Sponsored content by Guillaume Decalf from www.ouifinancial.com – MerciSF is not responsible for the advice provided in this article.

Setting up your business

The first step to starting your own business is to set up your structure. There are multiple types of legal entities, but the most common for small businesses are the following:

Sole Proprietorship: There is no distinction between the owner and the business. The business doesn’t file a tax return, and the profit/loss pass through to the owner’s tax return. If you choose this option, your personal liability would be unlimited so if there is a problem, you would be personally liable.

General Partnership: two or more people who decide to create a business together. They will share the profit, loss, assets, and legal liabilities. It’s also a pass-through entity, so profit/loss pass through to the partners’ tax returns. Like a sole proprietorship, each partner has unlimited personal liability and each partner is liable for the entirety of a partnership’s business debts.

Limited Liability Company: this can have a single “single member llc” or multiple members. Just like for a general partnership, the members share the profit, loss, assets, and legal liabilities.
It’s a pass-through entity as well: profit/loss are reported on the members’ tax returns. The member(s) have NO personal liability – their personal assets are protected from creditors.

Protecting your business

Regardless of the type of structure you choose, you need to protect your business. If your business is sued, the lawsuit can take years to be resolved, and you could go bankrupt in the meantime even if you win the lawsuit in the end.
You may need some/all of the following insurance coverage:

Either Professional Liability Insurance or General Liability Insurance: professional liability covers negligence related to professional services. General liability insurance covers physical injuries. They protect your business from lawsuits, medical expense, attorney fees, and any damage you are responsible for.

Commercial Property Insurance: this insurance protects your company’s physical assets (building, furniture etc)

Businessowners Policy, or BOP: this is a combined package of different types of insurances, such as property, liability etc.

Commercial Auto Insurance: this protects your business and employees from damages and accidents related to vehicles.

Crime Insurance: this protects your business from theft, forgery and other types of crimes.

Business Income or Interruption Insurance: this can cover costs if your business has to close temporarily.

Commercial Umbrella Insurance: this provides extra protection against bodily injury and/or property damage.

Cyber Liability Insurance: this protects your business from data breaches, hacking, etc.

Equipment Breakdown Insurance: this protects your business from the damages and costs associated with equipment breakdown (computer network, production equipment, etc).

Workers’ Compensation Insurance: this protects your employees from a work-related accident.

Accounts Receivable Insurance:  this covers your business against losses caused by the inability to collect customer payments.

You should probably have, at least, a professional or general liability insurance, and property insurance if you receive customers in a store or an office.

Merci Guillaume Decalf – Oui Financial www.ouifinancial.com

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