Should I Incorporate?
Should I get a business entity insurance license or not?
First, let’s recognize that you are in a licensed profession. You will not get any asset protection using an LLC or Corp for your own personal acts. That’s why you’re licensed – so you can be held accountable for your actions and recommendations.
Second, if you’re new to the industry… this is a distraction consideration. I wouldn’t spend much of ANY time on this as your first job is to have a message to promote, meet with new clients, close business, and get referrals. If you read “The E-Myth: Revisited”, you’ll find that this kind of stuff at the beginning is a sign of the technician rather than the leader or even manager.
If you’re “dead set” on having a business marketing name, then file for a DBA or FNS (fictitious name statement) and get it approved by your state DOI. Be sure to avoid any unacceptable or improper words or phrases.
The time to really get an LLC or Corp is when you’re contracting agents AND/OR hiring staff. Why? For contracted agents, if chargeback debt rolls up, it’s limited to assets of your business entity. In the case of hiring staff – if you get sued as an employer, it would be limited to the assets of your business entity.
Yes, as you grow, it can make sense to get an LLC or corporation established. For your insurance commissions, they would be paid to the LLC or Corp and then paid to you, bypassing some FICA taxes. You can do this also for your own RIA firm as well.
If you have broker/dealer securities licenses, your GDC will always be paid to you as an individual and (last I heard) cannot be assigned to a corporation or LLC. They’re paid to Registered Reps and that’s an individual, not a corporation/LLC.
I hope you find this helpful. Of course, this is not compliance, legal, or tax advice. Seek out competent and licensed professionals in your state for your specific questions.
Final note: Once you’ve filed for your DBA/FNS OR you have created your business entity and licensing… don’t forget to update your E&O! They need your marketing names and legal entities on your policy. You may not need an “agency” policy, but you still need to update your E&O with your marketing names.