Premium trust account

[Francesnunez]

I'm starting an agency and would like to know how do you manage the Agency Accounting? How many accounts do you have to have? How do I know an "earned commission" becomes "income.

 

[djs]

Have you ever worked in an agency?
If you collect premium payments (most agents do), then you need a separate account for carriers to sweep these out of. Don't mix this into your general funds or it will be the cause of many audits.

don't use the premium trust account to pay your bills.

So, all you really need is a general fund account and a trust account. You'll probably want a separate account for commission payments. Not everyone does this, but its a good idea. If you are large enough, you'll want a payroll account. Refer to your accountant to help with this though.

Most agents consider paid commission as income, especially in P&C. You tend to work on a cash basis, makes it simpler. Next month, you may have some chargebacks for cancelled /lapsed policies, but you'll have other new policies and service commissions to offset it.

Dan

 

[Francesnunez]

Thanks Dan. Yes, I'm working at an agency right now. I'm aware of what is a Premium Trust Account but I was confused on how many accounts do you actually need and when the commissions becomes income. I've seen a lot of bad money agency management so I want to make sure I'm well oriented about this topic because of course I don't want to make those same mistakes.

 

[surendra1998]

Nice work knowing what to do before doing it always help you do things right.