Bookkeeping is essential for both big and small businesses in the US and every part of the world. It involves recording financial transactions and ensuring that these records are accurate.
Bookkeepers play crucial roles in every business. They help their clients attain success. Nevertheless, their role has a certain risk level. Some risks that could jeopardize bookkeeping services include data breaches or where clients accuse you of errors or omissions.
That is why it is crucial to have business insurance for bookkeepers. Therefore, this article explains the importance of bookkeeper insurance and the types of coverage you need for your business.
Before we go into full details, we will explain the meaning and role of a bookkeeper in the success of your business.
What is a Bookkeeper?
A bookkeeper is a professional who keeps financial transactions and maintains accurate financial records for businesses and individuals.
Furthermore, bookkeepers are involved in business tasks such as:
- Recording financial transactions
- Completing data entry
- Updating general ledger
- Reconciling bank statements
- Preparing financial reports
- Ensuring compliance with tax laws.
According to research by CareerExplorer, there are approximately 1.7 million bookkeepers in the United States in 2022, with California, Texas, and New York having the highest concentrations of bookkeepers.
Although bookkeepers can work as employees for a company, nowadays, most bookkeepers prefer to work independently as freelancers, where they can work with different clients and make more money.
In addition, they need to know at least the basic accounting principles, excellent analytical and organizational skills, and small business bookkeeping software.
Mistakes can happen anytime while working for your clients, and bookkeepers need protection against risks. Therefore, this is where bookkeeping insurance comes in.
What Is Business Insurance For Bookkeepers?
Bookkeeper insurance is a type of business insurance that protect bookkeepers from different risks and liabilities. As a bookkeeper in the United States, there are chances that you can face several risks that can impact your business while providing services to your clients.
These risks include errors and omissions, data breaches, and lawsuits from your dissatisfied clients. Therefore, insurance for bookkeeping businesses can provide coverage for losses and liabilities that may arise.
Do You Need Business Insurance For Bookkeepers?
Absolutely Yes! As a bookkeeper, you need an insurance policy to protect you from potential risks. However, it is not a legal requirement to start a bookkeeping business. If you don't have insurance, you will be legally and financially responsible for any losses from your business operations, including legal actions or negligence claims. In most cases, your money and assets could be at risk.
Business Insurance for Bookkeepers can also cover the costs of legal fees, settlements, or damages that may arise. Furthermore, buying an insurance policy can help you establish credibility and confidence with potential customers.
How Much Does Bookkeeper Insurance Cost?
Bookkeeper insurance has no fixed cost. The cost depends on factors such as the size and type of business, the policy you need, and your location. Generally, business insurance for bookkeepers costs between $30 per month and $350 annually in the United States.
However, the type and cost of coverage depend on the level of risks. For instance, if you are running your bookkeeping business from home, without employees, you only need general liability insurance. The cost of general liability insurance for Bookkeepers ranges from $300 to $600 per year and from $35 per month.
However, if your insurance business is large with many employees, you can get additional coverage since you will be offering extensive services. These additional coverage include cyber liability insurance, professional liability insurance, or business property insurance. Therefore, the cost of your premiums will increase.
What Does Business Insurance for Bookkeepers Cover?
Bookkeeper insurance typically covers general liability insurance, professional liability insurance, cyber liability insurance, and business property insurance.
General liability insurance covers bodily injury, property damage, and other third-party claims. Professional liability insurance covers claims of negligence, errors, or omissions. Cyber liability insurance covers losses or damages from data breaches or cyber-attacks. Business property insurance covers damage or theft to your business property or equipment.
What Kind Of Insurance Does A Bookkeeper Need?
Depending on the size of your business and potential risks, several types of insurance are available to bookkeepers. The following are some of the most typical types of insurance that bookkeepers may need:
1. General Liability Insurance
This insurance covers bodily injury, property insurance, and other third-party claims from business operations. Some clients often ask for general liability insurance before they can do business with you. Also, some landlords require it before renting out their office space.
2. Professional Liability Insurance (E&O)
Errors and omissions insurance for bookkeepers covers negligence, errors, and omissions resulting from the expert services you offer as a bookkeeper. E&O insurance, also known as professional liability, is the most popular cover among bookkeepers in the United States.
3. Cyber Liability Insurance
Bookkeepers may store sensitive financial information for their clients online. However, data breaches or cyber-attacks can lead to significant losses. Therefore, cyber liability insurance covers losses from cyber attacks or data breaches.
4. Business Property Insurance
This policy is necessary if you manage a big bookkeeping firm with a physical office. Business property insurance covers damage to your business property caused by fire, theft, or other perils. Furthermore, business property insurance is necessary for businesses with office space, equipment, or assets.
5. Workers' Compensation Insurance
Big bookkeeping businesses with employees need workers' compensation insurance. This insurance policy covers medical costs and lost wages for staff who become sick or injured while doing their job.
Business insurance for bookkeepers is a crucial part of operating a bookkeeping business in the United States. Although insurance is not compulsory for running a bookkeeping business, business owners need it for protection against risks.
I urge you to assess your risk level to determine the types of coverage that are best for you. Contact an insurance professional to help you find the right coverage at the right price and get a quote for coverage.
Finally, don't wait until an unexpected event happens before you protect your business. Take the necessary action now to ensure you are ready for whatever comes your way.