Insurance

Insurance includes workman’s compensation, general liability, equipment, and professional liability insurance. Insurance is one of the many areas of business administrative functions and has assorted issues that must be addressed. This section of the website is designed to educate the reader about these matters.

Errors and Omissions Insurance

Errors and Omissions Insurance

Oops!  We’ve all done it at some point in our lives. We make a mistake while serving a client. Mine cost me a little over $2,000 in penalties to the Internal Revenue Service for failure to file an extension on a partnership tax return. Not a good day. 

Payroll – Introduction to Basic Concepts

Payroll

Payroll is envisioned as the simple employer employee agreement related to compensation for services. I often think of this as the simple handshake whereby the employer agrees to pay the employee a set rate per hour of work. This was true a hundred or more years ago, but over time; history and governmental regulations complicated this simple relationship.

Cost per Mile – The Basic Formula

Cost Per Mile

In any industry, especially transportation, it is essential for the owner of a business to understand how much it costs per mile to operate his vehicle, trucks or fleet. The formula looks simple and in reality it is; but you must understand the underlying elements to truly appreciate and comprehend the calculation.

Fixed Costs – Explanation and Examples

Fixed Costs

‘Fixed costs’ is a business term used mostly in cost accounting. It has several meanings based on its usage. The most common definition associated with fixed costs is expenses that must be paid regardless of production or sales volume. The best example is rent for a company. It doesn’t matter whether you produce or sell one widget or several thousand, the rent must still be paid.

So why is it important to understand fixed costs?  How is it used in cost accounting and in financial reporting?  Finally, what are examples of fixed costs? 

Worker’s Compensation Insurance – A Basic Understanding

Worker's Compensation Insurance

Worker’s Compensation Insurance a.k.a Workman’s Compensation Insurance provides for the medical cost of the sustained injury and for lost wages during recovery.  In addition, if the worker sustains permanent disability, the insurance provides compensation until the Social Security Administration’s Disability Program starts.

Insurance – Introduction to Business Insurance

Insurance

Insurance is a risk reduction tool used in our private and business lives. It is founded on the basic premise that a large group of individuals will cover a catastrophic event for one of the members sometime in the future. In general, the insurance company uses actuarial science (law of large numbers) to calculate the financial cost of accidents over a given period of time. 

The Key Man

Key Man

One of the most misunderstood principles of business deals with the one or few individuals in a small business operation who are critical to operations. This individual is referred to as the Key Man. The best example is that of the primary wage earner in the family unit. 

The 1099 Subcontractor

1099 Subcontractor

The Internal Revenue Service promulgates rules and regulations concerning the employment status of workers. In general, workers are classed as W-2 employees and certain tests must be met to have the worker classed as a 1099 subcontractor. All 1099 subcontractors should be issued a Form 1099 in January of each year for the prior calendar year of services. This article describes the general tests that must be met for the worker to be considered a 1099 subcontractor.

The True Cost of Labor

Cost of Labor

I laugh at the definition of labor costs because in my opinion the so called experts only have it half right. Labor costs are more than just gross wages and benefits. It should include the costs of insurance, employer taxation, human resources management and incentives. All of the costs associated with delivering the human element of service should be included. Let’s explore these costs from the most expensive to the least.

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