Sole Proprietors

Margaret's prawn boat

Starting Out
Many businesses start out as an idea - the business structure is simple and the income is often low. A sole proprietorship is often the best business model at this stage.

If the founder is starting the business whilst earning other income, the early costs or losses can be written off against the other income.

Partnerships are very similar to a sole proprietorship. In this situation the partners share the profit equally unless there is a partnership agreement.

Julia next to a BIG truck

Risks
What is going to stop someone from getting their business going? A serious injury, heart attack, stroke or cancer is top of the list.

The income in the early years of a small business is often low if not negative which makes getting disability insurance difficult if not impossible. This is because disability insurance is based on REPLACING the lost income.

Critical illness insurance is not based on income so is available at this stage of a business.

Insurance Solutions

My recommendation usually includes injury only disability insurance, term 10 critical illness insurance and term 10 life insurance.

The disability insurance should include 24 hour coverage from the first day after an injury. The amount purchased will be limited by the income in the previous year.

The critical illness insurance should include enough coverage to replace about 2 years of income.

Life insurance should be enough to make sure any dependents are debt free and have a nest egg.

Bald eagles and sealions on the log boom in Nanaimo harbour