If there is one big takeaway from the era of COVID-19, it’s the importance of having a solid plan in place to protect yourself and your business in the event of a disaster. While most people might look to an insurance broker for advice, your small business accountant can actually become your first line of defence if you ask the right questions.1. Your small business accountant can help clarify your assets
When it comes to assets, it’s the big-ticket items that usually come to mind first — the family home, investment properties, vehicles and any valuable personal items such as jewellery or artworks. However, taking a simple approach to insurance that only provides asset protection for the obvious things is part of the reason so many Australians are underinsured.
Your small business accountant should be taking the time to develop a clear picture of all your assets both personal and professional. Once you know what you have, then you can get the right assessment of what they are worth, and ensure you have the right level of asset protection.
2. Asset protection tax deductions
It is not only objects such as business premises, plant and equipment that require asset protection. For example, what price would you put on your professional reputation? What price would you put on the performance of your products or customer satisfaction?
Whether your small business is an employer or you are a sole trader, professional indemnity insurance, product liability insurance and cyber-crime insurance are all an important part of asset protection when it comes to your business and your future.
Keep in mind too that under ATO guidelines, insurance for assets relating to your small business and professional life are often tax-deductible. This is also something your small business accountant can advise you on.
3. Your small business accountant can help plan your asset protection
Just as you can count on your small business accountant to help you manage regular business outgoings such as wages, rent, loan repayments and tax obligations, they can also help you plan asset protection.
For example, compulsory third party motor vehicle insurance can now be paid either annually or six-monthly. Life insurance premiums can be paid annually, bi-annually or monthly. You can choose set-and-forget direct debits or be billed and make payment as part of your general expenses housekeeping.
There is no one-size-fits-all approach. Your small business accountant should take the time to tailor your asset protection plan and the relevant costs to your overall cash flow management and long-term wealth-building strategy.
For example, you might find that monthly payments mean you have greater liquidity from month to month available for paying down debt. Or, if an insurer offers a discount for an annual payment, what you save on asset protection could be invested into building more wealth.
4. A will is asset protection that protects your legacy
Death is a fact of life, and there is no way to sugarcoat that. But as small business accountants we have seen first-hand the additional pain and stress it causes loved ones when someone passes away without having made a will.
None of us like to think about the end game, but all the wealth-building in the world will not give your family the security and legacy you’ve worked so hard for if you do not have those all-important legal structures in place.
Your small business accountant should have the details of where your will is, all the relevant life and asset protection insurance details and the details of who your chosen executor is. This will make a major difference to how prepared your family will be in the event anything happens to you. With a proper plan in place, your accountant can work with your nominated executor to provide the support and information they need to conclude your financial affairs effectively.
To learn more about asset protection and the ways your small business accountant can help secure your family’s future, download our free eBook ‘Your Money, Your Choice - Make Money’