I am a newly licensed agent. I have not partnered with an agency yet. I have an LLC with a business address and a bank account. When I get up and running, can I have commissions paid into the company name? Do the carriers just use the name and EIN, or will they require that the business entity be registered as a insurance producer?
You need the business entity registered/licensed/appointed as well with most carriers.
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- #3
It is...very.
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Why did you think you needed an LLC? I know "To protect my assets."
Sorry, you have been misinformed. As an agent an LLC won't protect you. You'll always be liable for your own professional negligence (Errors and Omissions) and you'll likely have to personally guarantee any contract you sign.
I suggest you buy your E & O insurance before you sell even one policy.
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I used the LLC for real estate purposes. I didn't get for insurance. I just thought I would continue using it. So how do most independent agents set up? Are you a sole proprietor and if you have a business name do you do a fictitious name registration? If you are a sole proprietor and use a business name, how do the carriers handle that as far as paying commissions?
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An LLC isn't a bad idea, but it has ZERO asset protection for those engaged in licensed activities: insurance, real estate, securities, etc.
Where it can be helpful is two-fold:
1) Recruiting agents... and if they have charge-back debt, it can be limited to the assets of the LLC.
2) Lawsuits from employees. If an employee wanted to sue you (for whatever reason), it could be limited to just your business entity.
For your personal acts, that's why you're licensed in the first place: to be held liable and accountable for your actions and recommendations.
Where it can be helpful is two-fold:
1) Recruiting agents... and if they have charge-back debt, it can be limited to the assets of the LLC.
2) Lawsuits from employees. If an employee wanted to sue you (for whatever reason), it could be limited to just your business entity.
For your personal acts, that's why you're licensed in the first place: to be held liable and accountable for your actions and recommendations.
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The majority of independent agents just operate under their own name as a sole proprietor. Carriers just pay you under your own name (as sole proprietor) rather than your DBA/FNS.
Some may file an approved DBA or Fictitious Name Statement. Be sure to check your state DOI for improper and unacceptable terms that you cannot use in your business name before filing.
Here are the links in California:
Unacceptable Words/Phrases
Improper Use of Words/Phrases
Electing for S-Corp taxation will save you thousands of dollars a year in taxes, assuming you’re profitable. I don’t know why people scoff at this. If you made $100k, paid yourself 30% as salary, and took the 70k as a payroll tax exempt distribution, you would save $10,710 for the year in taxes.
Anyone who thinks that isn’t worth the hassle can feel free to wire me that amount right now to prove their point.
Anyone who thinks that isn’t worth the hassle can feel free to wire me that amount right now to prove their point.
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Completely agree. Only caveat is I dont think the IRS will find the $30k to be a reasonable salary for an insurance agent. Maybe they will, but not sure 30% salary & 70% dividend, etc would make it through an audit. The bad thing is the IRS doesnt have any charts on what is reasonable
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