The deal closed. The deposit is what was left after everyone else was paid.
A closing often sends one amount, already reduced by the split, a franchise fee, an errors-and-omissions charge, or a transaction fee. If you record that deposit as your income, your sales are the leftover and the fees never existed. You cannot see what the deal actually produced, and you cannot see what the agent actually cost. Separately, earnest money sitting in an escrow account is not income at all. It is someone else's money until the deal says otherwise. And at year end the agents still expect a form that states what you paid them. That total has to come out of the books without a reconstruction from memory.
Start from the closing statement, not from the bank line. The statement shows the commission the deal produced and every amount that came out before the deposit. Enter the gross commission as income. Enter the agent split as the cost of that deal. Enter the franchise fee, the transaction fee, and the errors-and-omissions charge as their own costs, on that deal if you can. The deposit then matches the cash, and the deal still shows what it made. Recording only the deposit throws away the statement.
If the agent was paid outside the closing, from your operating account, the same idea holds. The gross is still the gross. The payment to the agent is still the cost. Do not net them in your head and enter a smaller sale. Netting is how two deals with the same commission look different because one agent was paid at the table and the other was paid on Friday.
Money you are holding so a deal can happen is a liability until you have earned it or you return it. It should sit in an escrow or trust balance that you can reconcile to the bank account where that money actually rests. It should not flow through commission income on the day it arrives, and it should not flow through income on the day it leaves if it is going back to the buyer. The day you earn a fee, that fee moves to income. The rest of the money was never yours.
Mixing escrow with operating is how a quiet month looks profitable and a closing month looks confusing. The operating account pays the office. The escrow account holds the deal. Transfers between them need a reason written in ordinary words: earned fee, refund to buyer, or a mistake being reversed. 'Transfer' with no reason is how earnest money becomes coffee.
If agents are paid as contractors, someone has to total what you paid each of them. That total is not a January project if the payments were coded to a generic 'commissions' bucket with no name. Put the agent on the payment when you make it. Then the total is a report, not a memory. The form they expect is only as good as that report. This page will not tell you the dollar line at which a form is required. Your tax preparer applies that rule. Your job in the file is to make the total true.
Splits paid at the closing table are easy to forget, because the cash never entered your bank. They are still amounts the deal paid the agent. If the closing statement shows them, they belong in the total. A report that only sums checks you wrote will understate the agent and overstate your net, and the agent will notice before you do.
Send closing statements for the open months, the bank accounts including any escrow account, and a list of agents. The first product is a deal list: gross commission, what the agent kept, what fees came out, and what cash you actually received. Next to it, an escrow balance that agrees with the escrow bank, with no earnest money hiding in sales. The agent totals fall out of the same coding, so year end is a printout.
You are not behind because you did not know the vocabulary. You are behind if the deposit was the only number anyone entered. That is repairable. It is repaired from the statements, one deal at a time, not from a plug figure that forces the bank to match.
No. Record the commission the closing statement shows, then record the splits and fees that were taken out. The deposit is what remains. If you start from the deposit, the fees and the split vanish.
No. It is money you are holding for the deal. It becomes income only for the fee you actually earn, and the rest is returned or applied according to the contract. Until then it is a liability that should match the escrow bank.
Then the payments were not coded to the agent during the year. The repair is to put the name on each payment, including splits the closing statement paid directly, so the total exists before anyone asks for the form.
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