What Is a Small Business?
According to the U.S.Small Business Administration (SBA), a small business is one that has fewer than 1,500 employees and a maximum of $38.5 million in average annual receipts. The SBA sets the size standards for every small business industry in the United States based on the number of employees and average annual receipts. In 23 million businesses in the U.S. there are no employees and a single owner runs the business by themselves. And consider this, small businesses with fewer than 20 employees make up almost 90 percent of all U.S. business enterprises. Let’s take a closer look at what it means to be a small business in the United States.
Small Business Industries
Small businesses can be found in a range of industries. Agriculture, Mining, Utilities, Construction, Manufacturing, Wholesale Trade, Retail Trade, Transportation and Warehousing, Information, Finance and Insurance, Real Estate, Rental and Leasing, Professional, Scientific and Technical Services and Healthcare and Social Assistance are all small business industries in the U.S. And each has its own set of small business size standards as determined by the Small Business Administration.
For example, in construction the maximum a small business can earn is $36.5 million in average receipts. In real estate, there is a maximum of $7.5 million to $32.5 million in average annual receipts to be considered a small business.
For health care and social assistance to be considered a small business you’ll need a maximum of $7.5 million to $38.5 million in average annual receipts. And in professional, scientific and technical services there is a maximum of $7.5 million to $20.5 million in average annual receipts or a maximum of 1,000 to 1,500 employees.
And for a small business in information, the maximum number of employees ranges from 500 to 1,500 depending on the sub-industry and the maximum average annual receipts ranges from $7.5 million to $38.5 million.
More Small Business Qualifications
There are more qualifications to being a small business in the United States. Is the company headquartered in the U.S.? Does the company operate primarily in the U.S.? Is the company a for-profit business? Is the company independently owned and operated? All these qualifications make a difference.
What Does the SBA Do?
The SBA is a U.S government agency established in 1953 to bolster and protect the economy by providing assistance to small businesses. One of the biggest functions of the SBA is to provide counseling to individuals looking to start or grow small businesses. The counseling involves business plan writing and offering assistance with small business loans.
Insurance for Small Businesses
Every small business is different but some of their insurance needs are the same. Let’s look at the insurance needs of a small business construction company, a small business real estate company, a small business family doctor and a small business IT professional.
Insurance for a Small Business Construction Company
Here are four core business insurance policies for a small business in construction.
Business Property Insurance. Do you own your office building or other building? If so, you will want to purchase property insurance. A business property insurance policy protects your building and all its contents including exterior fixtures and outdoor signs and fences from fire, explosions, storms, theft, burst pipes and vandalism.
General Liability Insurance. This form of insurance protects you if you cause any damage whether it be bodily damage or damage to the client’s or another’s property. Some clients require that you carry general liability insurance. If so, consider this insurance policy part of the price of doing business.Compare Business Insurance Plans
Commercial Auto Insurance. For small business owners, commercial auto coverage is generally needed if they use their vehicle to transport work supplies such as parts, testing equipment and tools. Cargo vans and pickup trucks can be covered with a commercial auto insurance policy. Commercial auto insurance policies protect the business if one of their employees causes injury or damage to someone while using the business vehicle. Commercial auto policies also protect business vehicles from damage or theft.
Workers Compensation. If you have employees, workers’ compensation is a must and required by law in most states. Workers’ compensation offers insurance coverage for when employees become ill or injured on the job. Workers’ compensation covers employees’ medical costs and a portion of their lost wages.
Insurance Musts for a Small Business Real Estate Company
Here are some important insurance policies for real estate professionals who have their own business.
Business Property Insurance. For a real estate company owner, business property insurance may come to the top of the insurance list. How many properties do you own? You’ll want them protected from fire, explosions, storms, theft, burst pipes and vandalism with business property insurance.
General Liability Insurance. You deal with clients all day long so you will want to get a general liability insurance policy to protect you if you should cause any damage to a client or their property.
Workers’ Compensation. Because you have a team of realtors in your office, you’ll want to get workers’ compensation insurance in case they get ill or sick on the job.
Commercial Auto Policy. If you have a car just for business and showing clients to different property locations, you’ll want to insure it with a commercial auto policy.
Personal Liability Insurance. Here is another important piece of insurance that a real estate professional needs to do business. Personal liability insurance protects professionals such as doctors, lawyers, accountants and real estate professionals against negligence and other claims from clients. Any professional who has expertise in a specific area warrants this kind of insurance because general liability insurance doesn’t offer protection against claims of negligence, misrepresentation, and malpractice brought forth by clients. This insurance is sometimes called errors and omissions in the real estate field.
Insurance Policies for Family Doctor with Own Practice
Here are some important insurance policies for a family doctor running his or her own small business.
Business Property Insurance. Do you own your own office space or building? If you do, you will need to purchase business property insurance. This kind of policy protects your building as well as all its contents and is worth investing in when you are a property owner.
General Liability Insurance. Most employers require general liability insurance. This insurance policy protects you if you should cause damage to a client’s body or property.
Personal Liability Insurance. Known as medical malpractice in the medical field, personal liability insurance is a must for every medical office and small business. This insurance protects professionals against negligence and other claims from clients.
Workers Compensation. Got a loyal staff working for you? You’ll need to get workers’ compensation in case they get injured or ill on the job.
Insurance Policies for IT Professional With Their Own Business
Here are some insurance policies for an IT professional who is running his or her own business.
Business Property Insurance. Let’s start with the building. Do you own it? If you do, you will want to protect it with business property insurance, so that the building and its contents will all be protected.
General Liability Insurance. To protect yourself in the event that a patient is injured or there is property damage or advertising injury, you’ll need general liability insurance. So if you’ve got an office, it’s a good idea to consider buying this protection.
Personal Liability Insurance. This insurance protects professionals against negligence and other claims from clients. As mentioned above, any professional who has expertise in a specific area warrants this kind of insurance because general liability insurance doesn’t offer protection against claims of negligence, misrepresentation, and malpractice brought forth by clients. So if you’ve got professional expertise and you’ve got clients you need this insurance.
Workers’ Compensation. Unless you are going it alone, you have employees at your small business. Protect them if they should get ill or injured on the job with workers’ compensation. This insurance coverage is required in most states.
Cyber Security Insurance. This one is right out of your field. A cyber security insurance policy protects your medical business from computer-related crimes and losses, including data breaches, phishing schemes and ransomware attacks. Remember, you have sensitive personal information on patients. A cyber security policy covers both privacy and data exposures. Get covered.
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Excess liability insurance is a type of insurance policy that provides higher coverage limits when placed on top of an original, primary policy. The purpose of excess liability insurance is to close any gaps in coverage and provide an extra layer of protection.
One way that companies can protect themselves against these suits is by purchasing Commercial General Liability Insurance. But do insurers calculate premium rates, and what can small businesses do to get the lowest rates?
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Often, costs take on a life of their own and begin to really eat away at profits if you don’t take care to control them. Sometimes, a business’s inner workings can become so complicated that we overlook the simple and obvious changes we can make to improve our business practices. “A penny saved is a penny earned” could not be any more true.
Most businesses have general liability insurance because accidents happen. They happen even more the bigger your company is.
If you are a business owner, you will need to make sure that you have an adequate amount of business insurance to protect both your personal and business interests.
Quick and easy tips that every business owner should be doing.