Bookkeeping for Insurance Agencies
Running a successful insurance agency means juggling client relationships, policy renewals, commissions, and compliance. But behind all that activity, solid recordkeeping is what keeps your business financially sound.
Whether you’re a solo agent or manage a growing team, keeping organized records isn’t just good practice—it’s essential.
Why Insurance Agency Owners Should Keep Records
Accurate records help you:
- Track business performance over time
- Prepare financial statements for lenders or investors
- Identify income sources, including commissions and fees
- Monitor expenses like marketing, software, and staffing
- File accurate tax returns and support deductions
What Records Should You Keep?
You don’t need a fancy system—just one that clearly shows your income and expenses. For insurance agencies, this often includes:
- Commission statements from carriers
- Client billing records
- Marketing and advertising expenses
- Payroll and contractor payments
- Office and technology costs
- Travel and continuing education expenses
Whether you use spreadsheets, accounting software, or a cloud-based CRM, consistency is key.
How Long Should You Keep Records?
The IRS generally recommends keeping most business records for at least three years. However, employment tax records should be kept for at least four years.
Keep in mind: if a document relates to property (like office equipment or vehicles), you may need to keep it longer to track depreciation.
How to Record Transactions
A good system includes a summary of all business transactions. This can be done through:
- Accounting software like QuickBooks or Xero
- Spreadsheets for tracking commissions and expenses
- Journals and ledgers (digital or paper)
Electronic records are perfectly acceptable—as long as they’re accurate and accessible.
Understanding the Burden of Proof
If you claim a deduction, you need to be able to prove it. That means keeping receipts, invoices, and documentation that support your tax return entries. The IRS calls this the “burden of proof,” and it’s on you as the business owner.
Why Good Bookkeeping Matters for Insurance Agencies
Bookkeeping isn’t just about staying organized—it’s about making smarter decisions. For insurance agencies, good bookkeeping helps:
- Track commissions accurately across carriers and products
- Manage cash flow to cover operating costs and growth initiatives
- Stay compliant with tax laws and regulatory requirements
- Simplify audits and reviews by having clean, accessible records
- Understand profitability by separating revenue streams and expenses
When your books are in order, you gain clarity, confidence, and control over your agency’s financial health.
Need Help With Bookkeeping for Your Insurance Agency?
Whether you’re launching a new agency or managing a growing book of business, having the right bookkeeping system is essential. Let’s make sure your financial records are accurate, your cash flow is clear, and your agency is set up for long-term success.
Contact Matthew Tomko at mtomko@tomkocpa.com to learn more or connect with us at the link below.
Ready to Strengthen Your Agency’s Financial Foundation?
Schedule a consultation to get personalized guidance on building a recordkeeping system that works for your agency.
Disclaimer: This blog is for informational purposes only and not intended to be taken as professional advice. Always consult a qualified professional for specific guidance. While we aim to keep information accurate and current with tax regulations, be sure to review guidelines annually for updates as they frequently change.