Chapter 4: Managing Risks as a Marketing or Management Consultant
Part 1: Risk Management Tips that Keep Your Insurance Rates Low
Did you know that some insurance providers can offer you "credit" for enforcing certain risk management techniques? It's true! Below, we summarize some of the easiest, most cost-effective strategies around.
But before you invest any time or money, make sure you speak with your insurance provider first. Sometimes, insurance policies require very specific specifications in order to qualify for a credit.
Putting Safety First
Be sure your commercial office space is clear of clutter. Media cords should be stored and walkways should be clear of obstructions. If you own your commercial property, be sure that you shovel and salt the sidewalk in winter months.
You'll also want to ensure your entrance has a slip-proof mat for traction on rainy days. That way, you reduce the risk of visitors slipping inside your building and hurting themselves. Also, if your place of business has stairs, be sure that you have enforced railings to reduce the risk of falls.
Some insurance providers offer credit to businesses who install certain fire and security systems, which helps reduce the likelihood of property loss. Ask your insurance agent for more details.
Securing Your Digital Life
To keep up in today's fast-paced world, you probably conduct a substantial amount of your business online. But if you handle sensitive client information, such as their customers' email addresses or credit card information, it's imperative that your antivirus and malware protection software is up to date. Otherwise, your business may be the next target of a data breach.
A secure Wi-Fi network also reduces your risk of cyber attacks and thefts. Though you may rely on the cloud to secure your digital files, you should also have a physical backup of your important e-records.
Protecting Your Paper Files
Just as your digital files need safeguarding, your paper files should be secured, too. If there's a fire in your office, you'll want the peace of mind that your important records will survive. You may want to keep the following information in a fireproof safe:
- Insurance information.
- Client contracts.
- External hard drives.
- Client contact information.
- Other important data.
You may even consider making copies of these vital documents. There is a general rule that states each important record should be copied three times and kept in at least two separate physical locations. That way, if something happens to the document in the first location, the second copy is still safe.
Communicating with Your Clients
One of the most effective ways to reduce the likelihood of a professional liability lawsuit is to keep the lines of communication with clients wide open.
If you haven't heard from your client in a while, reach out and follow up on your strategy's progress. Touch base with them between project milestones every now and then, just to ensure that they feel like part of the process.
And if something comes up or you need more time to finish a project, inform your client and update your contract to reflect any changes.
Complying with the Affordable Care Act / Obamacare
As of January 1, 2014, all Americans must carry health insurance. As a sole proprietor or independent contractor, you can't rely on an employer to furnish those health benefits. However, there are a variety of plans available on the Individuals & Families Marketplace exchanges where you can find a plan to fit your budget.
Your premium varies depending on…
- The plan you choose.
- Where you live.
- The size of your household.
- Your income.
All plans must include free preventative care, and you can no longer be barred from coverage based on preexisting conditions (such as pregnancy or disability).
If you don't have coverage by the time you file your annual tax return, you will be assessed a fee of 1 percent of your yearly income. That fee increases each year. To learn more about the ACA (Obamacare), check out WebMD's easy-to-follow primer "Health Care Reform: Health Insurance & Affordable Care Act ."
Paying Your Quarterly Taxes
Earlier, we mentioned the tax responsibilities of sole proprietors and independent contractors. Your quarterly taxes are not optional — you must pay them throughout the year (April, June, September, and January). If you owe more than $1,000 at the time you file your annual return, you may owe penalties and interest in addition to your back taxes.
To avoid giving Uncle Sam more than you have to, try to pay your estimated taxes in equal installments throughout the year. You can file and mail Form 1040-ES vouchers to the IRS, or use the IRS Electronic Federal Tax Payment System .
$1,000 = tax bill threshold that triggers penalties.
In the next section, we discuss your quarterly tax obligations in more detail.
Next: Part 2: How to Save Money on Your Quarterly Taxes