Back Agency Solvency

mclureins Dec 5, 2009 8:36 PM
How does an agency show solvency? Too much money in the Trust Account violates IRS. Too little money violates CDI code.
gregcw Dec 10, 2009 1:39 PM
You should still have an Agency Operations account where you deposit commission income and where you pay yourself, staff, and agency expenses from. Also your comment about the IRS doesn't make sense unless you're talking about co-mingling funds and both the IRS AND the DOI have problems with that. The only funds that are allowed in a premium trust account are premiums and enough of your money to pay any finance charges, if your bank does not waive them for a clients trust account, as I believe they are required to.
sgross Dec 30, 2009 5:42 PM
Agency solvency is not shown through a bank account it is shown through a financial statement which generally includes a balance sheet and an income statement. The balance sheet will show your assets and liabilities. Within the balance sheet you will see a entry called retained earnings. This is generally a good indicator of the solvency of any business.

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