Most agents don't have a bookkeeping problem in March — they have one in January, when ten months of receipts and a stack of brokerage statements all come due at once. The fix is a short monthly rhythm. Here's what to capture each month.
This is educational content, not tax advice — for your specific situation, work with a CPA or a bookkeeper who knows real estate.
1. Commission income — gross, not net
When a deal closes, your brokerage often takes its split before the money hits your account. Record the gross commission as income and the brokerage split as an expense — don't just book the net deposit. Why it matters: your 1099 from the brokerage may report gross, and if your books only show net, the numbers won't match and you'll look like you under-reported.
- Gross commission on each closed transaction
- Brokerage split / company dollar withheld
- Referral fees paid out or received
- Transaction coordinator fees
2. MLS fees, association dues, and brokerage charges
These are the recurring costs that are easy to forget because they're often auto-drafted. Each one is a legitimate business deduction — but only if it's recorded.
- MLS subscription fees
- Local, state, and national association dues
- Brokerage desk fees, technology fees, and franchise fees
- Lockbox / Supra key fees
Paying brokerage dues and MLS fees out of a personal account is the single most common reason agents lose deductions. Run them through one dedicated business account so they're captured automatically.
3. Marketing and lead generation
For most agents this is the biggest expense category, and it's spread across more vendors than any other:
- Portal leads (Zillow, Realtor.com, and similar)
- Paid social and search ads
- Signage, photography, staging, and virtual tours
- Mailers, business cards, and closing gifts
- CRM and website subscriptions
4. Vehicle and mileage
Agents drive constantly, and mileage is often a four-figure deduction — but only if it's logged. Track business miles monthly (a mileage app makes this painless), and decide with your CPA whether the standard mileage rate or actual-expense method works better for you. We go deeper in mileage tracking for real estate agents.
5. Set aside money for taxes
No one is withholding for you. A common rule of thumb is to move 25–30% of every commission into a separate tax-savings account the day it lands, then make quarterly estimated payments. See quarterly estimated taxes for real estate agents for the mechanics.
The monthly close, in 20 minutes
Once a month, block 20 minutes and:
- Reconcile your business checking and credit card against the statements
- Categorize every transaction (income, by expense type)
- Confirm each closed deal's gross commission and split are recorded
- Update your mileage log
- Confirm the tax-savings transfer happened
Do that twelve times and tax season becomes a non-event. Skip it, and you're reconstructing a year from memory. This is exactly the work we take off agents' plates — see bookkeeping for real estate agents.
Frequently asked questions
Gross. Record the full commission as income and the brokerage split as a separate expense. Your 1099 may report gross, and matching that protects you if the numbers are ever questioned.
Yes — MLS subscriptions, association dues, and brokerage fees are ordinary business expenses for a working agent. The catch is that they're only deductible if they're recorded, which is why running them through a dedicated business account matters.
A common starting point is 25–30% of each commission, moved to a separate account the day it's received, with quarterly estimated payments. Your exact rate depends on your income and deductions — confirm it with a CPA.
You can wait, but it's far more expensive in time and missed deductions. A 20-minute monthly close keeps the numbers accurate while details are fresh; an annual scramble usually means reconstructing transactions you no longer remember.
Book a free consultation or learn more about our bookkeeping services.
This post is educational content, not legal or tax advice. For your specific situation, consult a qualified attorney or CPA.