Jack leaned back in his chair, grinning as he sketched his “solution” on a yellow pad.
“Look,” he said, “the carriers pay me. Then I pay my S corporation a management fee, or I just have them ACH the money straight to the S corporation. My friends do this. Their CPAs bless it. Why can’t you?”
Jack’s Setup: Contracts in His Name, Schemes in His Head
Jack owns a successful insurance agency. Every carrier appointment and producer agreement is in Jack’s individual name.
The state license is in Jack’s name. The carriers’ compliance departments recognize Jack—not any entity—as the agent of record. Each January, the carriers issue Form 1099-NEC to Jack under his Social Security number (SSN) for all commissions and fees.
Jack has read and heard that S corporations can reduce self-employment tax by allocating income between W-2 wages and S corporation distributions. He latches onto that concept and decides he can retrofit it onto his existing structure, even though no carrier ... Log in to view full article.
