Is an LLC Necessary?

[tek4425]

I'm planning on leaving my current agency and going independent. I don't plan on hiring agents so, with that in mind, is it necessary to form an LLC?

 

[Thad.Sipple]

Life, P&C, Health, what are you selling. What state are you in?

Generally speaking no you don't need an LLC, Corp or otherwise.

 

[DHK]

First, this question is a legal question and we're not lawyers.

That being said, the only possible reason to form an LLC is for tax bracket purposes.

Because you are a licensed individual responsible for your advice and actions, there is no 'asset protection' available for your actions as an insurance agent - regardless of the line of insurance you sell.

There may be other reasons to form an LLC or a corporation, such as if you hire employees (assistant, CSRs, etc). If employees were to sue you, you could be protected by having a business entity because such a suit would be separate from your actions as an insurance agent.

Just my thoughts and not to be taken as legal advice.

 

[Thad.Sipple]

First, this question is a legal question and we're not lawyers. That being said, the only possible reason to form an LLC is for tax bracket purposes. Because you are a licensed individual responsible for your advice and actions, there is no 'asset protection' available for your actions as an insurance agent - regardless of the line of insurance you sell. There may be other reasons to form an LLC or a corporation, such as if you hire employees (assistant, CSRs, etc). If employees were to sue you, you could be protected by having a business entity because such a suit would be separate from your actions as an insurance agent. Just my thoughts and not to be taken as legal advice.

IN almost all cases it won't help with taxes, the IRS has done a great job leveling the playing field, you pay it on one end or the other. Unless you make crazy mad money you may save a grand here or there but generally your gonna pay about the same as a LLC, Corp or Sole propriety.

I am not an attorney or CPA, but I do have both and I have tried every way that is legal to save on my tax bill, and it's all about the same, and I humbly make pretty decent money.

 

[DHK]

I agree. I've done my own analysis, and there really isn't much difference or savings with the current tax brackets between being a sole proprietor and having a separate legal entity.

Whatever you may save on taxes... will just get eaten up with the more complexity filing taxes for the legal entity and the state fees.

 

[Thad.Sipple]

I agree. I've done my own analysis, and there really isn't much difference or savings with the current tax brackets between being a sole proprietor and having a separate legal entity. Whatever you may save on taxes... will just get eaten up with the more complexity filing taxes for the legal entity and the state fees.

Sad but true........

 

[Glen Shelton]

Sad but true........

There are other benefits to forming an LLC outside of a possible break on taxes though

 

[Thad.Sipple]

There are other benefits to forming an LLC outside of a possible break on taxes though

Not really if your a single party LLC.

When it comes to a law suit you better hope every single part of the business is in the businesses name and is paid by the business.

But I am all ears.

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I will say if you are going to have employees or non-employees, you are safer running it through a Corp or a Non-Single partly LLC.

 

[HoosierLife]

See, I'm still trying to figure out if my accountant is crazy or stupid or smarter than every other accountant in the world. He seems to think as long as I claim something as income as an S Corp. that I won't get audited.

And even if I claimed a reasonable salary of $50,000 a year, it looks like I will say five to $10,000 a year in taxes and all we have to pay out about $1000 more to my accountant for payroll and filing for the S Corp.

And if 95% of final expense agents fail, wouldn't a reasonable salary be rather low?

 

[TFMSINC]

As DHK says, just my thoughts and not to be taken as legal advice.

I am a "C" corp, and as such, it does save tremendously on taxes.