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How to start a bookkeeping business, assessing professional indemnity policies
- By Julia Nitschke
- Published 05/24/2010
- Bookkeeping
- Unrated
How to start a bookkeeping business, assessing professional indemnity policies
If you are considering starting a bookkeeping business it will be important to think about professional indemnity insurance for you and your business. This is one type of insurance that many people either do not consider or deem to be too expensive for the risk. This is the far from the truth and you should consider the impact to your business if there is an issue and you do not have the protection of insurance.
When you are looking around for different policies, you can start of sourcing insurers who deal with the large professional associations. They will already have a good policy and low premiums since they deal with a large volume of bookkeepers. You can then obtain quotes form other insurers who offer the product.
Once you have obtained a number of quotes, usually around three, you will need to compare them. It is vital you compare the main components and try to compare apples with apples so to speak. If you compare the main components of each policy and then look at the prices it will be easy to pick a policy to suit your own circumstances.
Firstly it is important to look at the overall price of the policy in comparison to the revenue your bookkeeping business is going to generate. For example, does the premium feature a sliding scale where your fees are an indicator of premium cost? There may be a pricing for a turn over under $50,000 and then between $50, 001 to $100,000. It might then have the next increment of $100,001 to $150, 000. Depending on your turnover you may fit into a premium box such as that described. It is very important that the initial quote you request matches your turnover so you have an accurate starting point.
It is then important to compare the actual coverage you are receiving. For example is the premium for $1 million indemnity, or is it less, perhaps more. It is vital that you know what coverage you get in terms of dollar value for the premium quotes.
The excess is also an important factor of the policy. For example, if you have a very low excess, can it be increased so you pay a lower premium. This way, you receive the benefits of a lower premium now, but need to pay a higher excess if you ever have to claim. It is important not only to compare the dollar value of the excess, but also ask if the insurer has any flexibility with the excess component. This is one area you might be able to save a little bit of money with out it compromising the coverage of the policy
There are some smaller points to consider when looking at the individual quotes. For example, is cover immediate? This may be important if you about to commence trading. Additionally, can you obtain the cover online or is there a waiting period and lots of paper work involved. Can the cover be back dated to an earlier date if you have been trading for a while before getting cover? This may be important if you have been in business for a while.
As you can see there are a number of things to consider when sourcing professional indemnity insurance for your bookkeeping business. As long as you research what you are getting for the price and compare like components in the policies, it will help you make the decision to insure yourself and your business a lot easier.
When you are looking around for different policies, you can start of sourcing insurers who deal with the large professional associations. They will already have a good policy and low premiums since they deal with a large volume of bookkeepers. You can then obtain quotes form other insurers who offer the product.
Once you have obtained a number of quotes, usually around three, you will need to compare them. It is vital you compare the main components and try to compare apples with apples so to speak. If you compare the main components of each policy and then look at the prices it will be easy to pick a policy to suit your own circumstances.
Firstly it is important to look at the overall price of the policy in comparison to the revenue your bookkeeping business is going to generate. For example, does the premium feature a sliding scale where your fees are an indicator of premium cost? There may be a pricing for a turn over under $50,000 and then between $50, 001 to $100,000. It might then have the next increment of $100,001 to $150, 000. Depending on your turnover you may fit into a premium box such as that described. It is very important that the initial quote you request matches your turnover so you have an accurate starting point.
It is then important to compare the actual coverage you are receiving. For example is the premium for $1 million indemnity, or is it less, perhaps more. It is vital that you know what coverage you get in terms of dollar value for the premium quotes.
The excess is also an important factor of the policy. For example, if you have a very low excess, can it be increased so you pay a lower premium. This way, you receive the benefits of a lower premium now, but need to pay a higher excess if you ever have to claim. It is important not only to compare the dollar value of the excess, but also ask if the insurer has any flexibility with the excess component. This is one area you might be able to save a little bit of money with out it compromising the coverage of the policy
There are some smaller points to consider when looking at the individual quotes. For example, is cover immediate? This may be important if you about to commence trading. Additionally, can you obtain the cover online or is there a waiting period and lots of paper work involved. Can the cover be back dated to an earlier date if you have been trading for a while before getting cover? This may be important if you have been in business for a while.
As you can see there are a number of things to consider when sourcing professional indemnity insurance for your bookkeeping business. As long as you research what you are getting for the price and compare like components in the policies, it will help you make the decision to insure yourself and your business a lot easier.
Julia Nitschke
Julia Nitschke is an Accountant, business consultant and author of My Bookkeeping Business, how to Start, Run and Grow your Bookkeeping Business. Visit http://www.mybookkeepingbusiness.com for more information and for a free bookkeeping e-course. Or if you want detailed bookkeeping business plan information visit http://www.mybookkeepingbusiness.com/businessplan.html View all articles by Julia Nitschke
