How To Set Up An Agency

Getting Started:

If you have not already been appointed in your home state please visit our Get Licensed page for instructions on doing so. From there you’ll need to:

• Write a business plan.
• Choose a legal structure.
• Choose and register your agency’s name.
• Apply for a tax ID number.
• Register your business with the state.
• Get the appropriate business licenses or permits.
• Purchase Errors and Omissions Insurance.
• Select an agency management system.

Step 1: Write a Business Plan

This step is the most important part of building your business. You’ll use this plan to secure financing and loans, hone in on your market, and choose your business location.

Your business plan should…

• Introduce the people responsible for the agency and executing the plan.
• Explain how you’ll acquire customers and what products and services you’ll provide.
• Identify your target market, suppliers, and competitors.
• Describe the advantage your agency has over your competitors.
• Analyze your risks.
• Include an initial budget, cash flow projections, and a production forecast.

Step 2: Choose a Legal Structure

How you structure your business will determine the amount of personal liability you take on. There are several structures available:

• Sole Proprietorship.
• Partnership.
• Limited Liability Corporation (LLC).
• Corporation.
• S Corporation.

Each structure has its own risks and benefits. A sole proprietorship, for example, is the simplest structure, but it also carries greatest personal liability if the business busts. Any business debts you incur can be collected through your personal assets if you don’t have adequate commercial funds. On the other hand, LLCs and corporations offer a legal distinction between you and your business entity.

Step 3: Choose and Register Your Agency’s Name

Agents who choose to be sole proprietors use their own names as doing their “Doing Business As” name. If that doesn’t work for you, pick a name that…

• Conveys your agency’s benefits.
• Avoids cliché.
• Is easily searchable.

Once you settle on a name, register it with your state’s government.

Step 4: Get a Tax ID Number

The IRS requires all businesses to have an identification number to file their taxes. If you are a sole proprietor, you may use our social security number. Corporations and partnerships must apply for a Federal Employer Identification Number.

Step 5: Register your Business with the State

Once you have your tax ID, contact your state insurance commissioner’s office. They will have a checklist for registering as a “resident business entity.” You must do this in order to pay your state and local taxes.

Step 6: Get Your Business Licenses and Permits

Though you are a licensed agent, you may need a general business permit or license to operate legally. You can find which permits or licenses you must carry by using the Small Business Administration’s Business Licenses and Permits tool.

Step 7: Purchase E&O Insurance

As an insurance professional, you already know how important it is to carry adequate liability coverage. This is especially true if you decide to run your agency as a sole proprietorship. Some states may even require you to have Error and Omissions Insurance, or Professional Liability Insurance, to register your business.

ABC Medicare Plans currently offers an E&O policy that will cover you for all carriers that you are currently contracted with through us.

Step 8: Select an Client Management System

Whenever you have the opportunity to automate simple tasks, take it. That means you’ll want to invest in top-notch agency management software. A good system allows you to track prospects and service current clients.

Information provided on this website does not constitute professional advice. If you have legal, tax or financial planning questions, you need to contact a qualified professional.