Accounting Best Practices for Insurance Agencies

Growing agencies may not be at the stage of needing a full-time staff controller or CFO but can still benefit from CFO-level strategy during periods of growth or oversight for financial operations. The reason a statement of cash flows is important is because financing activities or some forms of owner compensation may not be recognized in the net income of the profit and loss statement. Choosing the right accounting software involves evaluating the agency’s needs and comparing options. User-friendliness, cost, scalability, and integration capabilities are crucial in making an informed decision. Robust reporting features within these software solutions help agencies stay compliant with ever-changing regulatory requirements. The software’s ability to manage complex transaction records and maintain audit-ready documents is crucial for operating within the legal framework of the insurance industry.

I. Importance of Accounting for Insurance Agencies:

Regardless https://x.com/BooksTimeInc of the complexity of the claim, these suits require legal fees, document production, lost billable hours, and precious energy consumed instead of serving your clients and growing your business. But no matter how good you are at your job and how much experience you have, any logical accountant knows mistakes are bound to occur. Best’s Review’s AM Best has repeatedly named Moss Adams among the top 25 insurance auditors in their rankings of top audit firms.

• The knowledge and expertise we’ve gained over 30+ years supporting insurance agencies with our world-class accounting platform is one of our many assets that saves our customers valuable time and money.
• Insurers will want to see your three-year revenue before calculating the cost of your accounting insurance.
• If you outsource your payroll, many payroll providers also offer employee benefits.
• The service that the accountant provides is crucial for calculating premiums.

Set up a commission structure

Our Accounting Services are designed to accounting for insurance agencies give you clarity, confidence, and control over your business’s financial health, so you can focus on building your company. Whether your business requires a traditional audit or accounting and reporting advisory services, Deloitte & Touche LLP’s Audit & Assurance practice works to deliver more than a static snapshot of the past. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Whether you have a business or are thinking about starting a business, let Rosedale & Drapala handle all of your, tax and accounting needs. The information provided on this website does not constitute insurance advice. All content and materials are for general information or illustrative purposes only.

• This integration reduces manual errors and discrepancies, simplifying the workflow significantly.
• It undergoes on-site peer review and adheres to the highest level of standards found in the largest firms while fostering the type of personal relationship with our clients only available from a firm of our size.
• If their reasoning is, “I think we can win if the IRS catches this.” Weigh the tax savings versus the extra cost to defend a “win” the case.
• For retail agencies, it is best to not include a COGS entry and for any agency engaged in any wholesale operations, the COGS entry should be the commissions paid to the outside agents.
• Outsourcing payroll, especially with business growth, saves time and minimizes errors.

Benefits of Using Accounting Software for Insurance Agencies

Top picks for 2025, including QuickBooks, FreshBooks, Sage Intacct, and Xero, offer unique features tailored to different agency sizes and needs. All insurance companies are required to use statutory accounting when preparing their financial statements because of the risky nature of the industry. This risk is due to the fact that insurance companies are wagering that only a small number of policyholders are going to need to collect on their coverage amounts and that their revenue from policy sales will cover these payouts.

User reviews provide valuable insights into the software’s real-world performance, highlighting potential issues or benefits. This helps in making an informed decision that aligns with the agency’s needs. Assessing your agency’s accounting needs ensures that the selected software aligns well with your operational requirements. Comparing options based on https://www.bookstime.com/ features and user feedback helps identify the best fit for your agency. Robust reporting and analytics are essential for understanding financial statements and making informed business decisions. However, it’s worth noting that FreshBooks offers limited features compared to other accounting software options.