A common misunderstanding has it that if your business isn’t worth anything yet, then you don’t need any sort of insurance whatsoever. The fact of the matter is that if your business isn’t worth anything, then people will come after you. You’re going to at least need some basic liability insurance very early on, as soon as you can afford it, in fact, because even if your business is just you in a garage, somebody could still slip and twist their ankle walking up your driveway.
Beyond basic liability, what is there to protect? Do you really need to insure a used laptop and a $50 particle-board desk? Maybe not. But there are some steps you will want to take to protect yourself in the early stages, even before there’s much of a business to insure:
- Incorporate your business. If you are the sole proprietor, then you are the target if your business is sued. This means that your house and car and other assets are all up on the chopping block. When you incorporate your business, putting ownership under a trust, then you and your business are separate legal entities, and you put far less at risk in the early days of building your business.
- Invest in cyber-security early on. The last thing you need is for someone to hack into your files when you do not yet have the money or the resources to do something about it.
- Talk with a lawyer the minute a consultation is in the budget. Every product, every service brings its own legal risks with it, and you won’t know exactly what those risks are until you do a one or two hour consultation with a lawyer. Some lawyers may even offer this service for free so that you’ll keep them in mind when it’s time to commission their services. You will want to speak with a local attorney, as you will be under the jurisdiction of local laws.
In short: Even if you don’t think your business is worth protecting, you are. You don’t want to get into trouble with the IRS and have them garnishing your wages for the next twenty years over a failed business venture you made in your twenties.
You don’t want to lose your house to someone who injured themselves delivering food to your home office. Even if your business is nothing but a card and a website, it makes you a target, and you need to protect yourself.
