Start-Up Talk: Get your Employees and Business Insured

Everyone wants security in their lives, and this applies for employees. A majority of people who accept jobs at their current companies usually cite benefits as an important deciding factor for choosing a company. Employees usually want a company that can provide them with health and life insurance.

Benefit of Insuring Your Employees

Although seen as a valuable benefit for employees, most start-ups—usually, small businesses—still hesitate to provide insurance coverage to their employees due to the fact that they have to pay bigger premiums than large companies. As encouragement for these business owners, the Affordable Care Act now features tax credits for owners of small to mid-sized businesses.

It was estimated by the White House that tax savings can save as much as $40 billion for owners of small businesses in the next 10 years.

Changes to the Credit

According to the IRS, the maximum credit from 2010 to 2013 is 35 percent of the premiums for small business employers and 25 percent of premiums paid for small employers exempted from tax such as charities.

For the year 2014, on the other hand, the maximum credit will increase to 50 percent of premiums paid for small business employers and 35 percent of premiums employers exempted from tax. The credit may be availed by qualified employers for two consecutive years.

Another advantage of the new tax credit for health insurance policy owners is that start-up owners who have no tax debt during the year may carry the credit to other tax years. Apart from the tax credit, qualified small business may also claim a deduction for premiums that surpass the credit.

Qualifying for a Tax Credit

To qualify for maximum tax credits, a business should have a maximum of 10 full-time employees, with an average annual salary amount not exceeding $25,000. The next category of tax credits, on the other hand, is offered for businesses that have a maximum of 25 full-time employees, with an annual wage not exceeding $50,000, are also qualified for a tax credit, although they’ll enjoy less tax cuts. However, employers are required to make contributions amounting to 50 percent of the total premium expense—a cost that owners of many small to medium-sized businesses aren’t all too willing to shoulder.

Getting your Business Insured

In the same way that personal insurance is important to an employee, it’s also important for a business to get insured. Keeping both employees and your business protected from possible misfortunes is essential to have peace of mind and security. There are three types of insurance for small business owners: employer’s liability insurance, public liability insurance, and professional indemnity insurance.

Employer’s Liability Insurance

– A cover for employers that hire staff, this insurance protects your business from expenses if an employee suddenly gets sick or is injured in the course of the work.

Public Liability Insurance

– An insurance ideal for those who regularly coordinate with third parties, regardless if that is a contractor, customer, client or the general public. This insurance covers customers who may get injuries from services offered by your business or covers damages caused by your service/ product

Professional Indemnity Insurance

– Recommended for businesses that provides advice to other businesses or individuals, this is an important insurance for advices that are seen as negligent in any way. This insurance covers compensation claims that will be made against your business, as well as cover the legal costs.

These three types of business insurance policies are only among the many other types of insurance plans available in the market that addresses the specific needs of certain businesses.

So, if you want your start-up business to thrive financially, and succeed, you should always keep in mind that the best types of workers are happy workers and most happy workers are those who have employers that provide them with comprehensive insurance coverage.

About the author:

Gilbert Bermudez is a regular contributor for CompareHero, a Malaysian insurance comparison website.