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Yitz
Level 1

Real estate Broker commision - deduction

In real estate transactions many times the disbursements is done at closing. I'm trying to setup/figure out how to enter such payments received.

Here is the challenge; the check will be issued by a bank or attorney which doesn't match the name of the seller as on the invoice, additionally, sometimes we co broke the deal and need to split the commission and the the check to the co broker is  issued by the bank or attorney and deducted from the full commission.

I create an invoice for the "seller" who will be paying the commission in the amount of $5,000.00.

Now, if there is a commission split the check we receive will be only for $2,500.00.

We need to record that we earned 5,000.00 and have an expense of 2,500.00 so it reflects the gross income.

 

How do I record received payment from someone else that doesn't match the invoice name and how do I deduct the remainder from the invoice and expense it to the co-broker?

7 Comments
Rejeil_O
QuickBooks Team

Real estate Broker commision - deduction

Hi @Yitz,

 

You'll need to receive the payment on the invoice and add a note to indicate where it came from.
Also, you can do these steps on how to record your remaining invoices as an expense:

Create a bank deposit to add the refund

  1. Click the Banking menu
  2. Select Make Deposit.
  3. Under the Received from column, put the customer where you receive the payment ($5,000.00).
  4. Put the Vendor (Co-Broker) and From Account column choose the expense account.
  5. Enter the negative amount (-$2,500.00).
  6. Click Save and close

 

In case you need help entering bill payment, refer to this link: Pay bills in QuickBooks Desktop.

 

If you have questions, feel free to leave a comment below. I'm always here to help you get back to business.

Yitz
Level 1

Real estate Broker commision - deduction

Thanks for the reply.

I cannot receive the full payment if I didn't receive it as it wont reflect the bank statement.

 

I'm using the desktop version I don't have a +New button as you recommended. However, this method will reduce the gross income plus it wont reflect to who the check was issued either

Rasa-LilaM
QuickBooks Team

Real estate Broker commision - deduction

Thanks for adding more details about your concern, @Yitz.


QuickBooks is like a diary of your business that keeps track of what’s happening to the actual transactions. To properly record the entries, record the full payment of $5000 and apply it to the invoice.

 

Let’s select the Undeposited Funds account since you don’t have the bank statement available. Once you have the statement, deposit the commission and expense to the correct account.

 

  1. Go to the Banking tab to select Make Deposits.
  2. On the Deposit screen, type in the correct account you're going to deposit the amounts and the date.
  3. Under the Received From column, enter the seller’s name and automatically the Undeposited Funds will show in the From Account column.
  4. Then, enter $5000 in the Amount column.
  5. On the second line, key in the vendor (broker) in the Received From column.
  6. Choose the account used for commission (From Account) and then $2500 in the Amount field.
  7. Click Save and Close.

I've attached a screenshot on how it looks like after following the resolution above.

dep.png

When you open the register, the deduction will show the correct amount of $2500.


The gross income will reduce since there’s a deduction ($2500). To keep track of what happened to the entry, use the Memo feature on the Receive Payment or Invoice page.


However, if you don’t want to lessen the gross income, I suggest reaching out to an account for further assistance. They can provide recommendations on how to record the transactions without affecting the gross income.


To help find one of our experts, simply visit the ProAdvisor site. From there, enter your city or zipcode in the field box.


Stay in touch if you have any clarifications or need further assistance while working in QuickBooks. I’ll be right here to make sure you’re taken care of. Have a great rest of the day.

Yitz
Level 1

Real estate Broker commision - deduction

Thanks for the reply.

Question; 6. should be -$2500? otherwise it will show just the opposite.

Anna S
QuickBooks Team

Real estate Broker commision - deduction

Hello, @Yitz.

 

I hope you're having a great day so far. Yes, number 6 should be -$2500, so the transaction doesn't show the opposite. By changing it to a negative, the deduction will display correctly.

 

I'm just a post away if you need any further clarification. Enjoy the rest of your day!

Yitz
Level 1

Real estate Broker commision - deduction

 
Rea_M
QuickBooks Team

Real estate Broker commision - deduction

Hello there, Yitz.

 

I'm here to ensure you can record the transaction that shows your co-broker is paid. This way, you'll be able to keep track of your account's transactions and keep it accurate.

 

You can write a check for the commission amounts, then enter it as negative. Then, you'll have to enter it using your commission expense account. This will deduct the commission to its original amount.

 

Before we start, please make sure to set up a Commission Expense account first prior to creating the check. Here's how:

  1. Go to the List menu.
  2. Select Chart of Accounts.
  3. In the Account drop-down, select New.
  4. Click Expense in the Categorize money your business earns or spends section.
  5. Select Continue.
  6. Enter all the necessary details.
  7. Click Save & Close.

 

Once done, you can now create the check to record your co-broker's commission. Here's how:

  1. Go to the Banking menu.
  2. Select Write Checks.
  3. Enter the broker's details.
  4. In the Account column, choose the commission account.
  5. Enter the appropriate amount.
  6. From the second line item, select the commission you need to deduct, then enter the amount as negative.
  7. Click Save & Close.

 

Once done, you can pull up the QuickReport of your expense account to to view the transactions associated with it. You can go to your Chart of Accounts, locate and right click the name of the account to select the report. Kindly refer to the screenshot below for your reference.

29 QBDT COA Expense QuickReport.PNG

 

Please let me know if you have other concerns. I'm just around to help.

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