winchester49
Expert
- 38
What percentage of your gross income would you folks set aside to allow for chargebacks and taxes? I have been out of the field for eight months due to health matters and I am ready to get back at it. Thanks for any input.
Starting over
- Thread starter winchester49
- Start date
So a recommendation is to have 3 separate accounts. One for your business, one for your personal, and one just for chargebacks alone. (at least). For chargebacks, I always recommend 15% out of every policy sold. For taxes, I am extremely aggressive and set back 35% however that's just me. I believe the rule of thumb is 25%.
- 6,994
Okay lol.
20% and 2 accounts is plenty. Have all your commissions and business costs (leads) come into/out of the same account. You could put 20% in a savings account attached to the business checking account. Doesn't have to be business, but just the account that all business goes through.
Then pay yourself a salary each week covering just your expenses. When you have $10,000 saved up, give yourself a raise.
The nice thing about chargebacks is that they come out of future commissions. If you are writing consistent business, you'll rarely, if ever, have to write a check.
The 20% is a safety net just in case and should cover most of your taxes. If you're paying 35% taxes as an Indy agent, you should fire your accountant.
20% and 2 accounts is plenty. Have all your commissions and business costs (leads) come into/out of the same account. You could put 20% in a savings account attached to the business checking account. Doesn't have to be business, but just the account that all business goes through.
Then pay yourself a salary each week covering just your expenses. When you have $10,000 saved up, give yourself a raise.
The nice thing about chargebacks is that they come out of future commissions. If you are writing consistent business, you'll rarely, if ever, have to write a check.
The 20% is a safety net just in case and should cover most of your taxes. If you're paying 35% taxes as an Indy agent, you should fire your accountant.
- 544
8 months? Wow, must have been pretty serious. Glad you're ok.
I tend to be pretty aggressive with savings. So I definitely use "ridiculously large percentages when prepping for taxing, emergency savings, etc". And I don't use the "just write more business approach either".
I don't let my commissions decide which company gets my business. I'm in the business for my customer, to help them and provide top-notch service to them. So, because some companies can price themselves right out of the market and for my client. I don't just assume I'll write business to cover the cost. If there isn't enough business on the books. The insurance company will ask for a check. So I would rather be prepared. (again, I realize I'm a bit extreme on the side of being over-prepared for the situation). However, I'd rather be over-prepared than under-prepared
I don't let my commissions decide which company gets my business. I'm in the business for my customer, to help them and provide top-notch service to them. So, because some companies can price themselves right out of the market and for my client. I don't just assume I'll write business to cover the cost. If there isn't enough business on the books. The insurance company will ask for a check. So I would rather be prepared. (again, I realize I'm a bit extreme on the side of being over-prepared for the situation). However, I'd rather be over-prepared than under-prepared
- 6,994
I tend to be pretty aggressive with savings. So I definitely use "ridiculously large percentages when prepping for taxing, emergency savings, etc". And I don't use the "just write more business approach either".
I don't let my commissions decide which company gets my business. I'm in the business for my customer, to help them and provide top-notch service to them. So, because some companies can price themselves right out of the market and for my client. I don't just assume I'll write business to cover the cost. If there isn't enough business on the books. The insurance company will ask for a check. So I would rather be prepared. (again, I realize I'm a bit extreme on the side of being over-prepared for the situation). However, I'd rather be over-prepared than under-prepared
I didn’t think you wrote business?
Fortunately, you would be wrong in that assumption. I do write some business, but I make sure my focus is on serving our agents. Wrote an Everest policy just yesterday for a client here in Virginia over the phone.
Only the ones you can't close . . .
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