Help with Some Legal Stuff Getting Started

[scagnt83]

it's $150 for finger printing,

-S

Wow thats steep, its only $20 where I live

 

[Josh]

Actually I do...For some legal entities (C Corp, S Corp, LLC, LLP or DBA) to conduct business within county or city limits may need a separate business license (not Insurance) to operate. This may not apply everywhere but better safe then sorry.

By no means am I a lawyer but it doesn't take legals fees to figure this out.

Just go to your local county and city website under the Business section to get a better understanding

Even in areas where that is required, being an independent insurance agent and working from home is usually creates complete exemption from any of those requirements. I don't disagree with you that some businesses are required to have those licenses, but the implication was you don't understand our industry enough to understand the real question he was asking.

 

[LGilmore]

"I don't disagree with you that some businesses are required to have those licenses, but the implication was you don't understand our industry enough to understand the real question he was asking."

So, at worst, his advice was harmless. So why be such a richard?

 

[scagnt83]

The general agency is telling me that they need the following :

My license (OK, I get it)
My E&O insurance (OK, I get it)
A license for my LLC (Huh ?)
My SS# (Why if I have a tax ID#?)

I set up the LLC so that I'm not doing business as "Joe the insurance agent" but why is he asking for a license for my LLC and my SS# if I have a tax ID# ?

-S

Any GA has records they have to keep, and part of those records include the license of any LLC that is appointed to do business through them.

The same goes for your SS#. Even though the LLC might "officially" be doing business with the GA, each agent within the LLC has to be separately appointed with both the GA and the companies they do business with.
This is federal regulations under the National Security & Freedom of Information Act to help protect against money laundering and fraud. You wont get around it.
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What I am hoping to accomplish with the LLC is:

* Protect myself in the event of an issue. I'll have E&O insurance but I don't need someone taking my house if they sue me. So I want them to be doing business with the LLC vs. with me.

* I was hoping to use the tax ID of the LLC vs. my SS# for the reasons above.
-S

If you want to sell insurance in the US you will need to provide a SS# to any company you plan to do business with (or your GA will).


Your trying to remove yourself legally from the situation, and unfortunately you can not do this to the extent that your hoping to do.
An LLC does not prevent a client from suing you personally in civil court. It only adds another "layer" to the situation.

I assume your thinking is that the client will sue the LLC which will basically be worth nothing since all its assets will be liquid and flow through to you on a monthly basis. But compliance, due diligence, appropriateness, etc extends to all parties involved in the transaction (insurance company, GA, LLC, YOU). So in other words the client can sue everyone involved in the transaction.

But lets examine this, who owns, operates, and basically "is" the LLC? You! So once the lawyers realize this they will skip the LLC and directly go after your assets and possibly even future income. The LLC absolves you personally from any judgments or claims against it. But it does not prevent you being sued in civil court because of your personal involvement.

Your best protection from from lawsuits is a comprehensive E&O policy. E&O is not all the same and can vary greatly. Defense fees, and payment methods are one of the biggest differences in most policies. But there are many variables to E&O, and most of the cheap stuff is exactly that, cheap. Take some time and do some research, compare multiple policies at multiple price points.
This is your personal asset protection, and E&O is much more valuable than any LLC to someone in an advisory position such as yourself, so be very diligent!

 

[Josh]

"I don't disagree with you that some businesses are required to have those licenses, but the implication was you don't understand our industry enough to understand the real question he was asking."

So, at worst, his advice was harmless. So why be such a richard?

New agents get confused enough as it is. It's also annoying when people come on the forum to start spamming and try to pump up their post count by making posts about things they don't know.

 

[scagnt83]

----------------------------------------

On another note, there are personal asset protection strategies that you can utilize to help protect yourself.

You mentioned being worried about your house.
You could place it in a QPRT (qualified personal residence trust) which will add asset protection as well as estate protection. Or you could place it in a FLP (family limited partnership). You could also form a one person "non-normal" LLC which is allowed to hold personal property(rent is required in most situations).

And to go even further you could form a living trust and place any of these inside the living trust, along with other assets.

Or if you dont want anymore trusts, you could use equity stripping through multiple LLCs to absolve any direct personal equity in various assets.

Or you could create international trusts to shelter the domestic ones to create another buffer....


Most of this is most likely excessive for you (unless your a multimillionaire).
The first step is a high quality E&O policy.
Then if your worried about your home still, look into a simple trust based solution first, then possibly a LLC or FLP.

 

[arnguy]

Squeed, it is just the cost of doing business!

 

[radiusbob]

New agents get confused enough as it is. It's also annoying when people come on the forum to start spamming and try to pump up their post count by making posts about things they don't know.

Bump...My advice has nothing to do with industry knowledge (which I am a part of) and more to do with common sense. If an entity is going to operate it must be licensed all the way to the local level irregardless of industry. The original post only mentioned the state level (the four entities I have set up during my time is what I speak from). And since the original post mentioned that he wanted to work through the LLC not as an independent agent which as you suggested is a different set of circumstances.

 

[xrac]

My understanding is that a Scorp is more advanatgeous than an LLC bascially due to the ability to shelter a portion of income from employment taxes.

 

[Josh]

Bump...My advice has nothing to do with industry knowledge (which I am a part of) and more to do with common sense. If an entity is going to operate it must be licensed all the way to the local level irregardless of industry. The original post only mentioned the state level (the four entities I have set up during my time is what I speak from). And since the original post mentioned that he wanted to work through the LLC not as an independent agent which as you suggested is a different set of circumstances.

He did say that he was working under a general agency which nearly always, (if not always), means no brick and mortar and the guy is working out of his house. Under that situation any other licensure would likely not only be unnecessary, but not even exist. Insurance agents, in the majority of states, need only be licensed at the state level. Florida is a little picky about the way they do their fees, but that's the exception and not the rule.

scagent83 has hands down given the best and most complete response to the question and issues at hand.

Squeed, if you really want a legitimate and definitive answer then you should give us the state you're in. Better yet, talk to some other agents in your area and ask them what they did.

BTW- Congratulations on getting started!