Real estate agent bookkeeping: the document checklist

Real estate agents are usually taxed as self-employed, spend heavily on marketing, drive constantly, and often accumulate entities faster than they accumulate bookkeeping. The two documents that matter most are the commission or closing statement for each transaction and a real mileage log.

The other recurring theme is separation. Successful agents end up with an LLC, then a second entity for rentals, then a corporation — sharing bank accounts and credit cards throughout. Sorting that out is most of the work.

Request every month

Transaction documents should arrive as deals close rather than in a month-end batch.

• Commission or closing statements for every closed transaction (gross commission, splits, fees)
• Referral fee invoices paid or received
• Bank statements for every account, personal accounts included if they are being used
• Credit card statements
• Marketing and advertising invoices — listings, signage, photography, staging, print, digital ads
• MLS, board and association dues
• E&O and liability insurance statements
• Vehicle expenses and a mileage log with dates, destinations and purpose
• Home office costs if claimed — utilities, internet, and the square footage basis
• CRM, lead generation and software subscriptions
• Client gifts and closing costs paid on behalf of clients
• Assistant or transaction coordinator payments

Request quarterly or annually

• Quarterly: estimated tax payment confirmations — agents are almost always paying estimates.
• Annually: 1099s received from the brokerage, reconciled against booked commission income.
• Annually: W-9s and 1099s for assistants, coordinators, photographers and stagers.
• Annually: licence and continuing education renewals.
• Annually: details of any equipment purchases — staging inventory, cameras, vehicles — including transfers between entities.

Ask before you onboard

These are the questions that decide whether you have priced the engagement correctly. Ask them on the first call, not in month three.

• How many entities, and what is the relationship between them?
• Are you paid through the brokerage as a 1099 contractor, or through your own entity?
• What is your commission split, and are there franchise or transaction fees?
• Do you pay or receive referral fees?
• Are personal and business accounts separate today? Honestly?
• Do you keep a mileage log, and in what form?
• Do you own rental property, and is it in the same entity?
• Who is your CPA, and are they expecting anything specific from me?

Traps that catch bookkeepers new to real estate

Net deposits booked as commission income. Gross commission income has to match what the brokerage reports on the 1099. If you book net deposits, the year-end reconciliation will not tie and the client will be asked about it.

Mixed personal and business, everywhere. Agents run their lives through one card. Rather than guessing monthly, agree a process: a rule for which card is used for what, and a monthly question list for the genuinely ambiguous ones.

Multi-entity expenses paid by the wrong account. Once there are two or three entities, expenses get paid by whichever card is nearest. Each entity has to stand on its own or none of the profitability figures mean anything. Set up intercompany accounts early and document the policy.

Equipment moved between entities. Staging equipment or a vehicle moving from a sole proprietorship into a new corporation is not a purchase. It needs proper treatment on both sides — get the CPA's instruction in writing and follow it exactly.

No mileage log. A reconstructed mileage figure is worth very little if it is ever questioned. Push for a contemporaneous log from month one; it is far easier to start the habit at onboarding than to ask for a year of it in January.