Own a Services Business? You Need Insurance

by Zack on November 23, 2016

Own a Services Business? You Need Insurance

Running a profitable small business demands fortitude, patience and know-how. If you go into business with only a limited understanding of the basics, your business is going to fall down around you. Build your business brick by brick with a detailed budget. Know your market. Train your staff. Before you open your doors to the public, make sure your house is in order, if it’s not, the future might not be too bright.

Taking Care of Business: Are You Prepared?

Henry Ford once said that “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” You most likely heard some iteration of this when you were working a retail job in high school and during your college summers. It’s true: without customers, we don’t have a business. And though this can be a tough pill to swallow given the unkind behavior of some customers, we still have to make sure that they are satisfied with their service at the end of the day. But know this: there will come a time when a customer is unsatisfied, and they will make badmouthing your business a top priority.

Service industries are the most profitable, according to Sageworks analyst Jenna Weaver in an interview with Entrepreneur Magazine earlier this year. Why are these industries generally more profitable than their counterparts? Weaver says it’s because “[Service industries] generally [have] lower overhead and startup costs. A lot of these industries you can start from your house.” Despite being a highly profitable industry, running an accounting service has its pitfalls.

Here are three facets of accounting services that are at the beck and whim of their customers/clients. If you can’t follow your business model, expect to be hit extra hard with litigation costs.

Accounting Services

AccountingWeb notes that there are six dangers in starting your own accounting firm from the ground up. For our purposes, let’s look at three:

Poor marketing: If your prospective clients do not know that your accounting firm exists, they’re not going to set up an appointment with one of your staff come tax season. You have to get yourself out there and work the crowd. Bid for any jobs available and go above and beyond the call of duty to make sure your client is happy. Referrals will then bring traffic your way, and you’ll soon be on your way to running a successful business.

Cutting corners: Come tax season, you’re going to have a lot of clients that just want to get their taxes done without having to pay a dime back to the state or federal governments. What does this mean for you? It means putting your foot down and continuing to do only ethical work, even if the client tries to pressure you. If the client was dishonest about their taxes, you are dishonest by association. Your client could sue you for mishandling their taxes and tear your firm apart—equipment, staff, money and all. It is always highly recommended for business owners to get insurance to cover potential disasters just like the one described above. If a customer sues you and has reasonable cause for taking you to court, there’s a chance they’ll win damages.

Hiring inexperienced accountants: This leads us to the third most important task of running a successful accounting business, hiring experienced staff. If you have a few empty cubicles that you’re looking to fill, it’s important not to hire the first person who applied to the vacant position. When seeking potential candidates, it’s necessary to scour their LinkedIn, call their references and make absolutely sure that what is written on their resume is who and what they are. If one of your clients is taken to task by the IRS because their accountant did an abysmal job, they will take you to court, and rightly so. This is again why it is so necessary for business owners to get business insurance. Business insurance will cover the litigation fees and damages should the plaintiff win the court case. Though your business’s reputation will be hit, your finances will remain in order.

No one’s perfect and business is a tough game, but with the right people, tools and attitude, your business is sure to succeed.

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