There is no lack of options when it comes to insurance for your small business. Not every business needs every kind, but you should know what’s available. Click through to get started thinking about business insurance.

Have you thought about the insurance your small business might need? Whether it’s a one-person outfit you run out of your home or a family corporation with dozens of employees, you need to protect yourself and your company. Review the following list to see what might apply to you.

1. General liability insurance — Even for home-based companies, liability insurance tops the list. The policy both defends against and covers damages for alleged bodily injury or property damage to a third party by you, your employees, or your products or services.
2. Property insurance — This is for your building or business personal property of office equipment, computers, inventory or tools. Consider a policy to protect against fire, vandalism, theft and smoke damage. Think about interruption/loss of earnings insurance as part of the policy to protect earnings if your business is unable to operate.
3. Business owner’s policy — This packages all required coverage a business owner would need, including business interruption, property, vehicle, liability and crime insurance. You have a say in what you want to cover in a BOP, which often costs less money as a package than if coverage were bought individually.
4. Commercial auto insurance — Protect your firm’s vehicles that carry employees, products or equipment. You can insure work cars, SUVs, vans and trucks from damage and collisions. If employees drive their own cars on company business, you should have non-owned auto liability policies to protect your company in case your employee doesn’t have enough coverage. Non-owned auto insurance can be part of your BOP package.
5. Workers’ compensation — This provides insurance to employees who are injured on the job, and it includes wage replacement and medical benefits. Employees therefore forfeit the right to sue the employer. This then protects you and your firm from legal complications. State laws vary, but they typically require workers’ comp if you have W-2 employees. Penalties for noncompliance can be very stiff.
6. Professional liability insurance — Also known as errors and omissions insurance, this coverage in the form of defense and damages is provided for failure to render or improperly rendered professional services. This insurance is applicable for such professionals as lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salon owners and technology providers.
7. Directors and officers insurance — This coverage protects against actions by directors and officers that affect the profitability or operations of your company.
8. Data breach — If you store sensitive or nonpublic information about employees or clients on your computers and servers or as paper files, you’re responsible for protecting that information. For electronic or paper breaches, the policy protects against loss.
9. Life insurance — This provides money to beneficiaries in the event of an individual’s death. You pay a premium in exchange for benefits. This insurance gives peace of mind, allowing you to know that your family/friends will not be burdened financially when you die. Although technically this is not business insurance, if you are essential to a business you own, you’ll want this to protect your family.

You, as a business owner, have been exposed to risks from the day you opened the company. One lawsuit or catastrophic event could be enough to wipe out your business. Fortunately, you have access to a wide range of insurance to protect your company against danger. Call us, and we can help you sort through your choices. Find out how you can leverage our meaningful financial analysis and candid advice to make the right moves for your business. Contact our Pasadena, CA accounting firm at 626-793-4322 or request a free consultation online.

No matter where your company is headquartered, there’s a good chance you conduct business across other state borders. How do taxes work in this situation? Click through to learn about multistate taxes and how to ensure that your business is compliant.

If your business is headquartered in one state, but you sell your products across the border, do you have to pay taxes in the recipients’ state? This answer depends largely on whether you have what is referred to as a “nexus,” meaning an establishment in the recipients’ state. So what is a nexus and what constitutes an establishment?

Any of the following might create a nexus in a given state:

• A temporary or permanent office
• A warehouse
• A storage locker
• A sales representative based in that state

The rules have a lot of subtleties, however, and each state may have slightly different interpretations of how the rules work, further complicating the issue. Take for example, New Jersey, which does a lot of cross-border business with New York and Pennsylvania. It says any of the following may create nexus:

• Selling, leasing, or renting tangible personal property or specified digital products or services
• Maintaining an office, distribution house, showroom, warehouse, service enterprise (e.g., a restaurant, entertainment center, business center), or other place of business
• Having employees, independent contractors, agents, or other representatives (including salespersons, consultants, customer representatives, service or repair technicians, instructors, delivery persons, and independent representatives or solicitors acting as agents of the business) working in the state

Of course, regulatory changes and court cases can change this interpretation at any time. Indeed, the New York State Department of Taxation and Finance issues more opinion letters on sales tax issues than on all other state taxes combined.

So, what’s your best bet? With 45 states imposing a sales tax, it’s essential you stay in touch with us to ensure that you pay every dime you owe — but no more! Trust Figueroa & Co for error-free tax preparation. Call 626-793-4322 or request a free consultation online.

One of the main requirements of the Affordable Care Act’s employer mandate is that health coverage must be affordable, based on annual standards set by the IRS. Click through for the details on the 2019 increase for one of those standards.

The ACA requires that employers with 50 or more full-time-equivalent employees provide minimum essential coverage that is affordable — or face a penalty for not complying. The affordability requirement is satisfied if an employee’s premium for self-only coverage does not exceed a specific percentage of their household income or a certain safe harbor amount.

Percentage increase for 2019

Each year, the affordability percentage for health coverage is adjusted for inflation. For 2018, the rate is 9.56 percent of the employee’s household income, down from 9.69 percent in 2017.

On May 21, 2018, the IRS released Revenue Procedure 2018-34, which states that for plan years starting in 2019, the affordability percentage will increase to 9.86 percent — the highest amount since the ACA’s passage. This means that employees’ premiums for the lowest-cost self-only coverage cannot be more than 9.86 percent of their household income.

Three safe harbor options

As noted, the affordability percentage threshold applies to employees’ household income. But since it’s difficult for employers to know their employees’ household income, the ACA provides three safe harbor alternatives, which can be used instead of household income. You do not have to meet all three requirements; just one will do.

1. The employee’s W-2 wages, as shown in Box 1 of the form. For plan years starting in 2019, coverage is affordable if the employee’s premium does not exceed 9.86 percent of the amount in Box 1 of the W-2. Although this method is relatively simple to apply, keep in mind that it uses current-year wages. Therefore, you won’t know whether the affordability requirement for an employee has been met until the end of the year.

2. The employee’s rate of pay. Coverage is affordable if the employee’s premium does not exceed 9.86 percent of their monthly salary or wages. To determine the monthly rate of pay for an hourly worker, multiply the hourly pay rate by 130 hours.

For instance, an employee makes $15 per hour at the start of 2019. Multiply $15 by 130, which equals $1,950. Then multiply $1,950 by 9.86 percent, which comes to $192.27. Coverage is affordable as long as the employee’s premium does not exceed $192.27. For salaried employees, affordability is based on monthly salary.

The rate-of-pay method cannot be used for employees who are paid solely by commission, nor can it be used for tip wages.

3. The federal poverty level. The employee’s premium for the lowest-cost self-only coverage cannot be more than 9.86 percent of the most recently published FPL for a single person.

Applicable large employers should take the affordability standard into account when designing their 2019 health care plans — since pricing below the threshold could trigger penalties, as mandated by Section 4980H(b) of the ACA.

Our experienced Pasadena, CA accounting firm can save you real money on your taxes through sophisticated tax planning. To learn more about personal or business tax planning, call 626-793-4322 now or request your free consultation online.