Small business needs workers compensation coverage, just like any other size enterprise with employees.
Workers compensation insurance can help protect a fledgeling operation from having to struggle to come up with the funds to cover a single workers comp claim.
Without protection, the company could be liable for legal fees, damages and other out of pocket costs that could lead to cash flow issues. Still, some small business owners are wary of shelling out the cash for a business insurance policy they feel they may never need. Find out the top reasons your company needs workers compensation coverage below.
The most important reason to have workers compensation coverage is your state probably requires it.
Most states in the USA require businesses to hold workers compensation insurance policies to protect their employees. As noted by ChasenBoscolo
In the state of Virginia, employers with two or more employees are required to carry insurance to protect employees in the event they’re injured performing duties they’re approved to perform at work.
If you do not have one of these business insurance policies, you could be putting your business at risk of getting fined or shut down for noncompliance. This is an unnecessary risk that no small business owner should take. If you want to know why small businesses need workers compensation coverage, the main reason is that most states require it by law.
Helps You Get Business Loans
If you need to get approved for business financing, you need to have workers compensation insurance coverage. This is one of the major differences between business vs personal loans.
Traditional business lenders and foreign investors alike are much more likely to approve small business loan applications when they see that a company has business insurance. These types of policies prove to lenders that you are a responsible business owner that plans ahead.
Moreover, they also decrease the likelihood of a small business owner defaulting on a loan due to a costly workers compensation claim. Securing a loan is one of the best little known benefits of workers compensation insurance.
Makes Hiring Easier
Small businesses need workers compensation policies because they make hiring easier.
Employees are much more likely to be willing to work at a small business that has coverage over one that does not.
Workers compensation insurance plans can be a beneficial talent recruitment tool to advertise in your job listings. They indicate to job-seekers that you will be an employer that cares about their employees. This is critical for small business in particular, as small enterprises are proven to have a harder time recruiting workers to help run business operations. To find top talent, you should have a basic pre-requisite like workers compensation insurance.
Protects Business Financial Health
Workers compensation policies protect small business financial health. Small business statistics show that a single medical procedure from one workers’ compensation claim could prove to be devastatingly costly for a small business. In fact, buying a workers compensation insurance policy could wind up saving small business millions of dollars.
If your company does not have coverage, an injured employee could sue your business. There are several reasons why employees sue companies. That will ultimately add up to much more than the average workers’ compensation policy cost. Protecting your small business’s financial health is one primary reason your company needs workers compensation coverage.
Year-End Tax Savings
Investing in workers compensation insurance also provides small businesses with additional tax credits at the end of the year. Workers compensation policy payments are tax-deductible. That means you can claim them to save your business even more money at the end of the year.
Small businesses could always use additional business tax credits to reduce their year-end tax burden. Of course, you will want to avoid the wrath of the IRS. To stay out of trouble, it helps to have legitimate expenses. This is yet another one of the reasons why your company needs workers compensation insurance to further financial success.
Small businesses need workers compensation protections just as much as their employees. This is why so many states have made it a legal requirement to hire employees.
To expand to two or more employees, workers compensation insurance plans make your business legally compliant with state regulations. They also can help you get approved for business loans and find top talent easier.
Ultimately, coverage will protect and enhance your business financially by offering cost savings and tax incentives. These are the top reasons workers compensation insurance policies can protect your small business.