What Legal Structure is Right for You and Your Business?

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One of the most important aspects of starting a new business is choosing what type of legal structure your business will have. The structure will determine your legal responsibilities, taxes and personal liability among other things. The most common types are sole proprietors, partnerships and corporations. Below is an overview of each type and some potential advantages and disadvantages of each.

 

Sole Proprietorship
In a sole proprietorship, you are the only owner and there is no legal distinction between yourself and your business activities. All profits and losses are yours alone.

Pros:

  • Simple and inexpensive to start up and discontinue
  • You have sole control over your business and reap 100% of the profits
  • Low regulation

Cons:

  • You have unlimited personal liability for the activities of the business. This means that creditors could go after your personal assets.
  • You are limited by your own ability and assets to raise capital
  • The operation of your business is solely dependent on you

 

Partnership
In a partnership, you and the other partners combine financial resources and share in the profits and losses associated with the business.  It’s important to write a partnership agreement that outlines the partnership structure and the rights and responsibilities of each party. You can also be a limited liability partner meaning that you aren’t involved in the management of the business and are only liable for the debts to a certain extent.

Pros:

  • Easy to create
  • You share the financial start-up burden among partners
  • You share the responsibilities and liabilities of the business

Cons:

  • All partners are still personally liable for any debts or other liabilities of the business
  • All partners are financially responsible for decisions made by another partner
  • There is potential for conflict between partners and it can be hard to dissolve the partnership

 

Corporations
This is the most common form of a business organization and it separates the business as a legal entity from the owner, protecting the owner’s personal assets from the business.  The corporation is owned by shareholders and they appoint directors to be responsible for running the company.

Pros:

  • Limited liability for the owner as the business is now a separate legal entity
  • Ability to raise capital through the sale of stock
  • Potential financial benefits such as tax advantages

Cons:

  • More complicated and expensive to start up
  • Strictly regulated
  • More reporting and filing requirements

 

For more information on the advantages and disadvantages of each structure, including tax implications visit here. If you have any questions regarding how each structure would affect your insurance policy or if you have any other questions, the brokers at Bullfrog Insurance are here to help.

Why You Should Have Your Insurance Broker Review a Contract

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If you’re a contractor or sub-contractor, you will likely find yourself signing contracts for clients or a project manager. Likewise, if you own a retail business or operate any type of office, you are probably required to sign a contract with your landlord.

Many business owners don’t realize that contracts contain insurance and indemnity requirements. Once you sign on the dotted line, you’ve made a commitment to abide by those requirements, regardless of whether or not they make sense for your situation. Whether it’s a two or thirty page document, you should always have your insurance broker review prior to signing it. Here are some of the reasons why:

 

What coverage is required?

A contract will usually state what type of coverage is required for you to have and in what amounts. This could range from property insurance, liability insurance, equipment breakdown, business interruption or even construction insurance. It’s not uncommon to see cookie-cutter contracts that ask for just about everything. If there’s something not applicable to your business or a limit that seems too high for your exposure, your broker will identify this and you can ask for it to be removed or altered so you’re not forced to pay for coverage you don’t need. Your broker can also quote increases in coverage or additional types of coverage, so that you’re fully aware of the extra cost going in.

 

What insurance clauses are required?

In addition to the type of coverage required, there are often specific insurance clauses that are outlined in a contract. At a basic level, these can include naming specific parties as Additional Insured’s, a Waiver of Subrogation, Notice of Cancellation of your insurance policy, Products and Completed Operations coverage being maintained for a certain period of time after the project is complete, and many others. Some of these clauses may cost extra and most will need to be approved by your insurance company. Similar to above, if you identify these ahead of time, you can request unreasonable requirements be removed or amended or at least determine whether or not your current insurance company can comply.

 

Lastly, having your insurance broker review your contracts will help them better understand your business and operations, ensuring that you have the right coverage in place. If you need help reviewing insurance requirements or want to learn more about the clauses above, contact us at Bullfrog Insurance today.

Distracted Driving and Your Business

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Whether it’s texting, talking on the phone or using any type of hand held technology device, you know you shouldn’t be doing it while driving. Cell phones have been proven to be one of the most common distractions for drivers in recent years and in response, all provinces in Canada have some type of legislation regarding cell phone use while driving.  If you own or operate a business where employees do deliveries or operate a vehicle for business related purposes and they cause an accident while they were using a hand held device, you could be held vicariously liable.

Protect your business with a zero tolerance policy for using hand held devices while operating a vehicle. What steps can you take to achieve this? Here are some tips:

 

Tips for creating, and enforcing, a zero tolerance policy.

  • Take the time to write up an employee policy, outlining firm conditions for phone usage while driving and related consequences for not following the conditions. Based on the laws in your jurisdiction, you might want to institute a complete ban or allow only hands free usage.

 

  • Encourage employees to ensure they have all the information they need prior to leaving for their destination, such as proper directions and not feeling pressured to answer their phone or respond to a text message immediately during the trip.

 

  • Make sure any violations are documented and dealt with accordingly in order to establish that you are serious about implementing the policy.

 

Running the day to day operations of your company is complicated enough. Manage your risk ahead of time with the steps above and protect yourself from undue stress and potential financial consequences. If you have any questions regarding the information above or if you would like to discuss your current policy with a broker, our Bullfrog Insurance brokers would be happy to help you out. Contact us today for more information.

Preventing Loss at Construction Sites

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In recent years, construction companies, tradesman, and rental businesses have been applying stricter security measures while on construction sites. The reasoning behind this? This call for stricter security is the result of an increase in tool and equipment theft that continues to riddle construction sites.

 

As theft continues to be on the rise, it is important to ensure safety protocols and theft management programs are in place to protect tools and equipment. It is also important to make identification easy, so you can prove ownership in the event your tools and equipment are stolen and end up at a pawn shop or in police custody. To assist in developing successful security measures, here are some helpful tips and recommendations to protect your tools and, in return, your business’ bottom-line.

 

Tips & Tricks for Preventing Loss.

  • Keep all tools and materials in a locked area and out of plain sight, when not in use.
  • Paint tools and equipment in bright and distinctive colours to distinguish items and make identification easy.
  • Stamp all tools and equipment with a specific identification number or keep a record of their serial numbers in a safe place.
  • Keep a record of all tools and equipment you own and ensure that the list is kept up-to-date.
  • Make it a priority to keep the jobsite clean and free of unsupervised equipment.
  • Store all flammable liquids and products in approved safety containers.
  • Take photographs of all tools, equipment and materials, ensuring to capture serial number on these items as well.

 

If you have any questions regarding the information above or if you would like to discuss your current policy with a broker, our Bullfrog Insurance brokers would be happy to help you out. Bullfrog Insurance also offers affordable insurance coverage on tools, equipment and materials. Contact us today for more information.

Why You Should Ask for Proof of Insurance as a Business Owner

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Today’s world has become more concerned over lawsuits than ever before. As a result, it is extremely important to confirm that someone whom you have contracted work to carries valid liability insurance.

Regardless of your business, you will probably come across situations where proof of insurance should be requested. For example, if you are a contractor, you might hire an electrician to complete wiring for you or a plumber to install the plumbing. If you are retailer, you might hire a company to power wash your windows or to perform snow removal in your parking lot.

 

Why you should ask for proof of insurance:

  • If a contractor causes some type of property damage while working for you and does not hold the necessary insurance coverage, you may be held legally responsible to pay for it.
  • If a contractor causes bodily injury to someone else while working for you and does not have insurance, you may be on the hook again.
  • Someone who carries liability insurance is likely to be more professional and responsible than someone who does not.

 

What you should look for:

  • Ask for a certificate of insurance showing proof of liability insurance. If they have insurance, their broker should be able to easily provide this.
  • Confirm that the coverage is valid by looking at the policy’s effective and expiry date.
  • Confirm that the policy covers the person or business in question by checking the name on the certificate.
  • Confirm that there is coverage for Commercial General Liability for a minimum limit of $2,000,000 per occurrence.
  • You can also ask to be listed on their liability policy as an ‘Additional Insured’. Talk to your insurance broker for more information on when this would be appropriate.

 

Asking for proof of liability insurance is an important practice in ensuring your business is not financially drained through the fault of someone else. For questions on this or any other aspect of liability insurance, you can contact us at Bullfrog Insurance. We are here to help!

Insurance & Your Home-Based Business

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Do you currently run a small business out of your home? Do you have a home office set up for the business or store any inventory for this business inside your home?  If your answer is yes to any of these questions, and if you currently rely on your home insurance policy to cover potential risks to your business, you may not be covered in the event of a claim. Also, if you haven’t disclosed your business operations (even if it’s just a home office) under your home insurance policy, you not only risk no coverage for your business assets, but you risk voiding your home insurance coverage all together.

No matter the size of your small business, anyone who runs a business out of their home needs to have separate insurance coverage that is specific to the business. Depending on your industry or business segment, you can either obtain the necessary business coverage as an extension of your existing home insurance policy or obtain a separate insurance policy altogether.

Here are some recommended types of Business Insurance coverage if you currently run a small business out of your home:

 

Business Property Insurance.

This coverage protects important and/or high value items that are specific to your business, such as laptops, tablets and inventory. If something were to happen to these items while in your home, such as theft, fire, water damage etc., you would claim them under your Business Insurance coverage. If you take these items to job sites, trade shows or away from your home, you should make sure your policy includes an extension for property in transit and at other locations.

 

Business Liability.

This coverage protects you in the situation that a suit is brought against you for third party damages or injuries relating to your business. For example, if clients and/or customers visit the premises and if they unfortunately slip or get injured, this coverage would protect your small business from damages.

 

Errors & Omissions (E&O).

Do you work in real estate or does your job involve filling out legal forms? If you make a mistake on a form, you could be facing a lawsuit. Likewise, if you work in any professional capacity where you give advice, such as an accountant, consultant, architect, counselor and more, a client could allege financial loss from your advice. E&O coverage protects you in such cases.

 

If you currently run your small business out of your home and don’t have a separate business insurance policy, it is in your best interest to call your broker and inform them. If you have any questions regarding this or if you want to know what your options are, the licensed brokers at Bullfrog Insurance are available to help!

 

 

 

 

 

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