Snoboreders

Alright, my brother and I are in the process of starting up a business (21 and 19 years old...aka no assets) and my old man is adamant about us getting insurance. I see no point, but perhaps that is due to my inexperience.

Do any of you have it, and would it be worth it? Mind you, we're just starting out, and have yet to finish everything and make our first sale.

 

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gothicaleigh

What kind of insurance? Liability? Health?

Insurance is always good to have. If you're just starting it can be expensive though. I would suggest looking into AFLAC or similar to begin with, because it's very affordable, can cover as much or as little as you desire, and anything is better than nothing.

 

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JohnnyMo

I assume you are talking about business insurance so should you get sued for something you would have coverage..... or should you have some issue (fire, flood, etc...) your inventory/machinery costs would be reimbursed....

That said, if you and your brother are both young, have no appreciable assets, and haven't even made a sale.... I'd skip it.... honestly, unless you hire some employees, or start doing something where you open yourself up to the public entering your "store" (not a problem with eCommerce)... I wouldn't worry about it.... (this assumes you are like a typical start-up and have less than 1K or so in inventory and only a few small machines to get rolling... if you have a large inventory and several thousand tied up in presses, DTG printers, computers, etc... you have to consider the cost of replacing the items v. the cost of a monthly premium... on an aside, if you operate out of your home... or your dad's... your homeowners may cover some of the items if they aren't specifically used solely in business... )

Back to the point of the potential lawsuit.... off the top of my head, I would assume the only lawsuits you might encounter would be for infringement or trademark violation, and usually you get a Cease and Desist letter first.... other than that, I doubt your product is going to hurt or injure anyone... and if it did, the plaintiffs would likely sue Fruit of the Loom or whoever made the garment as their pockets are much deeper....

All in all... if you have no assets... there is nothing to take... or to sue you for.... and if you have some insane liability leveled against you from some bizarre suit.... bankruptcy is always an option.... without assets, and without a job that pays a huge amount of $$.... the court will generally let you file Chapter 7 and excuse all debts.... this isn't the case if you have substantial assets or a giant income, then Chapter 13 is more likely.... but honestly... this probably isn't likely going to be a concern....

I'd open the shop.... see how things go... and if you get to generating several thousand a month or so... then pick up some low cost insurance.... I ran my t-shirt business online for 5 years before I got any insurance whatsoever.... and now I only have it because I moved from printing in my garage, to a small warehouse where I have several thousand in inventory....

Good luck...

 

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cycocyco

A lawsuit or fire can ruin your life without insurance. Small price to pay for the assurance you won't be ruined tomorrow.

 

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Snoboreders

Thanks for the response guys. Yeah right now we have less than 1k in equipment and about $500 in shirts, and running it in the basement of our parents home (which obviously has insurance). My Dad was all worried that some parent would put their kid in a box that we shipped to them, send it out in the middle of the Atlantic Ocean, it would sink and then we'd get sued (ahem, an obvious exaggeration).

But yeah, we have no assets and have yet to launch the online store. I'm going to pass for quite some time.

Thanks guys.
Chris

 

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Solmu

Quote: Originally Posted by Snoboreders right now we have less than 1k in equipment and about $500 in shirts, and running it in the basement of our parents home (which obviously has insurance).

That insurance may or may not actually cover your business equipment though - it's something to look into.

__________________
Ceci n'est pas une autographe.

 

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reddaisy

You might want to think about shipping insurance if you are mailing your shirts through the USPS. My boyfriend sells stuff on eBay and always adds "Delivery Confirmation" to have proof that the package was delivered; and on high-price items adds "Insurance" to cover in case the package gets lost. Not sure how that works through FedEx or UPS, but it's something to consider.

 

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westp86

Given your situation, general liability may not be necessary (corp and personal assets are minimal). Incorporating can protect your personal assets as long as you respect the corporation and don't "pierce the corporate veil", but from a business standpoint better to be safe than sorry. If you have any trademark issues you want to look at tradmark defense infringement (you infringe on someone) insurance and trademark infringement (someone infringes on you). If you get a cease and desist and choose to fight rather than desist, legal costs can be very expensive. This kind of insurance is not cheap - it depends on your situation.

Michael

 

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