Four Critical Areas of Exposures Business Owners Need to be Aware of
Monday, November 15, 2010
Running a business isn’t always as easy as just producing and selling your widgets. Here are a few “hot topic” areas that could adversely affect your business interests if left unattended:
Fiduciary Responsibility on Retirement Plans
After the debacle of 2008, business owners were being sued by their own employees for lack of education and oversight on 401ks. As a business owner or officer making decisions about the company retirement plan, you may fall under the definition of “fiduciary” as defined in the Employee Retirement Income Security Act of 1974 (ERISA). One way to reduce this exposure is to work with professionals who will educate you and your employees about investment risk.
Workers Compensation
If you have employees, it’s mandatory that you have this coverage in Rhode Island. That includes “independent contractors” that work for no one else by you. For business owners trying to save a few bucks by excluding themselves, check with your health insurance provider to make sure you would have health insurance coverage in the event of a work related injury.
Buy-sell arrangements
Co-owners of a business need to prepare for the possibility that one of the owners might die, becomes disabled, retire, or want to leave the company. Owners must agree on a value for the business and then figure out how the company would buy out the disabled/departing owner or his/her heirs in the case of a premature death.
Cyber Liability
This is a relatively new concept brought about by the technology explosion. If you engage in e-business, use the internet, or have client information on your computer, you may have a cyber liability. Also, if you blog, tweet, or have a Facebook business page, you could have exposure there as well.
Dan Forbes is a regular contributor on business financial issues. He can be reached at [email protected]
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