Direct Deposit Catch 22 - HELP!!!

[mr_jpt]

Hi,
I am a new, independent agent in Massachusetts. I got my license for Life and Health a few months ago. More recently, I set up a business bank account at a local bank under my DBA (doing business as) certificate name, with a seperate EIN tax ID. Now I am working on getting appointments and setting up direct deposit. But now the insurance companies I am contracting with are coming back to me saying,
"In order to pay commissions to your TID, a MA state corp license is required. Please fax or email your corp license to me OR I do have everything necessary to set you up as an individual."

My bank checks have my DBA name on them, and the account is tied to the EIN. But my license has only my name on it. The bank says it won't be a problem for the deposits, as they just go by the account number.
But how will it play out with the IRS, when some of the deposits are under my SS# and some under the EIN (which I would prefer)? I mean, the whole reason I set up the bank account was to keep everything seperate from my SS# and my personal joint checking account.

I know you guys are not tax lawyers, but any ideas would be greatly appreciated. It's not easy re-inventing the wheel!!!

Thanks! ~Jeff

 

[captain94]

I had a problem like this. My "S" corp is a business name and in Ohio the Dept. of Insurance wont license a "S" Corp.
So my license is in my name my deposits go to my "S" corp.
Some companies had no problem with this a few did. My commission checks are under my name but deposited into my business account.
My accountant puts a note on my taxes every year and the IRS exepts it..
I put my name on my business checks along with my company name and the problem went away.

Again when I appt. myself to a company I do it as a Indiv. Sole Proprietor not as a Corp. then I give them a voided business check and they deposit the money in my business account.

 

[hcojen]

It is not legal for an Insurance Company to pay commissions to any entity or person that does not hold an insurance license. You will find this is the rule with every carrier. They will all require a license for your business entity in order to pay commissions to that entity. The ONLY exception to this is if you are in a OVERRIDE only position. And not all states will even allow that.

It really is not very expensive to get an agency license in most states. Some states however, it is very expensive.

There are several ways to do this. One would be to go ahead and get a agency license in each state and then assign commissions. The other is to have the commissions paid to you, then you pay your agency. You can 1099 your company at the end of the year for the commissions. (If you go with this plan, I suggest you contact your CPA first to find out all of the tax rules etc.)

I would be happy to talk to you about how to go about getting your agency licensed and what is needed if you need some direction. (Im not attaching any strings, just happy to help you out!)

Call Health Choice One at 877-377-0297 and ask for Jen.
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BTW I would NOT recommend putting your name on your Business checks. The carriers require that your checks come in with your name PRINTED on the checks. If you change that, it can only mean issues in the future. We are an "S" corp and currently hold an Ohio license, so it can be done, it just takes a little work!

Depending on how many states, and which states, you are going to go into, it really might be inexpensive to do it the correct way! =0)

 

[LGilmore]

Make sure what ever "name" you are using in the insurance world jives with your license. You can get fined operating under a "name" that is not registered with the OIC. It could be considered operating without an license.

This was something I learned when talking to someone at the OIC about another issue. He explained it to me and it was $5 to make the addition to my license. Well worth it.

Also it always pays to be nice to people from the OIC in your state. They can do you a little favor or they can slap the piss out of you.