One of the single most contributing factors that have influenced insurance costs for retail and restaurant establishments over the years is slip and fall incidents involving customers and employees.
On 04.23.10, In Car Auto Insurance, By admin
On 04.18.10, In Car Auto Insurance, By admin
Insurance is a necessity in any business. Businesses cover themselves against losses such as fire, theft and unexpected natural disasters. It is with the bookkeeping or accounting that owners get it wrong.
On successful insurance claims, a payment is normally made to the insured. My experience has led me to believe that small businesses have no clue, as to how, to account for insurance settlements. Most businesses reflect the payment as income.
Not only would this be deceptive but also violates International Accounting Standards. Since the transaction has everything to do with assets and nothing to do with income, it should be adjusted against assets. Erroneous accounting for assets might prejudice the business further in future, if similar insurance claims are made.
Insurance companies settle claims on assets, on its book value and not its costs. (And yet the asset was insured on its cost at date of purchase). Whereas this principle might vary from country to country, book value is widely accepted as the norm. Since most small businesses fail to maintain proper fixed assets registers, insurance companies perform “desk top valuations”, or make an “estimate”, on the book value, mostly much lower than its “real” book value. Without proper records, the claimant cannot debunk the assessor’s final conclusions.
Before I loose you in a sea of confusion, let me elaborate. If an asset is on your books at least, without the asset register, but you have no purchase date, and this asset is lost due to theft, no accurate wear and tear can be furnished. Furthermore, if a claim is settled, and reflects as “income”, what happens to the asset that was stolen, but still reflects on your books?
Many reading this article could not care a hoot about the number crunching involved, but please stay with me for a minute. You might not care, but an investor, a bank and yes, the insurance company might pick this up on your financial statements when they demand your reports.
The method used to account for insurance claims is the “disposal method”. Any asset subject to an insurance claim should be transferred to a “Disposal Account”. Depreciation on the asset for the relevant period is calculated, and credited to the disposal account with the insurance settlement. The cost, less depreciation equals book value. Any settlement amounts over or under book value, will result in a loss or profit on disposal.
An insurance claim, wrongly entered as “income”, can be adjusted by transferring the amount to the disposal account. After effecting these entries, the disposal account should balance to zero. Your new records would reveal, the loss or profit on claim (income statement), settlement in bank account, fixed assets less the stolen/lost asset, and a lower depreciation estimate for the year.
I acknowledge that this is your accountant’s job, you however have a duty to provide accurate records. But how many businesses continue to pay, the same insurance premiums on the assets, since purchase date, when they, entitled to a lower premium, due to a lower asset value.(prior to any asset losses).
Also, a precarious asset situation in your books, might lead to problems in your tax affairs.
No business can afford a visit from the IRS. Did you know that tax authorities always commence auditing, your assets, before they move on to your income?
By: Sean Goss
On 04.13.10, In Car Auto Insurance, By admin
Insurance agents are the insurance company’s front liners to its clients and potential markets. They are the ones who search for customers, aid them in selecting the right insurance products to meet their needs, and provide continuing support.
Often, being an insurance agent is part-time job, something that career people do on the side to earn extra income from commissions. But while it is work that can be done on leisure time, insurance agents are also tasked to reach monthly customer quotas. A person?s sales and marketing abilities come into play.
Most insurance companies train their agents to give them full comprehension of the products they sell. But while seminars and training are available for recruits, insurance companies often prefer to hire college-educated applicants. This is because a background in finance and accounting is necessary to be successful in selling insurance policies.
Previous experience in sales is, of course, a big boost. A working knowledge of the use of information technology, such as the Internet and computers, is necessary to ensure that relationships with clients are kept intact. An applicant who has a background on presentation skills, sociology and psychology, may already have an edge over other applicants.
An insurance agent may have control over his time and schedule, but he has to travel a lot to meet clients. Sometimes, he may have to work weekends and past normal office hours just to be able to present to potential customers. Most often, these presentations do not necessarily result in clients actually buying a policy.
Before insurance agents can get into the field, they must be fully licensed and must have passed the necessary exams to ensure their comprehension of financial policies. There are different exams for different kinds of accreditation.
By: Jennifer Bailey