Did you know that independent insurance agents have had 50% of the life insurance market from 2011 to 2020?
Those in the insurance industry understand how unique it is. Rather than a one-time fee for service, you are dealing with hundreds of customers over long timelines. Documentation is essential to a successful insurance agency.
There are many benefits to upgrading to accounting software for insurance agencies. Quickbooks alone will not be enough for an insurance agency. Keep reading for your quick guide to accounting software for insurance agencies to help you make the right choice for your business.
Why Are Insurance Agencies Unique?
If you’re asking yourself, what accounting software do I need as an insurance agency, then the first thing you need to understand is what makes you unique. Your small business accounting software should take these factors into account.
The biggest factor that makes insurance agencies different is their fiduciary duty. Agencies are responsible for managing fiduciary funds. Using small business accounting software that’s not for insurance agencies means that you will have to do a lot of extra work to ensure accuracy.
Your regular accounting software will not understand that premiums received are not income for an insurance agency. These are, in fact, fiduciary funds that you are keeping in trust for the client.
Insurance companies are also not 100% cash or accrual. For example, insurance agencies can incur bad debt even if it’s on a cash basis because they are responsible for someone else’s money.
Benefits of Accounting Services for Insurance Agencies
The right accounting software for insurance agencies can help increase your profits by managing all the information correctly. You can identify risk factors and increase your sales.
You can also save money in labor by limiting the number of people dedicated to accounting services for insurance agencies.
Your employees have a lot of work to do. To improve their productivity, you can use accounting software to reduce some of their workloads and simplify their tasks. You can also avoid many human errors and increase accuracy.
One of the most important benefits of using accounting software is to make taxes simple. Your accounting software can help you monitor income and costs and keep track of this information throughout the year. You can save time and money in filing accurate tax returns with the help of the right accounting software for insurance agencies.
As you can see, there are several benefits to accounting services, not least of which is maintaining the right order and documentation. By keeping track of all the information in a single place, you can determine opportunities and anticipated issues. This can help you stand out from other insurance agencies and retain clients for the long term.
What Do You Need to Keep Track Of?
Insurance agency accounting requires you to keep track of several line items. Rather than employ dedicated staff to take care of this which can result in errors, accounting software for insurance agencies can make your work simpler.
Track Income and Expenses
You need to keep track of your income and expenses on an ongoing basis. This gives you a full view of your profits.
Proper financial statements with income and expenses, and a full balance sheet is important for:
- getting loans
- if you’re thinking of selling your business or
- if you want to enter into a partnership with another business.
There are many other reasons to have a complete financial statement that tracks income and expenses accurately, including financial audits.
As we noted earlier, premiums are not income or expenses. These are fiduciary funds. You are keeping these funds in trust for your clients.
As fiduciary funds, you have higher obligations. Not keeping track of these properly can lead to liability issues and damage to your professional reputation.
Other Operational Expenses and Associated Budget
You should also keep track of ongoing expenses including payroll, rent, office equipment, etc. Once you have these expenses, you should also ensure that they align with your annual or monthly budget.
Separation of Personal Expenses
Remember that your business expenses should be kept separate from your personal expenses. You need to keep track of these expenses to make sure you are not mixing them and creating liability issues in the future.
Tax Deductions and Tax Deadlines
You want to make sure that you are calculating and including all your tax deductions. You also must meet your tax deadlines otherwise you will incur penalties and interest payments which can be quite significant.
Hiring Family Members
If you have hired family members, then you want to track that separately as well. You should make sure that you track their hours and salary paid. If there’s an audit in the future, you should have this information readily available.
A part of running a business is forecasting the future. Your company needs to have goals to aspire to, so you know that you’re successful. Keeping track of the forecast along with the budget in the same place can make risk management and future planning simpler for your business.
Cost Associated With Accounting Software for Insurance Agencies
You have employees that are dedicated to providing accounting services for insurance agencies. By paying a small monthly fee, you can save hours of time and labor. Your employees can focus on more important tasks to increase profitability.
Getting the right accounting software for insurance agencies can cut that cost down. For example, Uplinq costs $150 per month for a dedicated bookkeeping expert, cash or accrual accounting, and world-class support. It will also save your employees time so they can dedicate their energies to increasing productivity and profits.
Schedule a Demo Today
Now you know exactly why accounting software for insurance agencies is essential to running your business. You can save time and money while keeping track of the multitude of information. The insurance business is unique, and you need accounting software that understands that.
If you’re looking for the best accounting software for insurance agencies that are specially designed for insurance agencies, schedule a demo with us today. We will go over how Uplinq works and get you started with your demo.