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When Selling an Insurance Agency Have a Team of Pros Working for you

Most agency owners will sell an insurance agency once in their lifetime. Many insurance agency buyers have purchased more than one and have more experience with the process. Because of this experience, buyers have an advantage when it comes to negotiating the sale of your Personal, Commercial, Health or other Insurance Brokerage. When selling your agency it’s a great idea to assemble a team consisting of your CPA, Attorney and Insurance Agency Consultants. Each person plays a vital role in the process. This post will discuss the CPA’s role in the selling process.

A big benefit of selling a business is the proceeds are often taxed at a flat 15% capital gains rate plus state taxes. However, the allocation of your agency sale can determine what tax rate you’ll actually pay. If your furniture, computers and other fixtures were depreciated in previous years and a large sum of your sale is allocated to these items, there can be taxes due in addition to the 15%. If you carry a note and charge interest, you’ll be taxed on the interest you charge differently.

Should you receive payments for the sale of your Insurance Agency through your corporation or as an individual? Different entities can be taxed differently when a business is sold. Please understand, we’re not tax experts which is why we stress the importance of including your CPA when negotiating this part of your purchase agreement.

Your CPA can help you structure the transaction so you pay the least amount of tax possible. If you’ve had a long term relationship with your CPA they’ll understand how you filed in prior years and advise you on the proper allocation. There’s a lot to learn when selling an insurance agency. Some owners choose to sell it on their own to save money in legal and accounting fees but chances are you’ll make those fees back 5 ¬†fold from the advice they provide.

The individual or company purchasing your agency has experience buying insurance agencies; you should have experienced professionals on your team too.

If you’re considering selling your Insurance Agency or Book of Business in the next year, please contact us for a free, confidential, no obligation consultation.

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