One lawsuit, one hack, one flood—that’s all it takes to shut down your startup
Building a new business in 2025 takes guts, vision, and planning. But even the most innovative startups can fail if they overlook one critical step: business insurance. From lawsuits to cyberattacks, small businesses are more vulnerable than ever—and one unexpected incident can wipe out your investment overnight.
At TaxMagic, we work with startups to help them choose the right insurance coverage from day one. It’s not just about checking boxes—it’s about protecting your business so it can grow with confidence.
General Liability Insurance Is the Startup Safety Net
This is the most fundamental—and frequently crucial—coverage. General liability insurance protects your business if someone gets hurt on your property, or if you’re accused of causing property damage, bodily injury, or advertising harm.
Even home-based businesses need it. Without general liability, a single customer complaint or accident could result in a lawsuit that drains your business bank account. TaxMagic helps startups connect with vetted providers offering policies tailored to your specific risk level.
Cyber Insurance Isn’t Optional Anymore
Startups use cloud-based platforms and digital tools frequently. That makes cybersecurity risks higher than ever. If your systems are hacked, data is leaked, or your site goes down due to a breach, the costs can be devastating.
Cyber insurance protects your business from data loss, ransomware attacks, and legal liabilities related to digital privacy laws. TaxMagic’s startup clients in tech, e-commerce, and consulting are increasingly adding this coverage as a must-have—not a luxury.
Workers’ Compensation Is Legally Required in Most States
The law probably requires you to have workers’ compensation insurance as soon as you hire your first employee, even if they are only part-time. This covers medical expenses, lost wages, and legal costs if an employee gets injured on the job.
Ignoring it can result in severe fines, legal action, or even the closure of your company. Through TaxMagic, we help you identify the exact insurance requirements in your state and avoid any compliance blind spots.
Commercial Property Insurance Covers More Than Buildings
You don’t need to own a physical store to need commercial property insurance. It also protects your office equipment, inventory, tools, and electronics from damage due to fire, flood, theft, or vandalism.
Startups working from coworking spaces, garages, or shared studios should still consider this coverage—especially with expensive equipment or tech tools. TaxMagic helps you get cost-effective quotes to protect what you’ve built.
Business Interruption Insurance Buys You Time
If a disaster forces you to pause operations—whether due to a natural disaster, utility failure, or supply chain breakdown—business interruption insurance steps in. It can help cover lost income, payroll, and fixed operating costs during your downtime.
In 2025, with climate unpredictability and ongoing economic shifts, this coverage is becoming essential for long-term survival. TaxMagic helps startups calculate risk exposure and choose plans that offer real peace of mind.
Why the majority of startups forego insurance (and why they shouldn’t)
Many first-time founders assume insurance is something you buy “later.” But by the time you realize you need it, it might be too late. Just like you wouldn’t drive a car without a seatbelt, running a business without insurance exposes you to massive, unnecessary risk.
At TaxMagic, we make it easy for startups to understand, choose, and manage their business insurance needs—without overwhelming paperwork or confusing terms. We also help bundle coverage with your company formation, tax setup, and bookkeeping services, so everything is in sync from the beginning.
