Myths About Starting a Small Business

Small businesses (those with less than 500 employees total) are the backbone of the economy. According to the U.S. Small Business Administration Office of Advocacy, there are over 28.8 million of these businesses, and they account for 99.7% of all businesses in the country. There’s always room for more small businesses to open and thrive, however, entrepreneurs should be certain they are doing so for the right reasons and not just operating solely on wishful thinking and misleading information.

The myths listed below are common beliefs for new small business owners, and in many cases believing in these myths can lead to costly lawsuits and claims for small business owners. Below are some commonly-believed myths about starting a small business. Share these with your small business clients when discussing their coverage, in order to ensure that they are fully aware of their risk exposures.

Myth: If I start a small business I can write off all of my expenses.

Reality: While it is true that many business expenses can be written off in some way, it’s not quite as inclusive as many future business owners would hope. Some things don’t qualify as business expenses at all, and for many legitimate business expenses, business owners can only claim a portion of the expense. Being able to completely write off all expenses would be nice, but it’s definitely a myth.

Myth: I don’t have to charge or pay sales taxes when selling online.

Reality: It’s true that some online businesses refrain from charging sales tax, but that does not make it correct or advisably. Any business that is selling taxable products or offering taxable services, whether in person or through an e-commerce website, is responsible for collecting and remitting taxes. No exceptions.

Myth: My business is so small, I don’t need a license or insurance.

Reality: Being a small business owner comes with a good amount of responsibility. There are processes and procedures in place in both the federal and state level, and these exist to ensure that businesses are operating legally and safely. Regardless of whether a business has two customers or 2,000 customers, the government expects them comply with all regulations. Even a sole proprietor should obtain the minimum amount of licensing and insurance required of them. This can protect the business from financial burdens down the road, including state or federal compliance issues or litigation stemming from an unhappy client.

When starting a small business, a business owners policy (BOP) insurance package is a great way to quickly and easily obtain comprehensive coverage. A BOP such as the one offered by ATM Insurance, combines a basic general liability policy with other policies that cover property, inventory, income, and more. BOPs can benefit small businesses in a multitude of industries because of how customizable they are, and can keep business owners of all sizes compliant with insurance regulations.

About American Team Managers Insurance Services

Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (877) 671-7503 to speak to a representative.