California DBA Name Sole Proprietorship for New Agency

[lifeagent87]

I recently spoke to the California Department of Insurance. I am going to be doing business as a sole proprietorship and need to fill out a form to attach a DBA to my license.

I found the form and for a $40 fee I can add this DBA on as long as the name is not taken and it is a compliant name.

My question is do I need to do anything with the city I am going to be doing business in? Get a business license, or register my DBA with city as well??

The California Department of Insurance website says this:

Does CDI require business entities to register with the City or County in which it will conduct business?
No.


Just curious as to what other agents do with the city it conducts business in.

 

[djs]

You must register your business with your city and obtain a business license. In my city, they require independent agents to obtain a license and pay an annual fee. Captive agents do not have to do this. Don't ask why.

You're DBA has to be filed with the county (I think). It's been a long time since I've done a DBA filing. I'll let someone else respond to this. I do know when I did mine the last time, I had to publish it, show proof of publishing it, and then it was 'legit'.

I don't believe the CDI cares about any of this, but your city/county will. This is sort of in the same way that your bank doesn't care if you pay your auto registration renewal. Somewhat unrelated activities, but the DMV will care if you don't pay. The city/county wants their cut as well.

Dan

 

[retread]

For Kansas:

The Secretary of State in KS does not have a requirement to register a DBA for sole proprietors. However, if you sell insurance as an agency, you must register it with the KID. Agents do not.

My city requires a business license.... about $50/yr.... and get nothing out of it but a piece of paper. Taxation without representation as far as I can tell, but I am in compliance. I know a lot of agents that are not.

Now if I want to place doorhangars, canvas the neighborhood, etc. I can get permission, whereas w/o a license, you get a summons, fined, and still have to get a license. Agents not licensed just don't put out doorhangars, etc. and the city is not the wiser.

 

[Dave020]

For CDI, it depends on the business name. CDI allows agents to use their name as the business name without need to file DBA. If John Smith is going by "John Smith Insurance Services" or "John Smith Agency" then CDI does not require filing of a DBA. If he is going by another name like "Excel Insurance Agency/Services" then they do require a DBA since the agent is operating on other than his or her name.

BTW, "The" John Smith Agency is no longer allowed by CDI. They don't approve the use of "the" preceeding the business name.

As to business license, that is by community. By and large it depends on where you "office" is located. In my city, working from home does not require filing for a business license. If I were to use a business office, then it would required a business license. YMMV, check your local municpal code.

 

[GreenSky]

For years I would receive a notification from the City of Los Angeles requesting I pay for a business license for my sole proprietorship. Every year I would respond with the same page from the code that states that since I do not collect money directly from the client (always made payable to the carrier) that I was exempt.

They finally have left me alone.

Rick

 

[lifeagent87]

I ran across this on the internet (so it must be true), but it is information showing the state does not require insurance companies and brokers to pay business license tax.

I can't post the URL so I just cut and pasted everything:

[FONT=arial, helvetica, sans-serif] Every spring NAIFA-California faces off against local governments who try to levy a business license tax on agents.

The good news is that the law and the CDI are on NAIFA-California's side.
NAIFA-California has long maintained that California law exempts insurance agents from municipal business taxes. Specifically, Article XIII, Section 28(f) of the California Constitution imposes a premium tax on insurers "in lieu of all other taxes and licenses..." At least since 1914, this tax exemption has been extended to duly appointed insurance agents.

[/FONT] Since 1976, the exemption does not extend to insurance brokers; however, the California Insurance Code expressly excludes from the definition of "broker" those individuals who transact life and/or disability insurance on behalf of a life and/or disability insurer. Hence, an agent will not be subject to a business license tax IF they hold an in-force notice of agency appointment and that business involves life or health insurance sales or any other sales for which an agent/insurer relationship exists.

In January 1998, the California Department of Insurance (CDI) reaffirmed this position in a letter responding to a joint request from the Independent Brokers and Agents of the West (IBA West) and the Oakland city attorney. Specifically, the CDI stated that an in-force notice of agency appointment "establishes a virtually irrefutable presumption that a producer is an agent of the insurer which filed that notice."

In short, as a matter of constitutional law, local governments are prohibited from levying business license taxes. If you are facing such a challenge from a not-so-enlightened municipality.

 

[CALTCAgent]

I ran across this on the internet (so it must be true), but it is information showing the state does not require insurance companies and brokers to pay business license tax.

I can't post the URL so I just cut and pasted everything:

[FONT=arial, helvetica, sans-serif]Every spring NAIFA-California faces off against local governments who try to levy a business license tax on agents. [/FONT]
[FONT=arial, helvetica, sans-serif]
[FONT=arial, helvetica, sans-serif]The good news is that the law and the CDI are on NAIFA-California's side.[/FONT]
NAIFA-California has long maintained that California law exempts insurance agents from municipal business taxes. Specifically, Article XIII, Section 28(f) of the California Constitution imposes a premium tax on insurers "in lieu of all other taxes and licenses..." At least since 1914, this tax exemption has been extended to duly appointed insurance agents.

[/FONT]Since 1976, the exemption does not extend to insurance brokers; however, the California Insurance Code expressly excludes from the definition of "broker" those individuals who transact life and/or disability insurance on behalf of a life and/or disability insurer. Hence, an agent will not be subject to a business license tax IF they hold an in-force notice of agency appointment and that business involves life or health insurance sales or any other sales for which an agent/insurer relationship exists.

In January 1998, the California Department of Insurance (CDI) reaffirmed this position in a letter responding to a joint request from the Independent Brokers and Agents of the West (IBA West) and the Oakland city attorney. Specifically, the CDI stated that an in-force notice of agency appointment "establishes a virtually irrefutable presumption that a producer is an agent of the insurer which filed that notice."

In short, as a matter of constitutional law, local governments are prohibited from levying business license taxes. If you are facing such a challenge from a not-so-enlightened municipality.

This is interesting. At one time I was sent a letter from the City I live in saying I owe several years worth of business taxes plus penalties, totaled about $700. I was not aware I needed to pay that tax. I paid it. They told me basically that only certain captive agents were exempt. That the companies pay for the agents of that captive office.

I am also curious if I should be paying this tax?

 

[Dave020]

Interesting also in that this reinforces a discussion on another thread concerning the terms "broker" and "agent" in California.

A "broker" in California (for L&H) is a term that applies only to someone who acts as a "broker", is not appointed with the insurance carrier and does not receive any commissions from the insurance carrier for the sale of a product. Broker also must post a separate bond with the state of CA.

In CA, the term "broker" is thrown around quite liberally, when in fact I have never actually met or heard of a life or health insurance broker in California. Lots of agents, independent and captive, but don't know of any actual brokers.

PS - the broker would have to pay the business/license tax BTW.

 

[retread]

Interesting also in that this reinforces a discussion on another thread concerning the terms "broker" and "agent" in California.

A "broker" in California (for L&H) is a term that applies only to someone who acts as a "broker", is not appointed with the insurance carrier and does not receive any commissions from the insurance carrier for the sale of a product. Broker also must post a separate bond with the state of CA.

In CA, the term "broker" is thrown around quite liberally, when in fact I have never actually met or heard of a life or health insurance broker in California. Lots of agents, independent and captive, but don't know of any actual brokers.

PS - the broker would have to pay the business/license tax BTW.

If I'm not mistaken, a broker can charge a fee for his services and an agent can not. Perhaps this difference would explain why brokers would be subject to taxation, and agents would not.

 

[VolAgent]

If I'm not mistaken, a broker can charge a fee for his services and an agent can not. Perhaps this difference would explain why brokers would be subject to taxation, and agents would not.

IMO, the broker would because his fees are not part of the premium that is taxed. Therefore the government wants a cut. For the agent, since all premium is taxed, no additional cut is needed.