Chapter 11 Flashcards
Risk management
Identifying key business risks, their likely effect on the business and putting plans in place to minimize them from happening
Methods of Risk Reduction
Fireproof Materials Security devices Security systems Contingency plans Copies of valuable documents
Business insurance
Property insurance Key person insurance Public liability insurance Product liability insurance Fidelity guarantee insurance
Fidelity guarantee insurance
Dishonesty and fraud by an employee
Principles of insurance
Insurable interest Utmost good faith Indemnity - average clause Contribution Subrogation
Similarities between households and business insurance
Identify and manage possible risks
Insure against all reasonable risks
Fill out proposal form
Insurance policy
Taxes businesses pay
Corporation tax - profits by companies
Value added tax
Custom duties - imports from outside EU
PRSI
Form P21
Tax rebate
Form P45
When leaving a job
Form P60
Amount of pay, income tax and PRSI paid by an employe
Tax evasion
Tax payers illegally evade paying the full amount of tax owed
Tax Avoidance
Taxpayers take advantage of the tax system to legally reduce the amount of tax they owe
Insurance
A contract where the insured pays a premium to the insurer for a promise to compensate the insured in the event of a financial loss occurring
Importance of Insurance
Business survival is protected Improves cash flow Can save money Makes exporting easier Greater financial security and peace of mind
How to be Insured
Contact insurance company
Proposal form (applying for insurance cover)
Risk is assessed and premium is calculated
Policy is issued
Claim is made
Insurable Interest
The person must benefit from the continued existence of the item being insured and suffer financially from its loss
Utmost Good Faith
The insured must give truthful information and disclose all relevant facts when applying for insurance
Indemnity
You cannot profit from insurance
The insurer compensates for the actual financial loss suffered
Over-insurance and under-insurance
Average Clause Formula
Sum insured
——————- X Loss
True Value
Contribution
When two or more insurers are involved
they will divide the total cost of the claim between them
Subrogation
Insurers can sue the third party who caused the loss of an item to occur after paying full compensation
How does Taxation affect Business
Lower profits
Higher costs
Higher prices
Locate to take advantage of incentives
Tax Audit
A detailed examination by the Revenue Commissioners
In the event of out of work
Capital Acquisitions Tax
Tax on money as a gift inheritance
Tax Credit
Amount of money one can earn tax-free
Reduces the amount of tax owned
