When you’re busy with Medicare enrollments, do you let details fall by the wayside? You may come to regret it. Strong organization can help you maximize commissions and tax deductions, so you earn more for your hard work. Follow these tax and recordkeeping tips for agents, and your future self will thank you.
The Consequences of Sloppy Recordkeeping
If your recordkeeping is lacking, you may be losing money – and you may not even realize it.
- Missed Commissions. You depend on first-year and renewal commissions, but if you’re not double-checking the commissions you receive, you may be leaving money on the table. Mistakes happen, and sometimes agents are short-changed. You need to be on top of things so you can get problems corrected ASAP.
- Lost Opportunity. Retaining clients takes work. You need to follow up on additional needs, renewals, and plan satisfaction, but if you’re not keeping good client notes, you may not remember everything you need to do, and that can lead to client churn and lost cross-selling opportunities.
- Higher Taxes. You have to pay taxes on your earnings, but as an independent contractor or self-employed worker, you’re allowed to deduct legitimate business expenses. If you’re not keeping track of these expenses, you could be paying Uncle Sam much more than you really owe.
All of these issues can add up to major losses, but you can stop the revenue leakage with strong tax and recordkeeping practices.
Track Your Enrollments and Commissions
If you don’t receive your expected commissions, you know that something went wrong, and you can take action to correct it. The problem may be that the enrollment didn’t go through, and that needs to be addressed, or there could be something wrong with the payment, but you won’t know until you look into it.
Don’t just assume that carriers will send you all the commissions you’re due. Keep track of every enrollment, the commission you expect to receive, and when you expect to receive it. You can use fancy software, but a simple spreadsheet will do the trick. Just make sure everything is in one place and that each entry is filled out completely, including the client’s name, the date of submission, the method of submission, the carrier, the plan, call-tracking data, the link to your call recording, and any other important information. Also, use a spreadsheet to track your commissions.
For more information, read more about tracking enrollments and commissions. And be sure to check, check, and double-check.
Keep Your Receipts to Claim All Potential Tax Deductions
Tax deductions reduce your taxable income, so you pay less in taxes. By taking every deduction available to you, you may be able to save thousands of dollars each year.
The IRS says that a business expense can be deducted if it is both ordinary and necessary. Ordinarily, the IRS means it is common and accepted in your industry. By necessity, the IRS means it’s helpful and appropriate for your business. It does NOT have to be indispensable – just helpful.
Business taxes can be complicated, so you should consult a tax advisor. However, for a tax preparer to help you maximize your deductions, you need to provide detailed information.
- Know what deductions are generally allowed. Use the Insurance Agent’s Tax Deduction Checklist as a guide.
- Track your mileage. The easiest way to do this is to use a mileage-tracking app like MileIQ, Everlance, or DriverNote.
- Store your receipts. You need to get a receipt every time, and if you’re buying both personal items and business items, it’s smart to pay for them separately so it’s easy to keep track of what’s what. You can keep paper receipts in a folder. Another option is to use a receipt scanning app like Veryfi, Neat or Zoho Expense.
- Keep a spreadsheet. In addition to storing your receipts, keep a record of each expense, including the date and business purpose.
Agents who partner with Western Asset Protection have access to a comprehensive suite of tools for tracking, quoting, enrollment and more. We also offer resources to help you stay compliant and up to date on the latest Medicare developments. Learn more.