Imagine looking over your expenses from the year, and you calculate not only no refund, but you owe a hefty sum. Your small business is doing well, but not well enough that it can take a heavy tax hit or any other easy mistake. What can you do? Did you take tax-deductible insurance into account?

The savvy business owner works to get the most out of their return. Whether you use a tax app or are a pen-and-paper warrior, each person must hunt for every last tax deduction available to them. This helps puts money back in your business, and money in your business is an investment in its success.

adults brainstorming with post-its on a board — *Brainstorm when you can about deductions for your business. A penny saved is one more in your pocket.*

So, how can you get ahead of the curve? For the self-employed, the small business owners, and even larger companies, certain tax information can be murky. Uncovering the mysteries of insurance premiums and how they fit with taxes can help lower your payments come tax season.

Insurance is a Cost of Business

The IRS’s 2018 Publication on Business expenses states, “You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. However, you may have to capitalize certain insurance costs under the uniform capitalization rules.” This means money spent that was necessary to keep the business running necessary business running can be deducted. It also allows for a process called “capitalization” for certain expenditures, which means transforming your insurance premiums from a business “expense” to a business “cost.” The difference between these two is that an expense refers to the usage of an item, whereas a cost is purely money spent.

So, now the IRS has given you the go-ahead. You can take stock of your premiums and capitalize them if needed. When filling out your tax forms, make sure you place the correct amount spent for the year. For example, on a 1040 form, lines 46, 61, and 69 will be used to report your insurance expenditures.

These examples can be used by the self-employed as well. It comes down to locating which coverages you have, how much you spent on them, and if the premiums are deductible. Let’s look at what premiums make the biggest impact on your tax statement.

Only Some Insurance Is Tax-Deductible

You can start crossing off expenses and reducing your tax payment, putting more capital back into your company’s financial reservoir. Here are the premiums that are deductible:

business notes on insurance and other expenses — *Take good notes for these deductions. Tax forms will need accurate information. Celebrate your savings!*

Fire, theft, accidents, storm, or losses similar to these categories
Business interruption
Group Health/medical
Long-term care
Credit insurance coverage against bad debt
Liability
Worker’s Compensation
Malpractice

Other items of note are life insurance, vehicle insurance, unemployment funds, or overhead insurance. Life insurance can be useful here only if it covers you under contract. For your vehicles, they can be deducted (even if one is for personal use) only when used for the business. The payments to the unemployment fund are only counted in this list if they are approved by your state of residence. Also, the overhead insurance comes into play if you have used it for a long period due to a disability.

Non-Deductible Premiums

Payments made for a self-insurance reserve
Loan security
Earnings Loss
Life insurance/annuities not covered above

Another good rule to note is that if you paid for a premium in advance, this is not considered suitable for the current tax year. Remember, if you take out a premium for five years, each year only one-fifth of the payment can be used to offset your expenses. So you can not deduct the entire premium in one year since you are using it over the course of five.

person calculating numbers and stats for their company — *You’d be surprised the intricacies of this process. Don’t worry! Follow our lead, and you’ll be ahead in no time.*

If you are a sole-proprietor or self-employed, there is more good news for you. Your payments for coverages like medical, dental, and long-term care can be included as an expense. However, this is not the case if you “could” have been covered by your spouse for a certain time in the year. If they see you had the option, they will not take the deduction on your taxes.

In most cases, your business’ essential premiums are considered tax-deductible insurance, so they will be useful come next season. Using the list provided, you can cut down on business costs and fill out that revenue line. What could be better than being covered and saving money?

EZ.Insure is help both you and your business. Your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure, or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.

When and Why to Get a Group Insurance Plan

So, you’ve got a company, and you’re thriving. As a small employer that’s excellent news! But one thing that’s important for your employees (and thus, important to you) is insurance. Next to an employee’s income, health insurance is the second most important employee benefit. This includes health plans, medical insurance, etc, for both full and part-time workers.

business notebook with planning underlined — *The planning stage comes first before you look into getting insurance.*

One of the biggest factors in the job market out there is insurance, which is paramount to keeping your employees happy. Overall high morale reduces employee turnover, and a stable workforce is one of the greatest predictors of continued success. Guaranteed issue insurance can land your company in a “Best Places to Work” chart. Secure employees equal low turnover.

If you haven’t already, you need to look into a group insurance plan.

But what is it exactly?

What is Group Insurance?

This is a coverage type for a defined group of individuals. Usually, companies will offer health insurance as the primary offering and can supplement to include dental, vision, life or disability insurance.

Group insurance is a leg-up for both the companies and the beneficiaries. Because the companies get a large number of people to cover all at once, they can reduce their rates for said individuals, and the process will go smoothly as they want your business. Wholesale isn’t just for paper towels and bread.

So, in essence, it’s a bigger version of individual health insurance (a single policy) where the company is the individual, and all the employees are separate parts.

When to Acquire?

Technically, if you’re self-employed, you could apply for small group health insurance in some states. For the majority of business owners, you’ll probably be thinking bigger. You can look into this whenever you decide the time is right for your company. Many small businesses realize the benefits of having a group insurance plan, both for the business and for the employees, and opt to look into it sooner than later. .

doctor working with a business person — *The peace of mind that comes from group health insurance is an attractive benefit.*

Remember, the choice is yours to make this step for your business. One differentiation to note is employee number as it puts you in a separate category under the Affordable Care Act. However, this shouldn’t guide your decision.

There really aren’t “milestones” separating you from the uninsured line. When you’re ready to make the investment and are looking for the first time, there is no enrollment period you have to wait for. However, make sure that you start shopping at least 90 days prior to the date you want your insurance plan to be active.

If you feel like you’re wanting to purchase group insurance with a smaller business, one marker would be income. The average annual cost for an employee premium is around $5,000.

So, if you can budget $5,000 per employee per year into your books, it may be well worth looking into.

Why Acquire?

There are many benefits to getting a group health insurance plan:

Your employees will likely be healthier given that they have access to healthcare.

These types of expenses for your business are tax deductible which means putting more money in your pocket.

The aforementioned lower turnover. Happy employees=a stable workplace

As you can see, the benefits will outweigh the costs. You’re going to want to keep your employees happy, and you’ll find support from the government and insurance agencies to smooth the process.

business man giving the thumbs up — *You can do this! You have all the help and support you need.*

Acquiring new insurance and seeking a personalized plan can be difficult and time-consuming. An agent will do the smooth the process, allowing you more time to focus on your business.

EZ.Insure offers you this solution. Your agent will answer any questions you have, compare the plans for you, and even sign you up, free of charge. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure or calling 888-998-2027. EZ.Insure makes the entire process easy, and quick.

Tag: company

Tax Deductible Insurance: The Facts

Insurance is a Cost of Business

Only Some Insurance Is Tax-Deductible

Non-Deductible Premiums