Setting up Real Estate Brokerage and adding Agents as Contractor and will 1099-NEC. How do I set up the Agent in QuickBooks to track their commissions and the Brokerage commissions?

CheryllW · ‎April 04, 2025

I’m a real estate broker in Texas. Here’s how commissions are handled in my business:

For sales transactions, the title company splits the commission at closing, paying 20% to my brokerage and 80% directly to the agent. However, I’m still responsible for issuing a 1099-NEC to the agent at year-end, since the title company does not do this.

For leases or rentals, the full commission is paid to my brokerage, and then I pay the agent their 15% or 20% split.

I want to:

Properly track agent commissions for 1099-NEC reporting
Avoid overstating my income by only recognizing what my brokerage actually keeps
Still capture commission amounts even when agents are paid by the title company
What’s the best way to set this up in QuickBooks Online? Should I use a clearing account, journal entries, or vendor bills to reflect the agent’s earnings without affecting my income totals?

Any best practices or examples would be appreciated!

Kurt_M

Thank you for taking the time to post this here in the Community space, @CheryllW. You can set them as contractors to track commissions and ensure accurate 1099-NEC reporting in QuickBooks Online (QBO) for optimal recording in your business. I'll provide further details below to help resolve your inquiry.

You'll want to configure the agents as contractors in QuickBooks Online and ensure you map them correctly. By doing so, the system can accurately recognize the command you've input and maintain the organization when monitoring their commissions for 1099-NEC reporting. Here are the steps to follow:

Go to Expenses, then select Contractors.
Select Add a contractor.
Enter your contractor’s info, or select the Email this contractor checkbox so they can fill it out.
When you're done, select Add contractor.

For visual reference, see the screenshot below.

Moreover, you can set up a clearing account if there's a need to transfer funds between accounts or if direct transfers aren't possible. This method helps avoid overstating your reported income and ensures accurate recording of commission amounts, even if the agents are compensated directly by the title company. For further information, please refer to this page: Set up a clearing account.

I'd also recommend working with an accountant regarding the accounts you'll use to complete this in QBO. They can also provide other ways to streamline the process of tracking agents' commissions and guide you for a successful 1099-NEC filing. If you don't have an accountant, I can help you find one. Feel free to visit this page: Find a QuickBooks ProAdvisor.

In addition, you can set up contractors to receive payment via direct deposit. Please see this article: Pay a contractor with direct deposit.

Need assistance handling contractor transactions inside your QBO company? You can explore QuickBooks Payroll. This way, they can guide you in streamlining this process.

I can also help you get ready to file your 1099 NEC when you've completed these tasks. Additionally, if you have any other questions related to QuickBooks, please share them in the comment section, and I'll do my best to assist you. Stay safe.

CheryllW

Thank you for your help!

Jelayca V

You're very welcome, Cheryll.

We're delighted to hear that the support provided by my colleague, Kurt, successfully resolved your concerns about tracking agent commissions for 1099-NEC reporting. It's truly gratifying to know that you're satisfied with our service.

If you have further questions about tracking commissions or need help filing your 1099-NEC, please don't hesitate to revisit the Community. We’re here to assist you.

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Setting up Real Estate Brokerage and adding Agents as Contractor and will 1099-NEC. How do I set up the Agent in QuickBooks to track their commissions and the Brokerage commissions?