For small business owners, determining how to best protect your business and your family with proper insurance and legal needs can be overwhelming. But, it is important to realize that the stability of your business and family are often dependent on each other. Sudden events in your personal life can mean you are unavailable to manage your business. Likewise, business demands might mean you are not able to spend time with family the way you would like.
Failing to navigate your protection needs appropriately can be catastrophic if something unfortunate happens and your business is unprotected. It can be especially tricky when you begin to consider the security and protection of yourself, your family, your possessions, and your business.
Therefore, it is crucial that you ensure the proper protection and legal agreements are in place before the unexpected happens. There are always special circumstances to think about, but the following four points serve as a great place to start as you consider protecting your future:
1. Know what should be insured. Make a list of all the products, people, and services vital to your business and determine what insurance coverage and agreements are needed to ensure business continuity if an unexpected event occurs. Though it may not be pleasant, try to think outside of the box when considering your exposure to risks. Considering multiple scenarios – everything from stock market downturns to employee injuries to natural disasters – will help you recognize the vulnerable areas of your business. Purchase insurance to protect you from catastrophic events if it is available, and establish contingency plans for things that cannot be covered by a policy.
2. Establish partnership agreements. Each state has its own laws governing partnerships, but you are not confined to these laws. To avoid conflicts, document important agreements including how profits will be shared, the decision-making authority of each party, and the protocol for the withdrawal or addition of partners. Being able to refer to a written document may help defuse a disagreement before it escalates into a legal matter.
3. Budget and consult with other professionals. Treat protection costs like any business expense and budget for them in advance. If you find yourself stressed over the cost, decide what you cannot afford to replace with savings should something be destroyed or your income compromised by an unforeseen disability. Consult with professionals like a financial advisor, attorney, accountant, and small business consultant to ensure that you are adequately protected.
4. Do not forget to cover yourself. Your business and your family depend on you – so it is essential that you have the proper personal protection in place. Consider your options for life, disability, and long-term care insurance, and make sure that the income you provide your family would be replaced if you are injured or pass away unexpectedly. Also, be sure you have legal documents in place that reflect your wishes to help eliminate unnecessary complications for you and your family following a traumatic event.
No matter what the cost may be today, you will likely never regret the price of protecting what is most important to you in the aftermath of a tragedy.
Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
This communication is published in the United States for Texas only; and this advisor is licensed only in the states of CA, CO, FL, MO, NC, NM, OK, TX, and VA.
M. Ahmad Adnan, CFP®, CRPC®, RFC®
Business Financial Advisor
Ameriprise Financial Services, Inc.
3200 Steck Avenue | Suite 250 | Austin, TX 78757
Phone: 512.213.6400 Ext. 102 | Toll Free: 866.238.4230
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