At Profit Solutions, we work with clients to pursue three types of participation programs that generate revenue and increase profits on different ends of the business: Reinsurance Plans, Controlled Foreign Corporations, and Non-Controlled Foreign Corporations.
Reinsurance Plan
Owning and operating your own reinsurance company offers a secondary means of capitalizing on income streams from selling service contracts and related products. Through a reinsurance company, the dealership can participate in underwriting profit and investment income, providing a new revenue stream for the dealership on the backend.
Controlled Foreign Corporation
The second method for underwriting investment is through a Controlled Foreign Corporation. The advantage of a CFC is that it allows for a dealership to control both ends of the business: the sale of service contracts and products, as well as the underwriting. Profit can be earned on both ends, and the dealership controls investment income generated by company assets.
Non-Controlled Foreign Corporation
An alternative to the CFC is a Non-Controlled Foreign Corporation, in which the dealership owns only a portion of the FC, along with nine other shareholders. While profit is spread across nine shareholders, the dealership’s liability is limited. An NCFC is a fine option for dealerships with large volumes of service contracts and product sales.