How to Bring In the Big Three for Your Bar: Accountants, Insurance Agents, and Attorneys - dummies

How to Bring In the Big Three for Your Bar: Accountants, Insurance Agents, and Attorneys

By Ray Foley, Heather Dismore

When you start up your bar, get the best professionals you can afford. If you don’t know how to find good representation, ask around. Everyone will recommend someone. Make sure the people you hire have previous experience in the bar business.

Someone once said, “If you want to play baseball, ask Mickey Mantle, not your dentist.” The same goes for operating your bar. Seek the right advice from those who know and have the experience.

Contact the National Restaurant Association (NRA) to see whether it can recommend accountants, attorneys, and insurance agents in your area.

How to hire an accountant for your bar

Put an accountant at the top of your list of people to hire to help you with your new business. Before you even open your doors, an accountant can help you create your business plan. She can explain big words like depreciation, amortization, and capitalization. She can work with your attorney to show you tax advantages to setting up your business one way versus another.

After you’re up and running, your accountant can help prepare the monthly books and reports, prepare taxes, and conduct internal audits and reviews. Work with your accountant to determine what you need to do and what she needs to do to make sure all your paperwork is in order.

Why work with an attorney when setting up your bar

Working together, your attorney and accountant can help you decide how to set up your business. How you set up your business determines how your bar is taxed, how you earn an income from your business, what your obligations are if your bar should fail, and many other expensive decisions.

Here are the most common options for setting up your business:

  • Sole proprietorship: You (and your spouse) are the only owner. You keep all the profits and the debt.

  • Partnership: You have one or many partners. You all split the profits (possibly at different percentages based on different rates of investment) and share the debt.

  • Limited partnership: Limited partners share in the profits but none of the debt. You pay them back on their investment, but if your business folds, they’re not responsible.

  • Corporation: A corporation is a legal entity that you can create to own your business. You may be the only shareholder in your corporation, so you still own the whole thing, but you enjoy the legal protection in case your business goes bust.

  • Limited liability company (LLC): You gain some protections, similar to those afforded by a corporation, but you have a different tax consequence.

How to protect yourself and your bar with insurance

The law requires you to obtain certain kinds of insurance. The amount of coverage you carry and the deductible (which is the amount you’re required to pay before your insurance kicks in) you choose affect the amount of your premiums (or the amount you pay for your insurance).

Talk with your insurance agent to find the best, most appropriate coverage for your business.

Here is a list of common business insurance coverage:

  • Property: Property insurance protects your property in the event of damage. Many policies only cover specific damages. You may want to consider additional coverage that you add to your policy, called a rider, like earthquake, flood, wind, and hail insurance, if those natural disasters are likely in your area.

  • General liability: Liability insurance protects you in the event that someone sues you for something. Maybe a customer chipped a tooth on a beer bottle, cut his finger on a broken glass, or fell off a bar stool.

    Check your lease for any required minimums for liability insurance. Your agent should give you recommendations for how much liability insurance you should carry, based on the assets of your business.

  • Liquor liability: When you get your liquor license, check with your local agency to see what amount of liquor liability insurance you need.

  • Workers’ compensation: Usually called workers’ comp, this insurance takes care of medical bills for your employees who get injured on the job.

  • Unemployment insurance: If you fire an employee or have to lay some of your workers off for business reasons, this insurance pays your out-of-work, ex-employees until they find another job.

The federal government requires workers’ comp and unemployment insurance. Protect what you have with the right insurance. See your agent for the best coverage for you.