Insurance companies need information about your business to determine whether you’re eligible to receive coverage. The insurance company will require you to submit some basic information about your business, including:
- Business name and address
- Tax identification number (TIN)
- Effective date of the insurance policy (when coverage began)
- Policy number
- Benefits paid and benefit amounts paid
- Premiums paid and deductible amounts paid
Step 1: Calculate the cost of goods sold
The first step is to calculate the cost of goods sold. The cost of goods sold is a key factor in determining your business’ taxable profit. It includes direct materials, direct labor and manufacturing overhead as well as any other costs associated with producing your products or services.
Direct materials are supplies that are used in the production process, such as raw materials, packaging materials and repair parts. Direct labor includes all expenses associated with wages paid to workers who work directly on the manufacturing process, such as those who install equipment or build an assembly line. Manufacturing overhead includes expenses associated with managing a manufacturing facility such as utilities and insurance costs, but does not include manufacturing costs like rent or salaries for managers or supervisors who oversee production operations.
Step 2: Calculate the gross profit
This is the difference between all expenses and revenue from your insurance business, which will be shown in a profit and loss statement.
In order to calculate the gross profit, you need to take into account all expenses that are associated with running a business. These include rent, utilities, salaries and employee benefits.
You can also include some other expenses like advertising costs and marketing costs if they directly affect your bottom line.
Step 3: Calculate the operating expenses
The next step is to calculate the operating expenses. Operating expenses are the costs associated with running your business, including rent, payroll taxes and insurance. These expenses will vary from company to company, depending on whether or not you have employees and whether or not you own a physical location for your business. For example, if you have employees and rent office space, then your operating expenses will be higher than if you were self-employed.
To determine how much your business pays in operating expenses each month, multiply all of your fixed costs (such as rent) by the number of months that they cover (for example, if your rent covers one month, it will cost $1,000). Then add any variable costs — such as payroll taxes — that vary from month to month. Finally, divide this figure by 12 to get the monthly amount that’s left over after paying these fixed costs and variable costs each month.
Step 4: Add up the net revenue and subtract all operating expenses from net revenue
The next step is to add up the net revenue and subtract all operating expenses from net revenue.
Net Revenue = (Revenue – Cost of Sales) + (Cost of Sales – Selling Expenses)
The operation expenses are those that go towards operating the business. These include things like salaries, rent and utilities for the office space, repairs for the equipment in use, etc.
Use the following formula:
Net Revenue = Gross Profit + (Total Cost of Sales – Selling & Admin Costs)
In this case, we will use the following formula to calculate net revenue:
Net Revenue = Gross Profit + (Total Cost of Sales – Selling & Admin Costs)
Gross Profit = Total Revenue – Cost of Sales
Total Revenue = Gross Profit + (Total Cost of Sales – Selling & Admin Costs)
Step 5: Add up all deductibles and other business expenses and subtract that amount from your net revenue
This will show you how much profit or loss you have for the year. If you have a loss, you may be able to carry it over to the next year. If your insurance company is willing to cover it, they may even pay you the entire amount.
If you are not sure of how much money to expect from your insurance company, contact them and ask for a quote on what they will pay out if there is a claim.
