December 16, 2019
I wanted to take a moment to talk to you about business interruption insurance today. Business interruption insurance protects you if there is a loss where you are unable to operate your business center in your revenue. So if you suffer a loss like a fire for example, where you were unable to open your campground or a piece of your campground is not able to operate, you can use the funds from the insurance claim to help recover the missed income opportunities that you had during that timeframe when you’re rebuilding or repairing to get back up into full operating procedures. So when you look at that insurance make sure that you’re protecting the right things. Now, what are your insurance agents going to ask you about? Well, I’ve talked with the good folks at Leavitt Insurance and they specialize in working with campgrounds and they’ve given me some info for you.
First, you want to make sure that you have a solid set of books and records to be able to apply for this and insurance as well as to be able to support your insurance claim. If you had a loss, you’ll need to be able to provide accurate records to show what your income truly is by segment. You’ll also need to show the timing of that income, especially for taking into account seasonality and you’ll need to be able to show what your current income looks like when it’s time to file the claim if you had that loss. Having a solid set of books and records a financial statement, especially those prepared by a CPA, will allow you to speed the process along and make sure that you are able to get the right insurance coverage for you to protect your investment as well as get the funds from your insurance policy if a loss should ever happen.
We specialize by helping you keep up with those financials and having a solid set of books and records that can provide that information at a moment’s notice. The other problem that they see is that not only do business owners not have that information to even apply for the insurance, they also don’t have the information to support a claim if there is one. Obviously, if you’ve suffered some sort of a loss, you’ve got a lot of things on your plate and I’m sure going back and doing accounting is not going to be one of your top priorities at that moment. You need to make sure that you have a great system in place where that information is always readily available. That will also help you make better decisions in your campground all along the way. Working with industry-specific professionals like us assures that you’re well taken care of and gives you a solid set of returns on the investment in your CPA.
You will want to make sure that you have at least three to five years of financial statements available to both apply for the insurance and also if you have an insurance claim. You’ll also want to make sure you also have a good reservation system. One of the things your carrier is going to ask you about is the segments of your income. So if you have a store as well as campsites and cabins, they’ll need to know the breakdown of that income. If you suffer a loss in a store, for example, but you can still rent out your cabins and maintain your reservations. It’s important to have good records to look at the sources of that income.
If you have a loss like this, one of the things you’re going to want is a very timely payout. Don’t add to the burden by having to catch up your accounting at that point. You want to have this always ready to go.
Make sure you don’t try to underreport your income to the IRS. In relation to this type of insurance, If you have not claimed all of your income on your taxes and in your financial statements, you’re not going to get the insurance company to give it to you either. So you’ll be shortchanging yourself. We see the effects over and over again at the sale time for a campground also. If you’re claiming that you have additional sources of revenue that aren’t in your financial statements, guess what? You’re going to lose probably four or five times that amount in the sale price of your park. You’re also going to give a potential buyer a reason to question your judgment when looking at the numbers in the due diligence process. You may make yourself a much harder deal or knock out a deal that could have potentially been something that you really wanted.
Talk to the good folks at Leavitt Insurance. They will help you line up the best insurance policies for your campground and I will be happy to help you at CampgroundAccounting.com to make sure that we have good solid sets of books. These records will help make sure that your insurance is worthwhile and pays off for you in the event of a loss. We will also make sure that you’re saving a lot of money on taxes and growing the value of your campground to its ultimate potential.
Donna Bordeaux, CPA with CampgroundAccounting.com
What happens when you send two CPAs out into the relaxing outdoors to camp? You get CampgroundAccounting.com. Donna and Chad have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They camp and travel across the country every chance they get, so it’s just a natural fit that they focus their CPA skills on helping campground owners throughout the USA grow their businesses and minimize the impact of taxes. They understand the key performance indicators and specialized issued that face RV park owners every day.