- 11,576
I don't believe so? It's been a while since I've looked at that paperwork.
Contact licensing of your preferred companies and check. It can't hurt.
LLC or LLP ..?
- Thread starter MedicareMutt
- Start date
Contact licensing of your preferred companies and check. It can't hurt.
- Thread starter
- #32
MedicareMutt
Guru
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Totally.
- 11,054
Yes. A commission/renewal beneficiary has to be licensed to receive anything past what premiums have been paid for by the client.
And, for MAPD/PDP renewals, the beneficiary has to be AHIP certified. Every year.
- 11,054
A LLC helps in multiple ways as an Agent. Liability protection is not one of them imo. E&O covers that.
- Renewals can easily pass on to your family using a LLC and an Agency/Corporate Appointment with the Carrier.
Your beneficiary inherits the LLC/Agency. Then hires a licensed agent to be a Sub-Agent of the Agency and service the policies.
- An entity is easier to sell. You can take your renewals and monetize them into a lump sum for retirement.
- You can appoint sub-agents easier and create a true downline/agency if you ever want to.
- You can elect the Sub-S election and be taxed as an S-Corp. Giving you a break on the 15% Self Employment tax.
The biggest downside, is you have to apply as both Agency and Agent in each state you are licensed in. Creating 2x the fees and paperwork.
- Renewals can easily pass on to your family using a LLC and an Agency/Corporate Appointment with the Carrier.
Your beneficiary inherits the LLC/Agency. Then hires a licensed agent to be a Sub-Agent of the Agency and service the policies.
- An entity is easier to sell. You can take your renewals and monetize them into a lump sum for retirement.
- You can appoint sub-agents easier and create a true downline/agency if you ever want to.
- You can elect the Sub-S election and be taxed as an S-Corp. Giving you a break on the 15% Self Employment tax.
The biggest downside, is you have to apply as both Agency and Agent in each state you are licensed in. Creating 2x the fees and paperwork.
Why's an llc easier to sell? In a sale you're transferring your book to the buyer . Why does it matter if your selling from a llc or individual ?
- 11,054
It is a much more clear cut business transaction when legal ownership is transferred at the entity level.
It allows for a proper business valuation.
It allows for different types of ownership transfers on different timelines and different risks/rewards to the buyer/seller.
It lets the seller tailor the buyout in a more favorable way to make sure its a good fit before letting go of the book.
It allows for different tax strategies for the buyout.
It gives a complete view of the finances for the buyer making it a much more transparent transaction for all parties involved.
It allows you to easily transfer multiple lines of business for agents who write many different products with many different carriers.
It allows you to easily transfer sub-agents and their production in a buy-out. And easily include that in a valuation.
It shows professionalism and business savvy, which makes the business more marketable. And if valued by a business valuation professional, a true entity will bring more value than a Sole Proprietor Book of Business.
I agree with a few of these . If you transfer sub agents and their production . As far as tax strategies I think you're referring to selling as a capital gain vs income taxed at the higher personal income rate ? Can't an individual sell as a capital gain ?
- 11,054
No. I am referring to the ability to discount shares and provide alternative structures for share transfers.
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