Question
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?
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!