common risks, including customer injuries on your premises. More specialized varieties of
liability insurance include:
n Errors and Omissions Insurance. Errors and omissions (“E & O”) insurance covers inad-
vertent mistakes or failures that cause injury to a third party. The act must actually be an
inadvertent error, and not merely poor judgment or intentional acts. For example, an E & O
policy would cover damages arising from an insurance agent failing to file policy applica-
tions, or a notary forgetting to fill out notarizations properly.
n Commercial Automobile Insurance. Commercial automobile policies cover the cars,
vans, trucks, and trailers used in your business. The coverage will reimburse you if your
vehicles are damaged or stolen or if the driver injures a person or property.
Workers' Compensation Insurance
Workers' compensation insurance covers you for an employee's on-the-job injuries. Busi-
nesses with employees are required by various state laws to carry some type of workers'
compensation insurance. In most cases, workers' compensation laws prohibit the employee
from bringing a negligence lawsuit against an employer for work-related injuries.
Keeping a Clean Customer Database
Let's briefly discuss your accounting software and your record-keeping (more to come on
these topics in chapter 8). Put quite simply, you must understand that bookkeeping is a big
part of the entire business success plan. Frankly, it's not a fun job and it can get quite mono-
tonous at times, but clear and accurate records must be maintained. The bookkeeping por-
tion of any business can quickly become overwhelming if not consistently attended to, so a
daily monitoring of the checking account balance will go a long way toward the discipline
that needs to be maintained.
Within most account software programs one can keep records and copies of invoices,
quotes, purchase orders, and other important business-related information that we will
simply refer to as your customer database.
Your database record-keeping is just as important as your checking account record-keep-
ing. In the end it all ties together and leaves a clear path as to where money is spent, why,
how much, to whom, and from where. This is important as the Internal Revenue Service
must have access to these clear records at a moment's notice. If they ever ask, you will need
to show them where the money is or was that you've collected from your customers.
Not only for IRS reasons, you'll want to keep records of your customers and customer in-
voices in your database for your and their protection. It provides a clear sale date that will