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If I assign commissions to a company, are they liable for taxes?
I earn commissions for insurance sales. I have the option of assigning those commissions to my company (LLC, taxed as partnership). If I do this, will the 1099-misc then indicate this as income to the LLC, rather than to me?
(Bonus if you can tell me if the LLC has to be a licensed agency in order for me to assign commissions.)
@Quick: What, precisely, are you saying is "Not legal"? Assignment of commissions is a common practice in the insurance industry - the ability to do so is part of the boilerplate in agent contracting documents.
My question wasn't whether it was legal to assign them or not, but whether assigning them (the insurance company then pays them directly to the agency, not to the agent) would allow them to show as income to the agency. I'm trying to figure out a way to put agents on a salary, without having to renegotiate contracts with the carriers. This would be useful for me, too. If having them assign commissions to the agency means the income is shown (via 1099) for the agency, then the tax liability (for the commission) ends up where it belongs: with the agency.
My alternative is to renegotiate the contracts, which is another headache, altogether.
1 Answer
- Anonymous9 years agoFavorite Answer
Not legal. It's still income to you and fully taxable and fully subject to SE tax.
Edit, you earned the commissions. It's your income. You seem to want to reassign the income to people who didn't make it.