doesn’t cover any accidents or damage that occur while your truck still has a trailer. Since bobtail insurance is specific for trailer-less vehicles on the road, this policy won’t help you in other scenarios. It is gap insurance to protect you during a sliver of time when other policies don’t offer coverage. Here are some of the things your bobtail insurance won’t cover:

Driver Injuries: Injuries to an employee are covered under worker’s compensation insurance or under your own trucking insurance.
Damage To Your Property:Â While damage to other people’s property is covered, you will need a commercial trucking policy to file a claim for assistance repairing your own damage after an accident or incident.
Fire/Flood/Property Damage Sustained From A Natural Disaster:Â Some natural disasters are covered under commercial property insurance; however, flood and earthquake are often extra endorsements, so be sure to check the specifics of your policy.
The Loss Of Income If You Can’t Use Your Truck: Business interruption insurance will help with lost income and the cost of relocation if a disaster or accident causes you to shut down your business (or if a leader property suffers damage) and you lose money.

Who Needs Bobtail Liability Insurance?

Bobtail liability insurance is designed specifically for drivers working in the commercial trucking industry who drive a truck without a trailer. You might need bobtail liability insurance if:

You drive a truck under someone else’s authority without a trailer
You want to protect yourself from lawsuits or expenses if an accident occurs while bobtailing
Your motor carrier requires you to have a bobtail policy

Bobtail Liability Insurance VS Non-Trucking Liability Insurance

Do you still need bobtail liability insurance if you have non-trucking liability insurance? Yes!

Non-trucking liability is a specific endorsement used to cover a truck when it is being driven for non-business purposes.Â If you ever drive your truck (with or without a trailer) for personal use and are involved in an accident, you would need a non-trucking liability insurance policy to cover damages. When you are bobtailing, this is driving without a trailer, but you are still on the job — coming home from a drop-off, in-between runs, etc.

Unladen liability insurance is a newer policy offered for truckers that combines the coverage of both bobtail liability and non-trucking liability and is offered at insurance companies that specialize in commercial trucking.

Additional Types Of Liability Insurance

For all of the things your bobtail liability insurance doesn’t cover, there are other insurance policies that will help provide you with the coverage you need to fully protect your truck in the event of an accident. So, what options do you have?

Here are the main liability insurance policies available for businesses:

Insurance Type	What It Does	Who It’s For
General Liability	Often called “slip and fall” insurance, this insurance protects your business from the threat of a lawsuit.	All businesses
Directors & Officers Liability	This insurance protects the company and its directors from frivolous lawsuits.	A business with figureheads that could attract legal attention
Cyber Risk	Protects your business from the costs of a data breach or hacking or other cyber crimes.	Businesses that gather information about clients and store it online
Commercial Property	Protects your buildings and things inside your buildings from damage and accidents.	Businsses with a physical property site and products located in those physical locations
Product Liability	Protects a business from a lawsuit related specifically to the product it sells.	Any business that manufactures, sells, or distributes a product
Worker’s Compensation	Pays your workers salary and medical bills in the event of an on-the-job accident or injury.	All businesses with one or more employees
Business Interruption InsuranceÂ	If your business has to stop because of property damage, this will cover the cost of moving your business to a new location.	Businesses that need a specific location to keep open

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Talk with an insurance expert to see which policies are right for your business.

How Much Does Bobtail Liability Insurance Cost?

When you work in commercial trucking, your truck is the key asset in your business. An accident or damage can set you back financially. Insurance is the key to protecting you and your business. Bobtail liability is an endorsement that is added on to a general commercial trucking policy, and because it’s an add-on, it’s an affordable policy. The average going rate for bobtail liability is between $35-$60 per month for one million dollars of coverage. Monthly premiums increase if you need more than one million in coverage.

Where To Find Bobtail Liability Insurance

Due to the specificity of trucking regulations and safety requirements, finding an insurance agent and provider familiar with commercial trucking and bobtail insurance is an important part of your buying process. In general, there are four easy stepsÂ for buying insurance:Â Know what insurance you need, gather your business documents, comparison shop, and purchase!Â

Most major insurance agencies offer commercial truck insurance, but according to the Consumer Advocate, the highest rated commercial trucking agencies (based on coverage options, policy strength, pricing, financial rating, and customer experience) are as follows: Progressive, Esurance, and CoverWallet.

Other Insurance Policies Truckers Need

The commercial trucking industry is an integral part of our economy. Every day on the road, trucks move goods and equipment and encounter risks that could have long ripple-effects across many small businesses. Insurance is the way to protect against all those trucking worst-case-scenarios. Here are some other policies available to truckers:

Primary Liability Truck Insurance

This is needed insurance for anyone who wants to get behind the wheel of a truck with the trailer attached. It protects the people and things that are hurt if your truck causes an accident.

General Liability Truck Insurance

Will pay for the damage done to someone on your property or someone’s property while your truck is present. Also covers lawsuits involving libel, slander, and false advertising.

Physical Damage Coverage

This is the policy you will need to cover the damage done to your own truck and equipment in the event of an accident or a disaster. (This covers the blue book replacement costs.)

Motor Truck Cargo Insurance

If you suffer cargo damage through accident, disaster, or getting stranded in an ice storm or traffic jam, this insurance endorsement will protect your commodities.

Uninsured/Underinsurance Motorists Coverage

If you only have liability insurance and someone without insurance is involved in an accident with you, you may end up being left without a truck or a business if you need to pay those expenses out-of-pocket. The current data says that one in eight drivers on the road is uninsured. (And in some states, I’m looking at you Florida, that rate is over 25%.) This helps you if the person is either uninsured or under-insured for the accident.

Reefer Breakdown CoverageÂ

A refrigerated truck might have its own equipment and mechanisms to worry about. This specific endorsement to a trucking insurance policy would cover the cost of lost cargo, refrigeration breakdown, or damage of product due to a collision. (Sometimes insurance policies have exclusions. The most commonly seen products excluded from coverage are: frozen foods, seafood, tobacco products.)

Final Thoughts

A driver may not think about bobtail insurance as a necessity, but accidents and mistakes can happen at any time, and those in commercial trucking should be prepared. If you ever drive a truck without a trailer and want to protect your vehicle, your job, and yourself, bobtail liability insurance is an important and necessary endorsement.

The post The Complete Guide To Bobtail Insurance appeared first on Merchant Maverick.

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July 11, 2019

The Complete Guide To Restaurant Insurance

If you are opening a restaurant, the list of things to accomplish before you open your doors can be lengthy and overwhelming. In addition to planning a menu, finalizing decor, training staff, and lining up your deliveries, you also need to make choices that will protect your restaurant in the event of an accident, injury, lawsuit, or property damage. Setting aside some time to learn about business insurance, specifically insurance needed for restaurants, could save you from costly mistakes and lawsuits.

Read on to learn what business insurance is essential for your restaurant.

Why Restaurants Need Insurance

Every business needs insurance, but restaurants have more than their fair share of opportunities for mistakes, injuries, and business-ending accidents. (Personal anecdote: as a former restaurant manager, I drove employees to the ER multiple times for cooking-line related accidents. Also, one time a man was so angry we ran out of ribs that he threw a pitcher of water on me. I’m not sure business insurance would’ve improved matters in that story, but it felt important to share. Restaurants are wacky places.)

If a customer slips and falls, or is served an allergen, or the kitchen catches fire, you need insurance to give you peace of mind and to protect your restaurant against bankruptcy. At minimum, you need insurance to cover your building, potential lawsuits, employee injuries, and any other routine incidents that take place inside a restaurant. And while it’s impossible to create a list of all the potential what-ifs, it’s important to ponder your business and any potential risks so you can explore your explore insurance options and discover the right fit.

6 Types Of Insurance Restaurants Might Need

The bottom line for all insurance decisions is that your own restaurant is unique and needs a unique package of policies. Some insurance policies are more case-by-case. For example, restaurants that cater and rely on deliveries would want to consider adding a commercial auto package to their insurance bundle. However, the following six insurance types should be considered essential for any restaurant.

GeneralÂ Liability

General liability insurance covers your business if you are at fault in an accident or mistake and someone sues you. This pays for legal representation, judgment pay-outs, or medical bills if someone is injured on your premises. Sometimes called “slip and fall” insurance, this is a must-have for all restaurants.

Commercial PropertyÂ

If you need protection from fire, vandalism, theft, or other natural disasters, commercial property insurance that will cover these risks. Did strong winds push a tree into your building? Has your store becomes a target for some fun spray paint? Commercial property is the insurance needed to handle those claims.

Worker’s Compensation InsuranceÂ

While general liability protects your customers and provides medical help if they are injured at your restaurant, it doesn’t cover your own employees. You’ll need worker’s compensation insurance for that. Each state has different workers comp policies, so be sure to check your state’s laws and regulations. If an employee is injured at work, this insurance provides medical assistance and income assistance if he/she is unable to return to work.

Business Interruption Insurance

If your business has to close because of a disaster or accident, business interruption insurance will cover your lost income or the costs of temporary relocation. This policy could even protect you if a property leader suffers damage or foot traffic is limited to your establishment.

Liquor Liability Insurance

If someone consumes alcohol at your restaurant and then leaves and causes damage, you may be held liable for that damage. All restaurants that serve alcohol need to invest in liquor liability insurance.

Product Liability InsuranceÂ

General liability insurance will cover some, but not all, lawsuits related to product liability. In this case, your product is your food. However, if your product is risky, extra product liability insurance is a must. Think of it like this: what would happen if a spread of E-coli on lettuce made many people from your restaurant ill? Or salsa with shards of broken glass is served to guests? Without product liability insurance, these incidents could be the end of your restaurant. Luckily insurance protects your business.

When it comes to all six types of restaurant insurance, the process for finding a great policy boils down to research.

Study the averages for your industry and compare competing rates. Start with an idea of the risks your business might face and arrive equipped and ready your first meeting with an insurance broker with knowledge of what you need and why. Don’t be afraid to ask questions and ask if specific scenarios are covered under the policies you are looking to purchase.

How Much Coverage Does Your Restaurant Need?

How much coverage and what type of coverage will all boil down to your individual restaurant. Most experts agree that restaurants would need at least $1,000,000 per incident and $2,000,000 total aggregate amount of general liability coverage.

It’s important to sit down with an insurance expert and talk numbers. All needed policies are restaurant specific.

How Much Does Restaurant Insurance Cost?

When you add up the policies needed to effectively cover a restaurant, the cost isn’t cheap. However, there are so many individual factors it can be hard to predict the overall cost.

According to Insureon, over 53% of small businesses pay between $400-$600 a year for general liability insurance and 21% paid less than $400 a year. Here is what can affect your premium:

Your specific restaurant risks
How much liability insurance you need
The size of your business
How many employees you have
The location of your business
What kind of advertisements you run

A commercial property plan will run restaurants between $1,000-$2,000 annually, and worker’s compensation might settle between $600-$10,000 depending on the safety conditions and number of employees. The ranges are wide, so check with an insurance expert for a more accurate quote.

When you meet with an insurance expert, discuss if it is cost effective to bundle insurance policies. And then go shopping for the best policy! Many sites like Coverwallet, Coverhound, and Insureon will comparison shop for you.

Ways To Save On Restaurant Insurance

Because restaurant insurance may be expensive, you might be looking for ways to cut down on the cost. There are a few ways to make purchasing insurance a bit more manageable.

Choose A Higher Deductible: Your monthly premium decreases if you choose a higher deductible to pay. (For example, if your deductible is $5,000, then you would pay that much out-of-pocket before your insurance takes over.) The higher the deductible, the lower the premium.
Buy A Package Or Bundle Policies Together: Business owner’s policy (BOP) insurance is a policy that combines general liability, commercial property, and sometimes business interruption service into one. The BOP is less expensive than if you purchased those policies individually.
Install A Security System: Just like you can get an auto discount for good behavior (driving safely), business insurance works the same way. To get a discount on your commercial property insurance, update your security system or install outdoor lighting. This goes for worker’s compensation, too; those rates may be lowered by implementing employee safety procedures and training.

Getting Started

Assign some time and brain power to think about risk management. Ask yourself, what types of coverage are right for you and your business?

Once you’ve decided to invest in business insurance for your restaurant, you’ll now need to decide what type of coverage is best suited for your specific business. Make a list of assets you’d like to protect or lawsuit concerns. Managing insurance is just as important as other restaurant concerns such as acquiring loans, planning a menu, or choosing the best point of sale system. When you’re ready to make the insurance leap, read Merchant Maverick’s article on the steps needed to buy insurance. There are four quick steps to getting yourself secured with the right policy.

Assess your risk and choose which insurance you need.
Gather the necessary business information about your restaurant (square footage, number of employees, type of equipment, etc.)
Comparison shop the costs. (You can use comparison sites like Coverwallet, Coverhound, and Insureon, or contact your local insurance provider to see what commercial plans are available.)
Purchase your insurance!

Good luck as you embark on your restaurant business. Protect yourself from the things you can predict and the things you’d never predict, so you can focus on making your business the best you possibly can.

The post The Complete Guide To Restaurant Insurance appeared first on Merchant Maverick.

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July 8, 2019

What Is Garage Liability Insurance And Do You Need It?

Liability insurance is crucial to protecting your small business from lawsuits and accidents, but not all liability insurance policies are the same. If you run an auto repair shop, auto dealership, gas station, or tow service, you might be in need of a specific type liability insurance plan that helps insure and financially protect vehicles kept and stored on your site: garage liability insurance.

So what is garage liability insurance and do you need it? And, the big question, how much is it going to cost you? Keep on reading to find out.

What Is Garage Liability Insurance?

Garage liability, also called repair shop insurance, is a combination of a general liability insurance plan and a commercial auto policy. The primary coverage type is general liability insurance, which covers third-party bodily injury and damage or theft of machinery or vehicles on your premises. A good garage liability insurance policy with ample coverage will include general liability, commercial auto for garage businesses, and garage keeper’s legal liability. The goal of garage liability is to provide peace of mind and protection for the vehicles in your care. Vehicles may include cars, trucks, bikes and many other kinds of equipment and machinery that are stored on-site.

Your policy coverage will depend on what kind of business you run. If you are simply storing vehicles on-site, your policy will be different from someone who is actively repairing vehicles on-site. Check with an insurance expert to determine the amount of coverage your business needs to be adequately protected.

What Garage Liability Insurance Covers

A basic garage liability insurance policy will include the foundations of both general liability and commercial auto for garage owners. Here is what the policy typically will cover:

Bodily Injury Coverage:Â If a customer slips and falls at your garage, this insurance will cover the medical bills for your customer, legal costs to defend yourself in a lawsuit, and third-party repairs.
Third-Party Property Damage Coverage: If a clientâs car is damaged while it’s being stored in your garage, you will be protected against the cost associated with replacing or repairing the car.
Product Liability: If you install a faulty part as part of a repair and it causes damage property damage, your garage liability protection will cover this scenario.
Legal Costs & Attorney Fees: Need to defend yourself in a lawsuit? Liability covers the legal costs associated with a lawsuit brought to you regarding third-party bodily injury and third-party property damage.

What Garage Liability Insurance Doesn’t Cover

As a foundational piece of insurance, liability is important and necessary. However, while liability insurance covers injuries and third-party property damage, it will not cover all of the scenarios that may befall your business. Here are some specific things garage liability won’t cover:

Employee Injuries:Â Injuries to an employee are covered under worker’s compensation insurance.
Damage To Your Property:Â While damage to other people’s property is covered, you will need commercial property insurance to file a claim for assistance repairing your own damage after an accident or incident.
Negligence:Â If it’s proven that accidents happened because of your own negligence, the insurance company doesn’t have to pay the claim.
Fire/Flood/Property Damage Sustained From A Natural Disaster:Â Some natural disasters are covered under commercial property insurance; however, flood and earthquake are often extra endorsements, so be sure to check the specifics of your policy.
The Loss Of Income If You Need To Close Your Doors:Â Business interruption insurance will help with lost income and the cost of relocation if a disaster or accident causes you to shut down your business (or if a leader property suffers damage) and you lose money.

Types Of Businesses That Need Garage Liability Insurance

This type of insurance was created specifically for businesses in the automotive industry. If your business stores or transports vehicles (auto repair, glass repair, towing company, etc.), garage liability insurance should become your foundational insurance policy.

You can’t prepare for every potential accident and risk, and you benefit from having basic coverage. Frivolous (or not-so-frivolous) lawsuits will happen to the majority of small businesses. If you are still on the fence, you should definitely consider a garage liability plan if:

You have a physical garage that stores vehicles
You work with other people’s vehicles/repairs
You work with clients that might require proof of insurance
You run advertisements
You have a collection of commercial vehicles

This includes auto and repair shops, auto dealerships, gas stations, car washes, towing companies — you name it. Don’t let the name “garage” fool you. If you work with other peoples’ cars at all, garage liability is a must.

How Garage Liability Policies Works

A garage liability policy works specifically for auto repair shops, car detailers, tow truck company, car dealerships, and valet parking. The garage liability policy is for protection against damage to your customers’ vehicles and bodily-injury of your customers while they are on your property.

If a customer slips and falls at your business or injures themselves getting into a car in your garage, their lawsuit or medical bills are covered under your garage liability insurance.

There is a different policy called garagekeepers liability that adds protection for your business operations. A garagekeepers insurance policy also is the insurance you’ll need to be protected against property damage done to vehicles on your property due to company/employee mistakes. (A garage keeper’s policy also adds umbrella coverage to theft of a client’s car or damage done to the vehicle while it’s on the road.)

Additional Types of Liability Insurance

For all of the things your basic garage liability insurance doesn’t cover, there are other insurance policies that can help you fully protect your business. Garage liability is the foundation, but once you’ve started with that policy it’s easy to add others and bundle your policies with other insurance options. So, what options do you have?

Here are the main liability insurance policies available for businesses:

Insurance Type	What It Does	Who It’s For
General Liability	Often called “slip and fall” insurance, this insurance protects your business from the threat of a lawsuit.	All businesses
Directors & Officers Liability	This insurance protects the company and its directors from frivolous lawsuits.	A business with figureheads that could attract legal attention
Cyber Risk	Protects your business from the costs of a data breach or hacking or other cyber crimes.	Businesses that gather information about clients and store it online
Commercial Property	Protects your buildings and things inside your buildings from damage and accidents.	Businsses with a physical property site and products located in those physical locations
Product Liability	Protects a business from a lawsuit related specifically to the product it sells.	Any business that manufactures, sells, or distributes a product
Worker’s Compensation	Pays your workers salary and medical bills in the event of an on-the-job accident or injury.	All businesses with one or more employees
Business Interruption InsuranceÂ	If your business has to stop because of property damage, this will cover the cost of moving your business to a new location.	Businesses that need a specific location to keep open

Talk with an insurance expert to see which policies are right for your business.

How Much Does Garage Liability Insurance Cost?

As with all insurance policies, the cost will largely be determined by the type of business you run. Larger businesses with more places and vehicles to insure will pay more. However, garage liability insurance is not terribly expensive and the cost should be considered part of your company’s risk management plan.

According to CoverWallet, the average monthly price for garage liability is between $30-50 a month. Some of the things that may affect that monthly premium are:

Your specific risks
How much liability insurance you need
What type of business you run
The size of your business
How many employees you have
The location of your business

Other Insurance Policies Garage Businesses Need

Beyond liability policies, what are some other insurance policies that might be a good fit for your garage business? Insurance is about protecting the business you love and cherish — here are a few other options for insurance to provide full coverage.

Garagekeeper Insurance

As mentioned above, there are two types of garage insurance. Garage liability protects third-party claims, but won’t help pay for damage done to your own business or some of the damage done to vehicles left and stored overnight and are the victims of theft/vandalism. A garagekeepers policy protects clients against damage to a customerâs vehicle including fire, theft, weather, and vandalism. However, faulty workmanship or out-of-date warranties are not covered. This should be considered as a mandatory add-on to garage liability.

Final Thoughts

Garage liability insurance is foundational for your auto repair, tow company, or valet service. You want to make sure you are running the best business you can, and that includes having adequate insurance so that if the worst happens, your business can stay up and running.

Finding a great policy is about research. Know the averages for your industry and compare competing rates. Start with an idea of the risks your business might face. Answer the important questions, like how many locations do I have? How many vehicles do I need to insure? Then come equipped to your first meeting with an insurance company with the knowledge of what you need.

Go shopping for the best policy! Many sites like Coverwallet, Coverhound, and Insureon will comparison shop for you and walk you through the steps required to make an insurance purchase.

Your garage business needs protection; you are working with expensive equipment and vehicles, big-ticket items that need coverage. If the costs feel overwhelming, remember there are business loans specifically designed for auto repair shops to help. Don’t make the mistake of under-insuring your business out of optimism or denial. Some policies are as low as a dollar a day, and with insurance, no one’s small business story has to end in financial ruin. Check out our other Merchant Maverick advice for auto shops to learn the latest tips and tricks for running a successful auto shop.

The post What Is Garage Liability Insurance And Do You Need It? appeared first on Merchant Maverick.

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