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Do businesses get tax refunds? Sometimes, yes.

Generally, taxpayers, whether individuals or businesses, will only get a refund if they pay more in taxes during the year than they end up owing. Tax refunds for small businesses tend to be less common than refunds for individuals simply because they often don’t pay taxes directly.

Whether or not your business can get a tax refund will depend on how it’s structured and how much you paid in estimated taxes during the course of the year. Here’s a closer look at how a business can get a tax refund.

How Do Tax Refunds Work?

Taxpayers can generally receive a tax refund if too much money was withheld from their paychecks throughout the year. Because business owners typically don’t have any taxes withheld on their business income, they will often pay their federal and state taxes on a quarterly basis. These payments, called estimated taxes, are based on how much the owner thinks the business will owe in taxes. If the estimate is too high, they will get a refund.

However, whether that refund goes to the business owner or to the business itself will depend on the way the business is structured. Generally, C corporations are the only type of business entity eligible for a direct tax refund.

Are Businesses Eligible for Tax Refunds?

In some cases, yes. A small business that is registered as a corporation may be eligible for a tax refund if it overpaid on its quarterly estimated taxes. Any amount of overpayment would be refunded to the business after its tax filing.

Most small businesses, including sole proprietors, most limited liability companies (LLCs), partnerships, and S corporations, however, pay their business income tax through the owners’ personal tax return. These are called pass-through businesses because their profits “pass through” to the owners’ personal tax return, and the business owner or owners pay taxes rather than the business.

Business owners who report income from pass-through companies include the income (along with income from other sources, like wages, interest and dividends, gains on the sale of property, or rental income) on their individual 1040s. These individual owners would receive a refund only if their total payments and withholding exceeded their total tax liability on the return.

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Pros and Cons of Overpaying Taxes to Get a Refund

The key to getting a tax refund on your business’s income is to pay more in taxes throughout the year than you end up owing at the end of the year. This is the case whether you own a pass-through business (and report your business’s earnings on your personal tax return) or a corporation. Here’s a look at the advantages and disadvantages of overpaying taxes to get a refund.

Pros

•   This helps your business avoid fines from the Internal Revenue Service (IRS) for paying too little.

•   Reduced cash flow prevents the business from overspending.

•   The refund can be put into a savings account for the next year’s quarterly taxes or used to pay off business debt.

Cons

•   Receiving the refund can take time.

•   It reduces your business’s cash flow and spending potential.

•   Getting a refund can make a company’s financials seem worse than they are, which might make obtaining a business loan more difficult.

How Different Types of Businesses Pay Taxes

If you’re wondering if your business gets a tax refund, the answer will depend in part on your type of business. Whether your business can get a tax refund or not will depend on how it is structured. There are five types of business structures, each with its own tax requirements.

Sole Proprietorship

A sole proprietor is a person who runs an unincorporated business alone.

Because a sole proprietorship is not distinct from the sole proprietor as a legal entity, the business does not file a small business tax return. Any money earned or lost is reported on the business owner’s personal tax return using Form Schedule C.

Limited Liability Company (LLC)

A limited liability company (or LLC), is essentially a legal hybrid between a sole proprietorship and a corporation. The benefit of an LLC is that the business owner is protected from any personal responsibility associated with the business’s debts (such as different types of small business loans).

LLC owners typically report income from their business (along with income from other sources) on their individual 1040s. These individual owners would receive a refund only if their total payments and withholding exceeded their total tax liability on the return.

While LLC owners can elect to have their businesses taxed as C corporations, relatively few choose to do so.

Recommended: Sole Proprietorship vs. LLC: How to Choose

S Corporation

S corporations pass their income through to their owners (called shareholders), so the business itself doesn’t pay any corporate tax. Each owner reports this income on a Schedule K-1 when they file their personal tax returns and pays taxes on their share of the business’s profits.

Partnership

Partnerships file Form 1065 to report the company’s revenues and expenses. However, the partnership doesn’t pay taxes to the government directly. Each partner receives a Schedule K-1 that reports their share of the business’s profits. They then use this K-1 to fill out their personal tax returns and pay any tax due on that income.

C Corporation

A business structured as a C corporation is taxed separately from the business owners. C corporations use Form 1120 when filing their small business tax returns. A C corporation is a type of business that could get a tax refund in the event that it pays more estimated tax during the year that is due on its final company tax return.

Which Business Structure Offers the Best Tax Advantages?

Different business structures come with different options when it comes to taxes. The one that might be most advantageous for you will depend on your company’s situation and stage of growth, among other factors. For advice specific to your company, you may want to consult with your tax advisor.

General rules of thumb about what structure may be most beneficial include the following.

•   Pass-through entities — such as sole proprietorships, partnerships, S corporations, and LLCs that don’t opt to be taxed as C corporations — avoid double taxation.

•   An LLC that opts to be taxed as an S corporation may be a good choice for small businesses making a profit. It avoids double taxation but the owner may also be able to take a reasonable salary without having to pay self-employment tax.

•   C corporations are taxed at a flat corporate rate, which can sometimes be lower than individual income tax rates, and they may be able to retain some profits to put toward growth, so this structure might be advantageous for some companies experiencing rapid growth.

Recommended: LLC Tax Benefits

Types of Business Taxes

Whether your business or you as the owner can get a tax refund also depends on the type of taxes you pay. Here’s a closer look at how and when you might get a refund.

Income Tax

Businesses or business owners typically have to pay federal, and often state and/or local, income tax on any profits earned in a given year. They typically do so by paying quarterly estimated tax payments. If the owner or business overestimated and overpaid, it may receive a refund.

Payroll Tax

If your business has employees, you must report and deposit both federal and state payroll taxes, which include unemployment taxes, FICA taxes (which cover Social Security and Medicare), and income tax withholding. Regardless of your business structure, it might be possible to receive a refund on payroll taxes if you overpay your account.

Self-Employment Taxes

Self-employment taxes go toward both Medicare and Social Security. All LLC members, sole proprietors, and partners in a partnership must pay self-employment taxes. An overpayment of these taxes could result in a refund to the business owner.

Sales Tax

Many states and cities levy a sales tax on transactions of goods and services. The federal government also taxes certain goods and services, such as tobacco or fuel. An overpayment of sales or excise taxes could result in a refund to the business or owner.

Recommended: How Much Tax Will My Small Business Pay?

Will I Get a Tax Refund If My Business Loses Money?

First of all, you don’t automatically get a tax refund because your business loses money. However, if it means that you overpaid on your taxes, you may get a tax refund. How this works can vary by the type of business that you have.

•   For sole proprietorships, partnerships, and single-person LLCs: These are pass-through entities, so if your business loses money, the losses may offset income (including income from other sources, like a day job, for instance) to the extent that you pay less on your income tax or even receive a tax refund.

•   S corporations and LLCs choosing S-corp status: Since these are also pass-through entities, business losses may generally be deducted on your individual income tax return, potentially increasing your chances of getting a refund. But any deductions may be limited by your basis in the business.

•   C corporations: Typically, if the business loses money one year it will not result in a refund. Instead, the loss may be carried forward as a net operating loss (NOL) to reduce taxable income later, in a profitable year.

5 Tips to Maximize Business Tax Refunds

Do business owners get tax refunds? It depends on several factors.

One way to maximize business tax refunds is to deliberately overpay estimated taxes, which, as mentioned above, has both pros and cons. Here are some other small business tax tips to keep in mind when planning your business’s finances.

1. 401(k) Matching

If you offer your employees a 401(k), you may want to consider also offering matching funds. The amount your company offers in a 401(k) match is typically considered a qualified business expense up to certain limits.

2. Tax Credits

As a business owner, you may be able to take advantage of a number of tax credits at both the federal and state level. Speak with your accountant or take a look at the IRS’s business tax credits to see what credits you might be eligible for.

3. Tracking Mileage

If you drive for business, it can be a good idea to track the amount of business miles you’re logging throughout the year. The IRS allows you to deduct a certain amount for every mile driven for business purposes (for the 2026 tax year, it will be 72.5 cents per mile between January 1 and June 30, and 76 cents per mile between July 1 and December 31).

4. Home Office Deductions

If you have an office in your home dedicated solely to your business, you may be eligible for a home office deduction. Generally, your home office must be either the principal location of your business or a place where you regularly meet with customers or clients.

Home office business deductions are based on either the percentage of your home used for the business or a simplified square footage calculation. It may be worth investigating other small business tax deductions, too.

5. Employee Bonuses

Bonuses can be a win-win. They not only help incentivize and reward employees, they may also qualify as a small business tax deduction. There are rules and regulations around how much of a tax deduction you can take based on employee bonuses. To learn more, check with a tax professional or refer to the IRS’s Guide to Fringe Benefits.

The Takeaway

Do businesses get tax refunds? A business may be able to get a tax refund if it overpays its estimated taxes. However, whether that refund goes to the business itself or to you, as the business owner. will depend on how your business is structured. Generally, the only way the business itself will get a tax refund on its company tax return is if it’s structured as a C corporation.

Whatever your business structure, however, there are actions you can take throughout the year that could potentially reduce your tax burden and possibly even result in a tax refund. A tax professional can offer guidance.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

FAQ

Can small businesses get money back on their taxes?

It’s possible. However, in order for a small business to get a tax refund, it would need to have paid more than it actually owed to the Internal Revenue Service (IRS) in estimated taxes. And, unless the business is structured as a C corporation, any refund would go to the business owners, not to the business itself.

Do business owners get tax breaks?

Many businesses qualify for tax breaks, described as tax deductions. These are typically for “any ordinary and necessary expense” incurred to carry on any trade or business. It’s up to the business owner to pursue tax deductions. The qualified business income deduction allows eligible small business owners to deduct up to 20% of their qualified business income.

How much can small businesses get back in taxes?

It all depends on how much the business paid in estimated taxes. If the business (in the case of a C corporation) or the business owners (in the case of a pass-through business) overpaid estimated taxes during the year, that business or owner would get a refund.

Are LLCs able to get tax refunds?

Not typically. LLCs are generally treated as pass-through entities for federal income tax purposes. This means the LLC doesn’t itself pay taxes or get refunds of its own. Instead, each member pays taxes on the business’s income in proportion to their ownership stake in the LLC. If the LLC members overpay their estimated taxes, they might receive tax refunds.

Will I get a tax refund if my business loses money?

It may happen in certain circumstances. If your business takes a loss, you can often include the business loss in your tax return to lower your taxable income, depending on the business’s structure.

Photo credit: iStock/Jirapong Manustrong

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q326-077

Should an accident occur on your business property, it could lead to a costly lawsuit that could put your business at risk. That’s why many small businesses that work directly with customers or the public choose to purchase public liability insurance.

Public liability insurance covers claims made by third parties, such as customers, clients, or members of the public, as a result of bodily injury or damage to their personal property while they’re on the premises of your business.

Public liability insurance is similar to general liability insurance, but the coverage is more limited. If you’re just starting a small business and don’t need all the coverages included in general liability insurance, purchasing a standalone public liability insurance policy may be a great option.

Read on to learn more about what public liability insurance covers, whether you need it, and how it compares to general liability insurance.

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What Is Public Liability Insurance?

Business public liability insurance provides protection to your company if you’re found to be responsible for causing an injury or damaging someone’s personal property while that person is on your company’s property. This can be a customer, client, vendor, contractor, or any member of the public.

There are many scenarios in which your business could be at risk of public claims. Accidents can happen in the course of your business operations, whether it’s a slip-and-fall situation at your office involving a customer or one of your employees inadvertently damaging someone else’s property while carrying out their work duties.

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How Does It Work?

Let’s say that someone who works for your interior design company has taken an action that harmed a customer’s personal property. It could be something as simple as offering to carry the laptop of a client so that you can look at their decorating ideas together at your desk and then dropping and destroying that laptop.

An act of negligence could also trigger a public liability claim. For example, if you washed your reception area floor but didn’t put up any warning signs and someone slips, falls, and gets hurt, your business may be open to a lawsuit for negligence. In fact, it would be up to the judge to decide if the sign is sufficient to avoid liability.

If someone files a lawsuit against your business for a reason covered by your public liability policy, you file a claim with your insurance company. Your insurance company then typically helps cover your legal costs and pays damages up to the limits of your policy.

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How Is It Different from General Liability Insurance?

General liability insurance and public liability insurance policies are similar in that they are both business liability coverages that would pay the legal fees and damages in the event a bodily injury or property damage claim is made by a third party.

General liability insurance, however, provides a business owner with a wider scope of coverage than public liability insurance, including false advertising claims and product liability claims, which public liability insurance doesn’t cover.

General liability insurance also doesn’t limit itself as to where a third party is injured or their property is damaged. If someone is accidentally injured at their home by an employee of a business, general liability insurance would cover that claim while public liability wouldn’t because the injury didn’t take place at the business’s physical location.

The coverage provided by public liability insurance is usually included in a general liability policy. General liability policies typically cost more than public liability policies and also tend to be more widely available.

However, public liability insurance can often be purchased as a standalone policy and may appeal to a small business owner who doesn’t need a wider scope of coverage and wants to spend less on liability coverage.

Here’s a summary of the differences between the two types of business liability policies.

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Types of Public Liability Insurance

Business public liability insurance generally offers two specific types of coverage:

•   Bodily injury: This is when someone in the general public gets injured on the site of your business.

•   Property damage: This is when your business is responsible for damage to a third party’s property while they are on your business’s premises.

The policy will typically cover the damages, as well as the cost of legal defense, including court and lawyer fees.

If, for example, you’re in the food industry or even just provide refreshments to the public at an event and someone claims that your food or drink caused them to become ill (and the court rules in their favor), public liability insurance coverage can kick in.

Or let’s say you own a convenience store and one of your employees spills a soda on a customer’s leather purse. A public liability policy could help cover the cost of replacing the bag and anything inside it that got damaged.

A public liability policy usually only covers bodily injuries your company has caused to members of the public, not to the business owner or employees. And this type of policy generally only applies to damages or injuries that take place on your business property.

Recommended: What Is Small Business Umbrella Insurance?

What Types of Businesses Benefit From Public Liability Insurance?

Businesses that have frequent interactions with the general public, such as restaurants, coffee shops, retail stores, hotels, and dry cleaners, can be good candidates for public liability insurance. Any member of the public or any property of others that you come into contact with in the course of your business operations can be a risk factor.

Companies that have offices where customers or clients regularly visit and even home businesses that see foot traffic from the public might also benefit from public liability insurance.

If your business often interacts with the public in other locations, such as the customer’s home or a client’s office, a public liability insurance policy might not offer adequate protection.

Public liability insurance is a more limited policy than other types of business insurance, which means it’s more affordable, but it doesn’t provide as much coverage.

Public liability insurance can be a good choice for businesses that need to save money and have mostly on-premise risks and no exposure to potential personal and advertising claims.

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How to Get Public Liability Insurance

Like other forms of insurance, your business may want to get quotes from reputable licensed agents who provide this type of policy. You can also use online cost estimate tools from insurance companies and agencies.

It can be a good idea to compare rates, terms, and benefits for insurance offers from several different agents or insurance companies in order to find a liability policy that meets your needs and also fits into your business budget.

The cost of public liability insurance will depend on the type of business you operate and the risks involved in running it. For example, a busy coffee shop that has foot traffic all day long will likely have a higher risk and pay more for a policy than an accountant’s office that may only see a few clients a day.

How Does Insurance Impact Your Small Business Loan?

When applying for a small business loan, you may discover that a lender will require you to have certain types of business insurance coverage as well as a certain dollar amount of coverage. That’s because they want reassurance that if a member of the public gets hurt or otherwise suffers damage on your premises, you’ll have the financial resources to handle any compensation and associated legal fees while still being able to make your loan payments and keep your business running.

If it ends up that your policy lapses during the term of the loan (the lender may check regularly), the financial institution may take out the policy at your expense.

If you’ll be renting property for a small business, then your landlord may have liability insurance requirements as well. That’s because if a member of the public gets injured on your premises or otherwise suffers damage, the landlord will want to be sure you’ll have the financial resources to handle the claims and legal fees. When you have adequate coverage, this protects the landlord, too, saving them time and money.

What type and how much liability coverage you need will likely be spelled out in your commercial lease agreement.

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The Takeaway

Public liability insurance is a minimum layer of liability coverage for your company against claims of bodily injury or property damage from the public. It can be especially important for companies that engage in frequent interactions with members of the public.

Compared to commercial general liability insurance, which typically provides more comprehensive coverage for a wide variety of scenarios, public liability insurance tends to be a more limited option that can be more economical for small and midsize businesses that may not have the resources or the need to purchase commercial general liability coverage.

Though its protection isn’t as comprehensive, public liability insurance can still protect your business from claims made by third parties for bodily injury or damage to property that they own. This helps ensure that in the event of a claim, the costs of legal defense, court, settlements, and damages don’t have to come out of your company’s pocket and put your business at risk.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

FAQ

Who needs business public liability insurance?

Public liability insurance is essential for businesses that interact with the public, clients, or customers, such as retail stores, contractors, or event organizers. It’s particularly important if your operations involve high foot traffic or physical interactions.

What does public liability insurance typically not cover?

Public liability insurance usually does not cover employee injuries, professional negligence, or damages caused by defective products. These require separate policies such as workers’ compensation or product liability insurance.

How much does public liability insurance cost?

The cost of public liability insurance depends on factors such as the size of the business, industry type, level of risk, and coverage limits. For small businesses, premiums can range from a few hundred to several thousand dollars annually, depending on the policy.

Photo credit: iStock/JLco – Julia Amaral

SOSMB-Q326-026

These days, starting an e-commerce business is relatively simple. Growing that business into a successful online store with solid revenues, however, can be challenging. To effectively scale an e-commerce company, you generally need to take a proactive, multipronged approach. You need to not only find customers and bring them to your site but also encourage them to make a purchase and come back for more visits.

There are some simple, effective actions you can take to grow your company, especially if it’s still in the early stages.

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10 Tips for Growing an E-commerce Business

Below are 10 proven e-commerce business growth strategies to try.

1. Build Your Email List

Email marketing can be an effective tool for an e-commerce business. To build your email list, consider including an opt-in email capture form on your site as well as during checkout. You might incentivize sign-ups by offering a bonus, such as a discount code or free shipping, in return.

The key to successful email marketing is to deliver quality content. If it looks like spam to you, it’s going to look like spam to everyone else. You’ll want to make sure that every email is unique and that your customers feel like they are getting an opportunity every time they open up one of your emails. Try to personalize the content and offer a mix of articles, videos, tips, and special offers.

2. Encourage Repeat Business

While bringing new customers to your site is essential to your company’s success, it’s equally important to retain the customers you already have. Consider offering incentives not just to new customers but also to returning ones. You might also want to start a loyalty program to get your customers excited about visiting your site regularly.

Another way to encourage repeat business is to send personalized emails to prior customers that include recommendations of products that go well with the ones they’ve already purchased.

3. Make Your Site Mobile Friendly

The web is increasingly accessed by mobile devices rather than computers and laptops. Designing your website to be mobile friendly ensures that your pages perform well on all devices. If you used Squarespace or WordPress to make your website, chances are your e-commerce site is already mobile friendly. However, it can be a good idea to check. You can go to Google Chrome for Developers’ Lighthouse page to test how easily a visitor can use your page on a mobile device.

4. Run Limited-Time Promotions

How many times have you filled up a shopping cart on an e-commerce site and then abandoned it completely? When you did commit to a sale, was it because of a promotion that was ending that day? Limited-time promotions can be a great way to encourage shoppers to hit the “place your order” button.

The best promotion idea will depend on the type of merchandise you sell, but common ones include free shipping, free gifts with purchase, discounts (such as 20% off), and buy one get one free (BOGO).

5. Offer Excellent Customer Service

Customers who have a poor customer service experience will likely take their business to a competitor. Those who have a positive shopping experience, on the other hand, will probably want to shop with you again. It’s not hard to give good service, and the financial rewards can be well worth the added time and effort. Consider offering customer service on multiple channels — by phone, live chat on your website, SMS, email, and via social media.

6. Master E-commerce SEO

What searches do you want your site to show up on? How do you want new customers to find you? Understanding and taking advantage of search engine optimization (SEO) can help your site beat out the competition on Google search results.

If you’re new to the world of SEO, sites like Semrush offer guides that can help you get more organic traffic to your site. If you’d rather outsource the job, you may be able to find an affordable SEO pro on a freelance website such as Fiverr or Upwork.

7. Encourage Customers to Leave Reviews

Positive reviews are known to increase conversions. Consider asking customers to review your business or service right after checkout, perhaps with a clickable star-rating window.

To encourage product reviews, follow up with customers via email and ask them to submit a review of their purchase. You might even offer an incentive, such as a discount for a future purchase, in return for leaving an honest review. You might also search sites such as TrustPilot for reviews of your products and include them in your review listing.

8. Market Campaigns Toward Lost Customers

Consider using social media to market ads to customers that have visited your site but didn’t make a purchase. Or, if you were able to get their email when they visited your e-commerce company, you can email them to remind them they still have items in their cart.

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9. Offer International Shipping

If you limit your reach to just U.S. customers, you’re limiting your company’s sales potential. Consider offering free shipping to anywhere in the world. You may be surprised where your sales start coming from. If it’s not feasible for you to offer free global shipping, consider giving shoppers information about any extra costs involved in international shipping upfront, so they know what to expect when they check out.

10. Partner With Influencers

You may be able to significantly expand your e-commerce business’s reach by partnering with influencers who have thousands of followers (and possibly more). You might want to reach out to influencers who focus on your industry and help them create content that can lead to sales. You’ll need to offer them payment (such as a fee or commission) for their work and effort, but if they have a large audience, it may be well worth their price.

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Which Strategies Are Right for Your E-commerce Business?

You may want to start with the skills and tools you already have and build from there. Consider which growth strategies you and your team can implement on your own. Once you’ve reached your limits, you may want to bring in outside contractors who have the expertise you lack. The return on your investment may more than cover any initial costs.

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Are There Any Downsides to Growing Your E-commerce Business?

While e-commerce growth is good, rapid growth isn’t always good. If you grow too quickly, you may not be able to maintain quality control or even fulfill large purchase orders. This can lead to disappointed customers, negative reviews, and, potentially, the downward spiral of your business. Rapid growth could also push your employees to exhaustion, reduce their morale, and cause people to quit.

The key to healthy e-commerce growth is to make sure you don’t damage what you already have as you expand. Steady, predictable growth can often be healthier than an overnight explosion.

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Funding E-commerce Business Growth

There are a number of different ways to get financing for e-commerce business growth, from finding investors to exploring loans. Here are some you may want to consider.

Business Loans

There are many types of small business loans. Banks typically offer the lowest rates and best terms but tend to have strict qualification criteria. If your e-commerce business is less than two years old, you may have better luck getting a loan through an online lender. Also known as alternative lenders, these companies tend to have more flexible qualification criteria and are faster to fund than banks. However, they typically charge higher rates.

Out of Pocket

Funding e-commerce business growth out of pocket may not be the fastest route to expansion. However, it can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into bumps along the way. Once income becomes consistent and predictable, though, you may want to venture away from bootstrapping.

Cash Advances

If your e-commerce business has high credit card sales volume and you need funding quickly, you might look into a merchant cash advance. With this type of financing, you receive funds as a lump sum upfront from an MCA provider and repay the advance from future sales. Typically, the lender will automatically deduct a portion of your credit card sales, usually each business day. MCAs are generally easy to qualify for but costs typically run significantly higher than traditional small business loans.

Small Business Grants

There are a variety of government, nonprofit, and private entities that offer small business grants. You may be able to qualify for a grant if your business meets certain requirements (such as being a woman-, minority-, or veteran-owned business). Unlike loans, grants do not need to be paid back. However, competition for this type of funding tends to be intense.

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Equipment Financing

There are also loans specifically for buying equipment, such as computers you might use in your e-commerce business. With equipment financing, the equipment itself acts as collateral for the loan, which keeps the interest rate low and your other assets (either business or personal) safe. You would typically get a quote for the equipment you’d like to buy, and a lender would then front you all or a large portion of the cost.

Business Credit Cards

If you need a way to cover dips in cash flow, you might consider a business credit card. If you can qualify for a business card with a 0% introductory annual percentage rate (APR), you can spend for a predetermined period without interest. If you pay off your balance before the end of the introductory period (which may be a year or more), you don’t have to pay any interest at all. A business credit card can also help you build business credit, which can allow you to access loans with low rates and attractive terms in the future.

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The Takeaway

There’s no one way to grow an e-commerce company, but proven strategies include email marketing, making sure your site is SEO and mobile friendly, running time-sensitive promotions, and giving excellent customer service. Once you’re in a rhythm and are seeing the results of your labor, you may want to leverage a small business loan to help your business reach the next level in its growth journey.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

FAQ

What are some tips for growing an e-commerce business?

To grow your e-commerce business:

•   Build an email list

•   Use SEO

•   Encourage repeat business

•   Provide excellent customer service

•   Sell to international markets

•   Partner with influencers

•   Make sure your site is mobile friendly

•   Offer time-sensitive promotions

How can you receive funding for an e-commerce business?

E-commerce funding options include:

•   Bank small business loans

•   Online small business loans

•   Business lines of credit

•   Business credit cards

•   Merchant cash advances

•   Small business grants

How do you scale a small e-commerce business?

Some effective ways to scale a small e-commerce business include optimizing your site for SEO, creating a marketing campaign that includes social media and email marketing, and developing an online ads strategy.

Photo credit: iStock/JLco – Julia Amaral

SOSMB-Q326-018

Small business accountants can do more than help you file your business taxes. They can also set up an accounting system, help you prepare financial statements, audit your books, and create financial goals for your business. If you think your business could benefit from the help of a certified public accountant (CPA), read on.

Here’s a closer look at what they do, how they can help your business both in the short and long term, and how to find the right finance pro for your company’s needs and budget.

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Does Your Business Need an Accountant?

To determine if your company needs an accountant, it helps to understand what CPAs do and how they may be able to help your small business.

What Accountants Do

A certified public accountant can help with many aspects of small business accounting, including:

•   Preparing personal and business tax returns and filing them on your behalf

•   Preparing the documents needed to submit an application for a small business loan or grant

•   Helping your business manage its day-to-day finances and cash flow

•   Notifying you of clients and customers who have a habit of paying late

•   Warning you about increasing costs that may affect your business, as well as helping you find affordable alternatives

•   Analyzing daily, weekly, monthly and seasonal cash flow patterns in your business

•   Illustrating key financial ratios for your small business

•   Recommending areas to consider expanding or shrinking your business

•   Helping you establish a weekly and monthly budget for your business

•   Taking care of your company’s payroll

•   Helping you prepare financial statements for potential investors or lenders

If you need something more specific, contact a CPA and ask if they can do it. You may find they can help you with your unique issue, whether it’s choosing accrual vs. cash accounting or how to expand your business into another state.

When You Might Need a CPA

Here are some common business scenarios in which you may need a CPA to help you out:

•   You need to change your business classification. As a business owner, there are a number of different ways you can structure your business. A CPA can help you choose the best setup so you’re not overpaying come tax time. Even if you decide you don’t want to make a change, an accountant may be able to help you make the most of your current structure.

•   Your business is growing. When a company grows, its finances typically become more complex. As more money comes in and goes out and you begin to work with more vendors and hire more employees, cash flow can be difficult to keep track of. A CPA can help you with this by staying on top of payments, payroll, and everyday expenses. Small business owners often try to save money by not delegating tasks that a CPA can do, but the truth is that CPAs very often save businesses money, leaving the business owner more time to do what they do best — coming up with great ideas that can grow the business.

•   You don’t understand taxes, deductions, and tax credits. You may be a whiz at developing products and acquiring new customers, but if taxes are like another language to you, then you likely need a CPA. It’s not that it’s beyond your ability to learn, but the more time you spend working on it, the more time you’re taking away from your business. Moreover, each year many business owners make mistakes, such as overpaying on their taxes.

•   You need help preparing financial documents. Whether you’re selling your business or looking to get small business financing, a professionally prepared financial report by a CPA can make the process go more smoothly. When going through the application process for a loan, a CPA can directly answer any lender’s questions about your financials.

•   You’re being audited by the IRS. Small business audits are not uncommon for businesses with complicated tax returns. Low annual revenue and a large amount of expenses can also be triggers for an IRS audit. A CPA can help the audit process by providing documents and backup information an auditor requests, allowing you to focus your attention on running your business.

4 Steps to Finding a CPA for Your Small Business

Wondering how to find a good accountant for your small business? These four steps can help you hone in on the best pro for your needs.

1.    Ask fellow professionals in your circle. A good place to begin your search for an accountant is by asking your peers, such as colleagues and other business owners in the community, for recommendations. People in your network are likely to have a good handle on what you need and may be able to offer feedback on CPAs they’ve worked with.

2.    Tap social media channels. You might also join local business communities on Facebook or LinkedIn (if you haven’t already), and then post that you’re looking for a good small business accountant. It’s not necessary for your CPA to be local, but it could be beneficial if they are, especially if they have connections with local banks.

3.    Check their credentials. Both accountants and CPAs perform similar functions, but a CPA has met state licensing requirements in order to earn the CPA designation. A CPA is also able to represent you in front of the IRS (not all tax preparers can do so). You can check an accountant’s credentials on the IRS’s Directory of Federal Tax Return Preparers.

4.    Conduct an interview. It can be a good idea to schedule a meeting with a CPA to discuss why you are seeking their services (making sure you ask the questions below). Not all accountants specialize in the same things, so it’s very possible they may direct you to another CPA who is better suited for your needs, or you may feel a need to continue your search.

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Evaluating an Accountant

While interviewing a potential CPA, you’ll want to ask a wide array of questions and get to know the person you may work with. If you have a good rapport with one another, your interview should become less of a test and more of a discussion of the ways your business can grow and expand.

Questions you may want to ask include:

•   What is the cost? Do they charge by the hour, or do they have a flat fee?

•   Do they have a team? Some CPAs work by themselves, while others have partners or staff. If they have a team, you’ll want to know their qualifications.

•   What’s their availability and typical turnaround time? How quickly can they get back to you if questions come up? How much of their time will you get?

•   How long have they worked as a CPA? Are you their first client or have they worked with hundreds of clients like you?

•   Can they provide references? Even if you became acquainted with your CPA from a friend, it’s never a bad idea to get more references if you can.

•   Will they represent you during an IRS audit? Having a professional explain your finances to the IRS can be a huge weight off your shoulders should you ever be audited.

•   What type of services can they offer? It’s possible they can help you with something you haven’t thought of. Get a full rundown of everything they do. You may end up hiring them for additional services that can help you run your company.

The Takeaway

Finding an accountant for your small business can be a huge weight off your shoulders and allow you to focus more on the business side of things. Just make sure to do your research and due diligence to ensure you find a CPA that fits your company’s needs and future goals.

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FAQ

Is a CPA worth it for a small business?

Yes, a CPA (certified public accountant) can be invaluable for small businesses. They provide expertise in tax planning, financial reporting, and compliance. This can help ensure your business meets regulatory standards and avoids costly errors. CPAs can also offer strategic advice on managing expenses, optimizing cash flow, and scaling operations.

How to find the right CPA for your business?

To find the right CPA (certified public accountant), you might start by asking for recommendations from colleagues, other small businesses in your community, and any connections you have with local professional organizations (such as the Chamber of Commerce or Rotary Club). You might even be able to get a referral to a good CPA from your bank or realtor. Once you have a list of candidates, it’s a good idea to interview each CPA to assess their expertise, communication style, and fees.

What type of accountant is best for a small business?

For small businesses, a CPA (certified public accountant) or small business accountant with experience in your industry is ideal. They should offer services tailored to your needs, such as bookkeeping, tax preparation, and financial strategy. A CPA can be a good choice if you need guidance on complex tax laws, regulatory compliance, or business growth planning. If your needs are basic, on the other hand, a general accountant or bookkeeper might be sufficient.

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If you rent commercial property or lease office space to run your business, you’ll likely want (and may, in fact, be required) to get business renters insurance.

While landlords generally carry property insurance for their buildings, they typically won’t take responsibility for any business property a tenant keeps in the space.

Business renters insurance can cover the repair and replacement of business assets (such as furniture or equipment) in the event of a fire, theft, or vandalism. It can also cover legal or medical costs related to any accidents that take place on the premises. If you’re just starting your company, this type of business insurance can be especially important since you may lack the cash to cover an unexpected event or loss.

Here’s a look at how business rental insurance works, what it covers, plus how to get the right coverage for your business at a cost you can afford.

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What Is Business Rental Insurance?

Business rental insurance (also known as business renters insurance or commercial renters insurance) is a type of insurance that small business owners purchase when they lease or rent a space for their business that they do not own. It is separate from the insurance that the property owner has for the actual building.

Business renters insurance policies are typically a combination of a general liability policy that covers basic accidents and disasters and a commercial property policy, which covers items, supplies, and equipment you may keep inside a rental location.

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What Does Business Property Insurance Cover?

Business renters insurance policies typically cover damage or destruction of properties due to fire, vandalism, adverse weather conditions, and other common risks. It also generally includes insurance against theft of your business assets. The type of property that is covered usually includes office equipment, manufacturing equipment, inventory, business records, and, in some cases, cash.

Business rental policies also often include premises liability coverage, which protects you in case you are liable to your landlord for damages to the property. Liability coverage also helps to protect your business from claims that may be filed if a person is injured on the premises — a type of coverage that is sometimes referred to as a “slip and fall” policy.

What’s not covered? A standard business rental policy might not cover flood damage. If you operate in a location where floods are common, you can choose to purchase additional coverage for flood damage. Coverage for your employees’ possessions may also require an additional policy rider, although some policies do include some protection of this type.

Another type of add-on you may want to consider is business interruption insurance, which reimburses you when you can’t operate your business due to theft or property damage.

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How Is Insurance Cost Determined?

The cost of your business renters insurance will depend on a number of factors, including:

•   The size of your business

•   The type of business you have

•   The location of your business

•   The number of people you have employed

•   The value of your equipment

•   Your claims history, if any

Larger businesses, with larger rental spaces, are typically more vulnerable to risks and tend to have to pay higher premiums. Getting additional coverage will also increase costs.

Your premiums will likely also depend on the typical risk factors that insurance companies use to determine policy prices. These include fire risk, based upon how the building where you are renting is constructed, whether it has a sprinkler system, and its distance from a fire station.

Properties in high-crime areas often incur higher premiums for theft insurance, as do businesses that have particularly valuable or desirable inventory or equipment.

Another factor that can influence cost is whether you choose “replacement cost” or “present value coverage” for your equipment and inventory.

•   Replacement cost: Coverage is typically more expensive, but it will reimburse you for the full amount you need to buy new items.

•   Present value coverage: Reduces the amount you are paid by taking into account the age of your damaged or stolen property (known as depreciation).

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Why Do Landlords Require Liability Insurance as Part of Your Lease?

If you lease space for your business, the landlord will likely require you to have your own liability coverage.

The reason is that if someone gets injured inside the space you rent, the landlord’s business insurance may not cover it. It’s generally to the landlord’s benefit that your business has the financial and legal resources to address the situation.

If an injured person sues, for example, the case could get expensive — and with your insurance company’s attorneys defending your case, this helps your business financially and also protects the landlord from needing to become involved.

When tenants are adequately protected by a business rental and liability policy, it can save the landlord time, money, and hassle.

If you are looking to rent a space for your business, it can be a good idea to get clarity from the landlord about what is covered under their business property insurance and what type of property and liability coverage they require tenants to have.

What Types of Businesses Need Property Insurance?

Nearly every small business that rents or owns business space needs business property insurance. The reason is that it helps to protect not only the space you operate in, but also your equipment, belongings, employees, customers, vendors, and visitors who spend any length of time in the building.

Plus, depending upon how the policy is structured and what it includes, it can also provide a range of legal and financial protections, such as reimbursing you for any interruptions to your business due to an unforeseen event.

How to Find the Best Insurance Policy for Your Business

If you’re starting a small business or you’re moving to a new commercial space, it can be a good idea to shop around for the right rental insurance policy, keeping your business assets, risk tolerance, and what coverage is required by your lease in mind.

Even if you’re still negotiating your business lease, you may want to start researching your insurance options. Some ways to get started include:

•   Consulting directly with an insurance company: You can work with a company directly to build a policy that fits your needs. You may want to call two or three and compare costs and coverage options.

•   Searching the online marketplace: You can use online marketplace platforms to get quotes and compare multiple carriers that offer business renters insurance.

•   Using an insurance agent or broker: They can give you access to quotes from multiple carriers and help you navigate through different policy options.

How Does Insurance Factor Into Your Small Business Loan?

Some small business lenders require you to have a certain amount of insurance coverage when you apply for a small business loan. Why? Just like a landlord, a lender typically wants to know that you’ll have the necessary resources to navigate a natural disaster, slip and fall lawsuit, or other financial or legal challenges and still make your loan payments and continue to run your small business.

The lender may regularly check to make sure the policy is still in place.

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The Takeaway

Getting business renters insurance can be an effective way to secure your rented business space from any unforeseen circumstances and allow for financial stability.

A good business renters insurance policy will not just protect you and your employees from any sort of loss or injury, but can also help cover any legal or medical expenses that might come your way.

While your landlord might have their own insurance policy in place, that policy can have limitations that could end up costing you a large sum of money. Your landlord may also require you to have business rental insurance.

In addition, you may need to show proof of business rental insurance in order to get a small business loan.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

FAQ

What does business rental insurance cover?

Business rental insurance typically covers damage to the rented property caused by events such as fire, theft, or vandalism. It also provides liability protection for accidents or injuries that occur on the premises and may extend to covering the tenant’s equipment, inventory, or furniture within the space.

Why is business rental insurance often required?

Many landlords require business rental insurance to ensure tenants can cover potential damages to the property and minimize disputes over liability. It also protects both parties by providing a financial safety net in case of accidents or property damage.

How can a business choose the right rental insurance policy?

Businesses should evaluate their specific risks, such as natural disasters or high foot traffic, and choose a policy that offers adequate liability coverage, protection for valuable assets, and additional options, such as loss of income coverage if operations are disrupted. Consulting an insurance broker can help tailor the policy to specific needs.

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