Accounting and Business structure for Independent Agents

[REI_Velocity]

Just looking for opinions. This is in the context of being an independent agent. More specifically a life agent, but not sure if it matters here.

Two questions below:

1) What have you found helpful with tracking personal commissions and expenses? Especially as you grow a large client base, and perhaps pay out commissions on spilts, have ongoing self employment expenses, track year over year life commission changes, etc. Do you use a spreadsheet? Xero? QuickBooks? Integrate it with your CRM? Etc….?

2) Are you an LLC taxed as an S Corp? If so, do you assign your commissions to the LLC to then pay you a W2 salary? The goal being to lessen self employment taxes on distributions above your salary.

Thanks!

 

[Allen Trent]

Just looking for opinions. This is in the context of being an independent agent. More specifically a life agent, but not sure if it matters here.

Two questions below:

1) What have you found helpful with tracking personal commissions and expenses? Especially as you grow a large client base, and perhaps pay out commissions on spilts, have ongoing self employment expenses, track year over year life commission changes, etc. Do you use a spreadsheet? Xero? QuickBooks? Integrate it with your CRM? Etc….?

2) Are you an LLC taxed as an S Corp? If so, do you assign your commissions to the LLC to then pay you a W2 salary? The goal being to lessen self employment taxes on distributions above your salary.

Thanks!

Who are the commission splits being paid to? Many carriers will pay the commission splits directly to the other rep when the rep code is submitted on the application. (most carriers selling agreeements & rules require disclosure to the carrier when any other party is going to receive payment from the writing age & many require that party to be appointed with the carrier).

on #2, are you licensed as an agency entity with the state(s) and also appointed by the carrier as an entity agency or merely licensed & appointed in your own name. Somewhat difficult to assign the 1099 income if earned in your own name to an LLC as a pass through.

Work with a CPA on the best entity type for yourself & have them discuss what is a reasonable salary compared to taking income as a dividend, etc.

Make sure your E&O & liability insurance lines up with naming both your individual name & your entity for protection

 

[titeye]

That's a great question!
I have heard that the only way to continue having commissions paid to your successors upon death is if you are set up as a business entity/agency. Having commissions paid directly to the agent and SS#, as I understand it, will not suffice. Hopefully, someone here will confirm or negate this.

 

[Tahoe Ray]

1) I pay a bookkeeper to keep track of all of that.

2) My agency is set up as an LLC/S w salaries/distributions. If you want to assign personal commissions, the carriers are going to require you to license the entity as well.

 

[bernardcoghlan]

Hey there, everyone! I've been diving into the world of accounting and business structure for independent agents lately, and it's been quite the journey! If you're like me and trying to make sense of it all, I can't recommend enough reaching out to the Leicester accountants. They've been a game-changer for me, and I'm sure they'll have some fantastic insights to share!