Many people decide to go into business to have greater control of their future and financial success. Most see it as a great vehicle to generate more wealth while others for passive income and others to indulge in their passion.
One of the most common challenges that all businessmen have to contend with when going into a business is the financial risks it comes with. However, did you know that you can offset some of these risks with the right approach?
Here are some of the great options available that you can discuss with your Melbourne accountant:
For start-ups, it can be difficult to secure a loan, especially without a help of a Melbourne accountant to prepare the financial documents. Why? Most lending institutions would view businesses as risk. However, there are ways you can make your business more attractive to investors and minimise the risk.
One option would be to use their residential property as their collateral when borrowing money. In general, lenders prefer this as it reflects that the business owner has vested interest in the business and well, of course, no one wants to lose their own home.
There are a number of insurance options that can help cover financial risks. Among the most common types is the life insurance, which can be used as collateral. If in case the business does not work out or the business owner passes away, the life insurance along with other assets can be used to cover the costs.
Another type of insurance that can be used to cover financial risks is the key person insurance, which is designed to protect the business in case something happens to the owner. This type of insurance is typically taken on by the business owner whose contribution to the business is considered to be irreplaceable and unique.
Last but not the least, the business overheads insurance is yet another type of insurance, which is designed to cover the self0employed individuals in case they will not be able to render or perform their work or if they can no longer function as the business owner.
Take time to discuss all these options with your Melbourne accountant.