Retaining Business Records
The length of time you should retain your business records depends largely on their relative importance to your business operations and the risk associated with loosing them. Construction documents, audit reports, year-end financial statements, licenses, trademark registrations, property appraisals, loan documents, in-force insurance policies, etc., should be retained indefinitely. Bank statements, customer invoices, payroll records, payment vouchers, purchase orders, accident reports and claims, etc., should be retained for at least 7 years; OSHA logs for 5 years; and employment applications and petty cash vouchers for 3 years, to mention just a few. (Source: Commerce Clearing House, Inc.)
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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The “Key” to Business Success
Just as many of us may tend to avoid contemplating the loss of those we depend on every day, business owners may often fail to prepare for the death of key employees. Yet, consider for a moment how such a sudden and unexpected event could affect your business. Suppose you lost your most productive sales manager tomorrow. What would you do to replace the revenue stream and customer contacts he or she generated? How long would it take to recruit a replacement, and bring that person up to speed? Would the loss affect company morale? Would other employees become worried and begin seeking new jobs? Term insurance provides an attractive opportunity for small businesses to help protect themselves against the loss of key employees.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Disability & Your Business
If you are like most business owners, your family relies on your income to provide a comfortable lifestyle. A temporary or permanent disability could not only affect the operation of your business, but might also necessitate selling the business to raise revenue for personal living expenses. Just as a buy-sell agreement can be activated by the death of an owner, it can also be triggered by the owner's disability. This provision can be funded by disability buy-out insurance.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Continuity: The Disability Buy-Out
Like most business owners, you probably have life insurance to protect your family against the financial impact of your premature death. You also insure your valuable assets against financial loss resulting from various casualties, such as fire or theft.
However, what would happen to both your personal income and the operation of your business should sudden disability force you to stop working? In businesses with multiple owners, how would the disability of one owner affect the chemistry of the business? Would the other owners want to buy out the disabled owner’s share of the business, and, if so, where would the funds come from to accomplish the buy-out?
Just as a buy-sell agreement can be activated by the death of an owner, it can also be triggered by one owner’s disability and funded by disability buy-out insurance. A properly designed buy-out agreement establishes the value of each owner’s share of the business and creates a market for each owner’s interest. Consult with your insurance professional to determine how a disability buy-out plan might work for your business.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Errors & Omissions Coverage
The Employee Retirement Act of 1974 established that all persons with any power or control over the management or disposition of any employee benefit fund must assume a personal, legal obligation for the faithful and prudent performance of his or her duties. Areas covered include asset management, investment diversification, and reporting. Specific prohibitions against acts relating to conflict of interest or self gain are also included.
The pension law does permit the purchase of insurance to cover a fiduciary’s responsibility; a fiduciary responsibility insurance policy provides this needed coverage.
To provide coverage for errors and omissions in the administration of workers compensation, unemployment benefits, and Social Security, an endorsement extending coverage to the plan administrator for negligent administration or explanation of these same employee benefits is recommended. The endorsement covers injury caused by any negligent act, error, or omission of the insured, or any other person for whose acts the insured is legally liable in the administration of the named insured’s employee benefits. This very important coverage can be purchased at nominal cost.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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