Getting Company Life&health Licensed As Opposed to Individual

[Tkruger]

Good point.

I have those every now and again.

 

[cadylou]

I just went through this process to change from sole proprietor to LLC - with an S corp election. I had to get the LLC registered with Secretary of State, then get new licenses, and re-contract with all of my companies. The one difficulty I encountered was that some companies will assign all commissions to the business entity & deposit into LLC account, while others will only allow NEW commissions to be deposited into LLC account. The previous commissions earned in those instances will continue to be deposited into the old bank account for sole proprietor. So . . . .I have to keep 2 separate business accounts open, while I maintain a separate personal account. It was messy to say the least, but from here on out it's beneficial. The S corp election minimizes my exposure to self-employment tax (which was becoming horrendous). We set a "reasonable" salary for me, and the structure does allow me to take distributions from the account. Distributions are not subject to self employment taxes, while salary is. All are subject to income tax. You just have to be sure that your salary is really reasonable - and not too low. You also have to be sure that distributions do not end up exceeding your salary.

 

[CFP83]

I just went through this process to change from sole proprietor to LLC - with an S corp election. I had to get the LLC registered with Secretary of State, then get new licenses, and re-contract with all of my companies. The one difficulty I encountered was that some companies will assign all commissions to the business entity & deposit into LLC account, while others will only allow NEW commissions to be deposited into LLC account. The previous commissions earned in those instances will continue to be deposited into the old bank account for sole proprietor. So . . . .I have to keep 2 separate business accounts open, while I maintain a separate personal account. It was messy to say the least, but from here on out it's beneficial. The S corp election minimizes my exposure to self-employment tax (which was becoming horrendous). We set a "reasonable" salary for me, and the structure does allow me to take distributions from the account. Distributions are not subject to self employment taxes, while salary is. All are subject to income tax. You just have to be sure that your salary is really reasonable - and not too low. You also have to be sure that distributions do not end up exceeding your salary.

I set up my LLC up for my company in LLC....then chose an S-corp election in early 2013.
However, my CPA explained to me that I DID NOT have to have commission paid to my company...they could still be paid directly to me. Even though I have always been contracted as individual I HAVE ALWAYS HAD 100% OF MY COMP PAID TO MY BUSINESS ACCOUNT.....I have never had an issue doing this.

So now you might understand my initial question better......if you can be contracted as an INDIVIDUAL producer however have your compensation paid to your BUSINESS bank account, what is the purpose of ever being licensed/contracted with a carrier as a business?

 

[TwiLight]

I set up my LLC up for my company in LLC....then chose an S-corp election in early 2013.
However, my CPA explained to me that I DID NOT have to have commission paid to my company...they could still be paid directly to me. Even though I have always been contracted as individual I HAVE ALWAYS HAD 100% OF MY COMP PAID TO MY BUSINESS ACCOUNT.....I have never had an issue doing this.

So now you might understand my initial question better......if you can be contracted as an INDIVIDUAL producer however have your compensation paid to your BUSINESS bank account, what is the purpose of ever being licensed/contracted with a carrier as a business?

Cadylou spelled out correctly......SELF-EMPLOYMENT TAX of 15.3% of all net income..... You get the SosSec limits at $117,000 at 14.4% and Medicare with no limit at 2.9%. For those in the peanut gallery, that is both halves of social security and medicare tax.

If your accountant does not understand this tax, than seek a new accountant, they are not as smart as the program you can buy for $19.99 per tax season.

 

[Tkruger]

Cadylou spelled out correctly......SELF-EMPLOYMENT TAX of 15.3% of all net income..... You get the SosSec limits at $117,000 at 14.4% and Medicare with no limit at 2.9%. For those in the peanut gallery, that is both halves of social security and medicare tax.

If your accountant does not understand this tax, than seek a new accountant, they are not as smart as the program you can buy for $19.99 per tax season.

I agree a good accountant is in order.