R. Kenner French discusses risk reduction strategies and tax strategies for small business owners. They focus on the concept of captive insurance, specifically the 831B captive. He explains how a captive insurance company can help small business owners transfer and mitigate risk while also providing tax benefits.
Kenner discusses the four-part test that a captive must pass and the various risks that can be covered by a captive. He emphasizes the importance of understanding the complexities of captives and customizing them to fit individual business needs.
Takeaways
• Captive insurance can help small business owners transfer and mitigate risk while providing tax benefits.
• A captive must pass a four-part test, including risk transfer, risk distribution, insurance principles, and fortuitous risk.
• Captives can cover a wide range of risks, including business interruption, political risk, key employee risk, and market risk.
• Captives should be customized to fit individual business needs and should not be used solely for tax purposes.
• Understanding the complexities of captives and working with experts is crucial for successful implementation.
Sound Bites
• Risk reduction strategies and tax strategies
• Covering risks that are typically not covered by traditional insurance
• You are in control of the money in your own insurance company
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