The Year-End Coverage Checkup for Texas Business Owners

It's the end of the year. You're looking at revenue, thinking about taxes, and planning next year's budget.

Good. Now do one more thing. Look at what happens to all of it if you're not there.

Most owners set up their coverage once, years ago, and never looked again. The business grew. The coverage didn't.

I'm Harvey Baker Jr., a licensed Texas agent in McKinney. I work with North Texas owners who run shops, practices, and crews of about 5 to 50 people. Here's the year-end checkup I'd want every owner to run before January.

Why year-end is the right time

You're already in the numbers. Your CPA is asking questions. You know what changed this year.

That's the exact information you need to see if your protection still fits. Waiting until something goes wrong is the expensive way to find out.

What probably changed this year

Think back over the last twelve months. Did any of these happen?

• You hired people. More payroll, more people depending on the business staying open.

• You took on debt. A new loan, a line of credit, equipment financing, or a new lease.

• You signed a personal guarantee. Most owners sign more of these than they remember.

• You added a partner or a key person. Someone the business now leans on.

• Your business got more valuable. Good news. It also means the old numbers in your buy-sell agreement or your coverage may be stale.

• Your family changed. Marriage, divorce, a new baby, a kid heading to college, or a parent who needs help.

If you checked even one, your coverage may be sized for a business and a family that don't exist anymore.

The gaps that sneak in when a business grows

1. Your personal coverage is too small. It was sized when the business was smaller and the debt was lower. More here: Life Insurance for DFW Business Owners: Family and Business on One Page.

2. Nobody covers the key person. If one person brings in the work, runs the crew, or holds the lender relationship, what happens Monday if they're gone? More here: Key Person Insurance for Texas Small Businesses.

3. The buy-sell agreement is old or unfunded. A buy-sell with a price from five years ago, and no money behind it, is a lawsuit waiting to happen. More here: How to Fund a Buy-Sell Agreement With Life Insurance.

4. Personal guarantees nobody tracked. If you die, those loans don't always die with you. More here: Signed a Personal Guarantee? Your Family Co-Signed Too.

5. No plan if you can't work. You're more likely to think about dying than getting hurt. But a long injury or illness can hit the business just as hard. More here: Disability Coverage for Owners: If You Can't Work, Who Runs It?

Hypothetical example for illustration only: Picture a McKinney landscaping company owner who went from 8 to 20 employees in two years and took out an equipment loan with a personal guarantee. At year-end he pulls out his old policy and realizes it was bought when the business was half the size and had no debt. He sits down with his CPA and an agent and updates the plan so his family isn't stuck with the loan.

The 8-question year-end checkup

Grab a notepad. Answer these in one sitting.

1. If I died tomorrow, how much debt would my family or my business still owe?

2. Which loans and leases have I personally guaranteed?

3. Who is the one person, besides me, this business can't run without?

4. Does my buy-sell agreement have a current price, and is there money to pay it?

5. If I couldn't work for six months, who runs the business and who pays me?

6. When did I last review my personal coverage amount?

7. Who are the beneficiaries on my policies, and are they still right?

8. Does my spouse or family know where the documents are and who to call?

If you can't answer three or more, that's your January to-do list.

A word on advice

Some of this touches tax, legal, and ownership questions. I'm not a tax or legal advisor, and nothing here is that kind of advice. Bring your answers to your CPA and attorney. For the insurance side, that's my lane.

Get your Gap Map (free, 20 minutes)

If you want a clean starting point, I built a one-page Gap Map: where your home, your business, and your exit still depend on one person. Three columns. Plain English. You keep it either way, whether you buy anything or not.

Call or text 430-373-7752 with the word MAP for a free one-page Gap Map. Or learn more at bakerlegacypartners.com.

Built by you. Protected without you.

Insurance products involve costs, limitations, exclusions, and suitability considerations. This article is educational and is not tax, legal, securities, or financial advice.

Harvey Baker Jr., Licensed Texas Life, Accident & Health Agent, TX License #3470534. Coverage, eligibility, and rates vary by carrier and health.