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Insurance Coverage

In case if your business runs into serious difficulty, will it bring you down too For instance, what if one of your employees got involved in a serious car accident while working for you Furthermore will the resulting lawsuit bankrupt you personally

Below are just a few ways of protecting yourself against catastrophic losses and lawsuits.

1. Get Adequate Insurance Coverage

If someone slips on the sidewalk of your home and get injured, he could sue you for damages. In theory your tenant`s or homeowner`s policy may cover you for liability in such an event.

Though, what if it is your customer who falls on his way to visiting your home-based business You will require an extra rider on your house insurance to cover such incidental business assets and debts use. Believe me the extra charge for this additional coverage is well worth it.

If you use a car for say business use, insure it for such. Few people think that they are being clever writing off automobile expenses for income tax purposes but at the same time not informing the insurance company that the car is being used for business.

Remember this is false economy. In case if you ever get into an accident,

police and insurance investigators will certainly find out that you used the vehicle for business purposes. And in that scenario if youre not paying for business coverage, why would the insurance company cover your claim

In addition, what do you think an income tax auditor would think of your claimed business expenses on the vehicle when your insurance policy indicates personal coverage only It is advisable to avoid this additional exposure to tax liability.

Be clear in your mind to obtain required workers` compensation coverage. Few have been held responsible for the entire medical and other expenses of an injured worker, as well as fines for non-compliance to the assets and debts law. These costs can be turn out to be quite substantial and even bankrupt you.

Consider getting product liability insurance. This applies not just for any products you manufacture but as well as for products you sell that are made by others.

2. Incorporate Your Business

Theoretically speaking insurance may give you some protection against loss. Though, you may suffer business losses and lawsuits that may not be covered by your insurance fully. In that case an extra level of protection can be obtained by forming your own corporation. Even though incorporating yourself will more often than not result in extra paperwork and costs, it could be the best insurance you ever bought.

This is due to the simple reason that the corporation is a separate legal entity or person. Even though you may own the corporation, it is worth noting that if the corporation operates the business, it is the corporation that will be sued or suffer loss.

This is understandably hard to do but it can be done. The question now arises: Why would someone agree to accept your terms when you have not paid him or her anything in the past Remember the old adage "Half a loaf is better than nothing". Well again, it is crucial to put ourselves in the seat of the original creditor. Fact remained that he sold you something that you failed to pay for. Here it is again later in the piece and you contact him. Whats more he has sent the account over to a collection agency and they have not had any results in collecting any money. Now it is worth noting that when you make contact, in writing, you are planting a seed in their mind. They are saying to themselves "this guy has either come into some money or he is in desperate requirement of something". Well they are up to the mark in their thinking. You do require your credit history addressed.

Let us now proceed in terms of negotiating our debts. It becomes very easy. When you owe money, it is quite straightforward to make arrangements to pay it. Negotiate - remember you are giving something they previously had little hope of collecting. You normally have some leverage in this case. Do remember the point that you only want to communicate in writing and NEVER on the phone.

Writing offers you to create a paper trail. According to experts don't even try to the old "he said, or she said" scenario when negotiating paying bills. That generally won't fly. But on the other hand when you can produce in writing a record of an agreement and you can PROVE that you are making payments on your back debt, you are satisfying a lot of the requirements of the FHA in regards to obtaining a home mortgage loan.

Do not come to the conclusion for one minute that assets and debts simply dries up and goes away. Yes, it is correct that there is a seven-year time limit of reporting adverse information in your credit files. That is correct but can you wait seven years This is crucial to remember if you're trying to get a home loan. In case if a creditor decides to take you to court and he is successful, the seven years flies right out the window. It now doesn't count a thing. As a matter of fact you are now in a Judgement scenario. It is quite important that you do not take a chance regarding a back debt. Handle it at the moment if you are serious about buying a home.

You can also create your debt pyramid. In this scenario, you will get all of your bills and debts out in front of you. Now take them all and arrange them in such a way that the order of largest balance to smallest balance (balance is the amount that you owe the creditor). Now you have a pyramid of debts in hand that you owe. Now comes the next step of going to take some time but it is totally worth it in the end so stick to it. You begin by scraping up enough cash to completely pay off the smallest assets and debts in the pyramid.

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