So now you are a small business owner in Texas! Congratulations and we are thrilled you are informing yourself about small business insurance. Great start and a move that is ultimately very beneficial to your financial assets and personal peace of mind. There is great information available for the small business owner today and if you haven’t found it yet, let us help lead the way.
Whether you’re operating your small business out of your home, in a rented space or maybe you have a kiosk, in all situations you have personal business property that you have invested in to run your Texas small business, whether it’s a laptop or a table top. Maybe you own your building and you want to protect it from the elements in the Lone Star State. Also a needed coverage regardless of where you operate your small business is protection from lawsuits. At the very least; customers, vendors and property managers you work with will require proof of insurance because they understand the potential for the unexpected. The Texas Business Owners policy (BOP) has you covered!
If you use vehicles for your small business in Texas, the state requires that you be able to pay for any damages and injuries from a car accident you caused. Most people buy liability insurance to fulfill this requirement. If you own vehicles that are for business use only, it is probably wise to have a commercial auto policy. A commercial insurance policy can cover multiple drivers and business-use-only vehicles. Some other cases that might require commercial auto insurance; you are transporting products or people, or you want to insure workers that either use your business vehicles or drive their own cars for business purposes. Typically the business assets can be greater than personal assets, a commercial auto insurance policy will allow for higher limit of liability protection than personal auto.
Speaking of employees, if your small business has employees, in the state of Texas the law does not require Workers’ Compensation, however your customers may require you to carry it. Employers that secure Workers’ Compensation have some important legal protections including immunity from most lawsuits by injured employees. The Texas Department of Insurance’s Division of Workers’ Compensation (DWC) regulates the state’s workers’ compensation system and certifies employers that want to self-insure. Workers’ Compensation insurance pays medical bills and some lost wages of employees who are injured at work, or who have work-related diseases or illnesses.
Have you grappled with what small business structure to use yet; Sole Proprietor, Corporation, LLC or Partnership? Here is a quick view of the Pros and Cons.
| BUSINESS STRUCTURE | PROS | CONS |
|---|---|---|
| Sole Proprietor | Easy and Inexpensive to Form Complete Control Easy Tax Preparation |
Unlimited Personal Liability Hard to Raise Money You and Your Business are ONE at Tax Time |
| Corporation | Limited Liability Ability to Generate Capital Corporate Tax Treatment Attractive to Potential Employees |
Time and Money Double Taxing if a Dividend is Paid to Shareholders Additional Paperwork |
| S Corporation | Tax Savings Business Expense Tax Credits Independent Life Separate from Shareholders |
Stricter Operational Process Shareholder Compensation Requirements |
| Limited Liability Company (LLC) | Limited Liability Less Recordkeeping Sharing of Profits |
Limited Life Self-Employment Taxes |
| Partnership | Easy and Inexpensive Shared Financial Commitment Complementary Skills Partnership Incentives for Employees |
Joint and Individual Liability Disagreements Among Partners Shared Profits |
Texas is “Wide Open for Small Business” according to the Texas Secretary of State – gotta love that! The Texas Secretary of State provides a Texas Business Portal which has information on Selecting a Business Structure. If the name you have chosen for your business is anything other than your own personal name, otherwise known as a DBA “Doing Business As” or a “Fictitious” name, then you’ll need to register it with the appropriate local government agency. The legal name of your business is required on all government forms and applications, including your application for tax ID’s, licenses and permits.
Some small businesses may need some form of license or permit to operate legally. The requirements vary by type of business, where it’s located and what rules apply. Find out if your Texas small business needs a license or permit Find Business Licenses & Permits. One other site, if you haven’t found it yet is the U.S. Small Business Administration. It has tons of small business information and is a government site so you can’t go wrong.
So does your small business need an Employer Identification Number (EIN), otherwise known as a Federal Employer Identification Number (FEIN) – yes this is a federal deal for tax filings. You’ll need an EIN if you have employees, operate your business as a corporation or partnership, file any tax returns for employment, excise, alcohol, tobacco or firearms. Or if you withhold taxes on income, other than wages, paid to a non-resident alien or if you have a Keogh plan you will need EIN. Here is how to Apply-for-an-EIN.
Small business owners especially new sole proprietors can find a wealth of information covering their federal tax responsibilities at the SB/SE Tax Center which is the IRS page for everything small business!
AssureStart’s products have been approved by the Texas Department of Insurance and are underwritten by Midvale Indemnity Company, NAIC 27138, an affiliate of American Family Mutual Insurance Company, 6000 American Parkway, Madison, WI 53783.
