BE THE MASTER OF YOUR DEDUCTIONS

In this article, you’ll learn how to set up common fees and deductions for your Brokerage; additionally, we’ll walk you through each type your Brokerage might utilize, and the three areas you will have to set up when adding your fee. So, let’s dive right in!

DEDUCTIONS 101 

Deduction Settings - This is the backbone of every deduction.  *The❗items need special attention.

G/L Settings - Map your deductions appropriately. 

Level/Range Settings - These are the levels you’re looking for!  

FEES 101 

INCOME TYPE FEES - These fees contribute to a Brokerage’s income and reporting.
These fees are the most common fees set up in Brokerages. They can be as simple as a single $ or % amount or can be set up as several levels/amounts.

Split Fee -  % An income percentage fee created with 3 separate cap-level ranges.

Transaction Fee -  $ An income dollar amount fee created with 3 separate cap-level ranges.

Team Deduction Fee - % or $ An income fee deducted for all agents towards a combined team fee and/or cap.

STANDARD TYPE FEES - Deductions that do not contribute to Brokerage income.
These deductions & fees typically are used to cover items like coffee, printing, admin, and desk fees.

E & O Fee - % A trackable liability fee for Errors & Omissions Insurance.

Consumables Fee - % or $ fee to cover a coffee, printing, or admin fee.

PAYABLE TYPE FEES - These deductions will be paid out to an outside source.
These deductions & fees typically are used to track and pay outside sources eg., GST, non-licensed referrals, etc.

Using a payable  will create a bill to your specified Payee in Xero. You can set the Payee on the payable tab. There are two ways to set up your payable GL Accounts:

OPTION 1: You can select a payable ledger type and set it to clear to the commission payable GL account

OPTION 2: If you'd like to track the payables through their own GL account or if there is sales tax on the payable (most Canadian companies) you will use Option 2. 

You add 1 standard type and associate it to the GL account you'd like to track with and then add 1 Payable line that will then post the bill from the same GL account.

Franchise Fee - % A portion of an Agent's commission will be tracked in a Liability account and based on current brokerage commissions.

Gov’t Garnishment - % This deduction creates a payable to an income garnishment owed.

Non-Licensed Referral - % This deduction fee creates a payable referral from an Agent’s commission to an unlicensed or third party referral. 

Mentor Fee - % A portion of an Agent's commission will be paid to a mentoring Agent or the Brokerage.

Advance Recoverable - % This deduction recovers money owed to an agent’s equity advance company.

CREDIT TYPE FEES - These deductions create a credit note against an invoice in Xero.
Typically created to recover Agent’s expenses covered by a Brokerage.

A/R Recoverable  - % This deduction recovers money owed to the brokerage based on an agreed percentage of commissions.

REDUCE A/R TYPE FEE - This deduction reduces the expected receivable funds on a deal. (still have to film this, waiting on this to be fixed)

Did this answer your question?