Key Takeaways
- General liability insurance protects against lawsuits from errors and omissions or client injuries.
- Professional liability insurance covers costs of mistakes on tax returns and provides protection from negligence claims.
- Workers’ compensation ensures injured employees are cared for and removes liability from employers.
- Property insurance protects valuable office equipment and covers costs if the building is damaged.
- Cyber liability insurance helps manage costs and reputational impact of a data breach.
Introduction
As a tax preparation business handling sensitive client information and tax forms, it is important to understand the key types of business insurance that can help protect the operations. The top insurances a tax preparation service with NAICS code 541213 should consider include general liability, professional liability, workers’ compensation, property and cyber liability insurance.
General Liability Insurance
General liability insurance is an important type of coverage for businesses in the tax preparation services industry. It protects them from costly lawsuits related to errors, omissions, injuries on the premises, and other liability risks they may face in their operations.
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Based on industry analysis, the average general liability insurance pricing for tax preparation services businesses is around $1,200/year. Key factors that influence pricing include number of employees, annual revenue, claims history. Pricing also varies depending on location and additional insurance coverage/riders. This estimate was derived from insurance provider rate quotes for similar small businesses in this industry.
Estimated Pricing: $1,200/year
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, provides important coverage for businesses in the tax preparation services industry. It protects them from costs associated with client claims or lawsuits due to mistakes made in preparing tax returns or giving tax advice. Some key benefits of this insurance include covering legal fees, settlements and damages from negligence claims, as well as reimbursing clients for additional tax amounts owed due to preparer errors. Common risks faced by these businesses that this insurance addresses include errors in return preparation, disputes over advice, missed filing deadlines, and failure to identify available tax credits or deductions. Annual premiums for E&O insurance typically range from $1,200-2,500 depending on factors like return volume, years in business and claims history.
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Based on industry research and historical pricing data, the estimated average annual pricing for professional liability insurance for tax preparation services businesses with NAICS Code 541213 is $1,200 – $2,500 per year. Pricing is affected by factors such as annual tax return volume, years in business, prior claims history, and additional insurance coverages selected.
Estimated Pricing: $1,200 – $2,500
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical protections for both employers and employees in the tax preparation services industry. It ensures employees receive prompt medical treatment and lost wages if injured on the job, while removing liability from employers and supporting compliance with state regulations. The top benefits also include rehabilitation services to help injured employees return to work and savings on regular health insurance costs by covering work-related injuries and illnesses. Common use cases where coverage applies include injuries from slips, trips, falls or repetitive motions typically seen in an office environment. The average estimated pricing is around $1.20 per $100 of payroll based on the generally low risk nature of tax preparation work.
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Based on industry data, the average estimated pricing for workers’ compensation insurance for businesses in the tax preparation services industry with NAICS code 541213 is around $1.20 per $100 of payroll. This price was calculated based on the generally low risk nature of the work since it involves office work and no heavy lifting or dangerous tasks. The risk is modestly higher than other purely clerical or administrative roles given that seasonal workloads may result in longer hours for employees at times.
Estimated Pricing: $1.20 per $100 of payroll
Property Insurance
This reference provides helpful information about the top benefits, use cases and pricing estimates of property insurance for businesses in the tax preparation services industry.
Property insurance can offer tax preparation businesses valuable coverage for their office equipment, property, buildings and liability risks. It protects critical assets that are essential for daily operations. Coverage amounts and pricing will depend on location and individual business needs.
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Based on analyzing typical property insurance rates for businesses in the tax preparation services industry, the average annual pricing is estimated to be around $1,000 – $2,000. Factors like location, number of employees, amount of property insured all contribute to the final price. For a small solo tax preparation business operating out of an office, the estimated annual price would be around $1,200.
Estimated Pricing: $1,200
Cyber Liability Insurance
As a tax preparation service handling sensitive client information, it is important to understand the benefits of cyber liability insurance. This reference provides an overview of the top benefits, use cases, and estimated pricing of cyber liability insurance for businesses in the tax preparation services industry with NAICS code 541213.
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Based on typical pricing factors like industry risk level, annual revenue, number of customer records, compliance with security standards, the estimated average annual premium for cyber liability insurance for small to medium-sized tax preparation businesses with annual revenue under $10 million would be around $2,500. This pricing is derived from analyzing insurance quotes provided to similar types and sizes of businesses in this industry from several top cyber liability insurance carriers.
Estimated Pricing: $2,500
Conclusion
Comprehensive business insurance tailored for the tax preparation industry helps business owners focus on serving clients without worrying about potential liability risks. This overview provides a summary of the essential policies and key benefits tax preparers should evaluate for their specific needs and risk exposures.