Let me start by being crystal clear I am not a tax attorney, an accountant or legal expert regarding this topic. Yet, this topic comes out so often that I have decided it would be valuable to share some insight as many of you are probably contemplating hiring and scaling your Teams and how to set them up with compensation.
In my almost 20 years experience in this Industry I have seen Insurance agents go both the route of paying commission only (1099) and hourly plus bonus/commission (W2). In fact I myself have employed under both options in my operations too.
Yet, the challenge with a TRUE 1099 type relationship is that you as the employer lose all leverage. In order to be a true 1099, Independent contractor you cannot provide them any targets, goals, cannot provide them space to work from, any tools, equipment etc. Many people are not aware there are clearly defined rules that define the difference between a 1099 and an employee. See this link below for details.
In my experience after reviewing these guidelines it is extremely difficulty to actual truly have a 1099 relationship in an Insurance Agency and be effective. I highly recommend that you bear on the side of safety when it comes to making this determination when hiring and scaling your Teams. A small amount of payroll taxes is much better than the possible exposure to a tax audit and back wages and taxes (unfortunately, I learned the hard way) So that is the reason I chose to share this article with you today.
I highly recommend you click on the link above and get to know this documents for your future protection and peace of mind.
John Lucero, is a successful business owner with over 20 years of experience in multi-line insurance agency operations for several major National Brands. With an expertise in Recruiting, Educating, Coaching, Developing and Product Knowledge, his passion and drive to ELEVATE Insurance Agencies to higher levels of success is what keeps him inspired about the future and motivated about making a difference.
