Limited Liability Insurance for Small Business Info: A Brief Summary of LLP Insurance

Every business has to have insurance of some kind, but what about partnerships? If you do have some ownership in a business arrangement but not the entire organization as a whole, you should only be required to insure your share. This is what limited liability insurance for small business is for. Why should you be liable for everything? If you have a limited role in daily business practices and operations, you should only have to pay for coverage of your own assets.

The term “limited partnership” refers to a partnership in which there is at least one general partner and one limited partner. The general partner typically has the same role as in a general partnership, as someone who controls the business’ daily operations and being considered personally liable for business-associated debts.

The “limited partner”, as mentioned above, doesn’t have a lot of say in the daily operations and decisions of the business. There can be more than one limited partner involved in a small business. To make up for not getting an active role in decisions, you get the benefit of not having to pay off claims or business debts with personal assets. However, the limited partner can still potentially lose his / her financial investment in the company depending on the circumstances.

What Else to Look for in Limited Liability Insurance for Small Business

Another thing to consider when looking for limited liability insurance for small business is that the tax rules different somewhat. All partners are required to report and pay taxes individually on their share of the yearly profits. You probably won’t have to pay self-employment taxes since your status in the business is not “active”, thus your share of the partnership isn’t considered “earned income”. The general partner(s), on the other hand, do control the business’ day-to-day operations and therefore liable for business debts.

There is another type of partnership referred to as “limited liability partnership” or LLP, in which all owners are provided with limited personal liabilities. In this kind of situation LLPs tend to be professionals such as accountants or lawyers. In certain states, only professionals are allowed to be LLPs.

An LLP requires less paperwork than corporations and LLCs. Learn about the rules in your state, pay the relevant filing fee, and create the partnership agreement.

This is only a short overview of limited liability insurance for small business. To learn more about your options, look into Hiscox Business Insurance and the benefits this company offers. There are a variety of custom small business insurance plans tailored to your needs.

The End Of Business As Usual: Rewire The Way You Work To Succeed – A Brief Summary

In The End of Business as Usual, author Brian Sola explains the sea change in business caused by the advent of social media, Sola poses quite a challenge to those of us who have not yet joined the Facebook, Twitter and Linked-in revolution. He got my attention with the statement that 65% of the Millennial generation born between the mid-seventies and late 90’s are disconnected while awake less than one hour per day! Less than that “creates an unnerving sense of disconnectedness”.

Taking Seth Godin’s concept of Permission Marketing even further, Sola claims that it’s not about companies connecting with customers, it’s about customers deciding whether they want to connect with the company now and over time. The internet explosion required that successful email marketers must earn the permission of their reader via the recipient’s optin- agreement to receive the ad; a far cry from the intrusive and aggressive Madison Ave type advertising classically seen on television. Over the last ten years, we learned how to integrate permission marketing into our offers and our over-all marketing campaigns. And we found that we were adaptable and willing to change.

Guess what? It’s time for more change if we want to compete in the 21st century. Here is why.

The Millennial purchaser is not just interested in giving permission to the companies they want to hear from: they expect to partner with them, claims Sola, More than simply a business relationship, these younger purchasers expect to like the company they do business with so that they can share and post their purchasing experiences with their friends and networks, estimated at an average of 130 for each Facebook user. When they have a problem, they are not interested in dealing with your customer service departments, they expect to hear from someone at the top.. Aged from 17-32 as of 2012, this group comprises 25% of the on-line purchasing population.

Both In 2010 and 2011, Facebook outranked Google as the primary search term-people are increasingly more interested in other people and relationships. The results?

Americans are looking to different sources for our information. Television viewers are declining, subscriptions to traditional newspapers dropped by 9% in 2010, even more in the last couple of years. The combined subscribers of the New York Times, Wall St. Journal and USA Today have less than 5 million subscribers while Facebook houses more than 750 million residents and over 200 million people are using Twitter as a primary mode of communication. Interestingly the isolation predicted by the increased use of internet during the nineties does not seem to hold in the twenty-first century: surveyors find that over 50 percent of respondents feel more connected now than they did prior to the emergence of the social networks. The increased sense of “connectedness” is apparently more than a virtual phenomenon.

In 2008, Mark Zuckerberg, founder of Facebook, introduced a formula later known as “Zuckerberg’s Law” when he explained that social networking is simply about connecting with people we know and predicted that with each passing year, people will share twice as much information.Think about that for just a moment; a doubling of shared information each and every year. According to Nielson, Americans in 2011 spent a quarter of their waking hours on line networking and Facebook measures more than 700 billion minutes per month spent “Facebooking.”

These numbers are staggering and the implications for marketing profound for those whose products are shared, liked and posted.

Book Summary – Corporate Canaries – Avoid Business Disasters – Written by Gary Sutton

Gary Sutton is a business turnaround expert and this little book is packed with great stuff. If you are interested in business or have a business then this book needs to be on your desk. Use it as a business desk reference. I am a big believer in “Inversion” which is to study the opposite of things. If you want to be successful then study success & failure to really understand the full spectrum. Gary’s book outlines 5 major early warning signs which are similar to blood pressure, insulin levels, cholesterol and heart rate for physical health.

Why is this important to me?

There are several reasons you need to take into account that make this book important. Are you an employee? If so then you need to read this book. The early warning signs will make sure that your company is solid. Enron employees thought that their money and retirement was safe. As we all know this was not the case. One of the main principles on debt would have given them the knowledge to make a change before they lost all their retirement.

Do you own a business? If so then you need to understand all of the principles outlined in the book. You have a fiduciary responsibility to make sure your company is sound to all stakeholders. This is important because they depend on you and these early warning signs are imperative to understand so you can make the necessary changes.

Gary uses his grandfather’s advice as a coal miner to outline the 5 main problems to be avoided. I will focus on the 5 without the story but understand that coal miners used to use canaries to detect a gas leak. Thus if the canary died then they knew they had to evacuate the coal mine. We will dive into each of the 5 principles now:

1. You can’t outgrow losses – You see this time and again where short term Wall Street conscious firms focus on top line growth with no regard to profit. This is a bad idea. Mergers of two mediocre companies that have top line growth only yield one big average company that will bleed money.

Early warning signs are:

1.) If company revenues have grown at twice the rate of net profits for three years

2.) The sales force is commissioned on volume, without regard to profit.

3.) Hallway conversations are about sales, not earnings.

2. Debt’s a killer – This one is nebulous but Gary gives a great indicator of when debt is too much. If you have seen any of my other summaries then you know I am a big fan of OPM (other people’s money) to leverage good debt to buy cash flow assets. With that being said, too much debt can kill you in bad times.

Early warning signs are:

1.) Debt to equity exceeds 1:1

2.) Equipment is always leased, never bought

3.) Executives spend more time with bankers than with customers.

3. Fools fly blind – This one has to do with financial controls. When these are sloppy then nobody knows where the business really is. This is a killer because the operating P&L’s take too long to distribute or worse than that they don’t even use them as tools. Also, when bigger companies focus on revenues and earnings per share but have no idea if they have enough cash to cover payroll.

Early warning signs are:

1.) Year-end audit adjustments are more than 1 % of revenues or 5% of earnings.

2) The books don’t close within two weeks of the month’s end.

3.) When you ask employees where the company makes its best profits, nobody knows.

4.) There are no lead indicators for sales.

4. Any decision beats no decision – “Analysis paralysis” kills innovation and speed. These two factors separate market leaders and everybody else. When people are scared to make decisions or spend too much time covering their own asses then this uncovers deeper company problems and bad leadership. These behaviors create bureaucracy, inefficiency and ineffectiveness. Check out my summary on How the Wise Decide to overcome this bad behavior.

Early Warning Signs:

1) The mission statement tries to say many things to many people (wishy-washy)

2) Brochure and ad headlines don’t offer specific and meaningful benefits to buyers

3) Employees, customers, and vendors give different answers when asked what the company does best. Leadership has failed. Nondescript companies die.

5. Markets Grow and Markets Die – Company leaders have to recognize when markets are dying. If they don’t then the reinvestment yields “diminishing returns”. Basically this means the company will die by a thousand cuts. In the book Good to Great, Jim Collins profiles Kimberly Clarke’s entry into the consumer paper business and exit from their traditional business. They had to sell the mills. This was a big decision that worked out but can be very difficult because you have an established business that makes money. I can attest to number 5 because it has happened in my own business. We have had to reinvent ourselves twice in the 14 years I have been working it. There are types of businesses that are more successful and easier than others. This is worth the study in and of itself and I will profile business types in future summaries.

Early warning signs:

1) Sales have dropped two years in a row.

2) The competitors’ sales have dropped two years in a row.

3) Nobody’s making money.

In summary, Corporate Canaries is a must read book. The lessons are critical if you strive to build a business and the lessons can translate to your personal finances as well.

I hope you have found this short video summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days.

One thing you can take away from this book is to keep your debt to equity below 1:1. This is difficult for most people because they have the debt and no equity. Through daily discipline and simple daily changes, this can change easily.

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