Insurance is essential when dealing with any asset, whether it’s jewellery, a vehicle, a home, or a business. That’s why there are various kinds of insurance policies available today that can cover all kinds of risks such as damage from natural calamities, theft, accidents, loss and more.
There is even one that’s made precisely for small businesses and is called SME business insurance. This is tailored for small to medium-sized businesses and covers just the right aspects a small business needs.
So if you happen to have a small or a starting business, why not know more about SME business insurance and see if it’s for you? Check out everything there is to know about it down below!
What Is SME Business Insurance?
Given that SME stands for small or medium-sized enterprises, this insurance coverage was tailored to meet the needs of businesses of these sizes. And since business insurances allow you to select policies, you can tailor the perfect insurance coverage for your small business.
This coverage is more efficient and affordable for small businesses since this only covers necessary needs at a reasonable rate.
What Does SME Business Insurance Cover?
There is an array of things SME business insurance covers that are not only to protect your business but also your staff, customers and reputation. To know what policies you can get, here’s a rundown:
- Property Damage – This policy covers any damages caused by natural calamities and accidents.
- Burglary/Theft – This covers any loss your business has suffered from stolen goods, documents or equipment.
- Financial Losses – This covers finances that were stolen within the premises at open hours or closed hours, during transit and so on.
- Business Interruption – This covers any losses your business has suffered during a business interruption such as power outage, community lockdowns and so on.
- Liability – This covers the legal liability of injury or damage caused to a customer or any third party.
- General Property – Protects movable items you take outside of your property against material damage risks.
- Electronic Equipment – covers the costs of damages to computers or electronic equipment due to accidents, faulty products, natural disasters, etc.
What Are The Kinds Of Small Businesses?
There are over 5 main kinds of small businesses, all with their own set of characteristics, functions, purpose and nature. To know each of these ‘main kinds’, here’s a sum up:
Sole Proprietorship
This kind of small business is usually owned by a single person who is responsible for all business transactions, lawsuits and debts. And since their personal assets are the same as their business assets, they file all their taxes as one, all as personal tax.
General Partnership
This kind of small business is owned by two or more persons who are jointly liable for the entirety of the business. Although not all owners make the same amount of money (based on their agreed-upon arrangement), they all have the same legal obligations.
General partners, like a sole proprietorship, can write off the majority of business costs on their personal tax returns.
Limited Partnership (LP)
This kind of small business is somewhat similar to a general partnership since it also has two or more owners. But what makes this different is that its owners do not share financial and legal responsibilities. Limited partners provide funding for their small businesses operating expenses but have little to no managerial participation.
Limited partners could also pay less in taxes due to their limited involvement in corporate operations.
Limited Liability Company (LLC)
A limited liability company (LLC) enables a small business to have one or more owners who are not personally responsible for business activities, transactions, debt and so on. Keeping their personal assets away from risk.
LLCs allow small business owners the option of submitting their corporation taxes and self-employment taxes separately from their business taxes or as part of their taxes.
Non-profit
This kind of small business, like its name, doesn’t aim to make a personal profit but to generate funds to cover operation costs to support local communities and more. To run a non-profit business you’ll be needing funding like donations or financial backers.
Owners of these sorts of small businesses are eligible to apply for tax exemptions as well as other government aid programmes because they don’t make profits. Due to non-profit tax benefits, non-profit businesses must comply with particular operating guidelines in order to preserve their non-profit status.
