Deductions 101

Deductions 101

Creating A Deduction

Most deductions are straightforward and can be created by following the tooltips next to their corresponding fields. 

Important Tip when setting up a new Deduction Template!

It's important that whatever type you deduction you set up, see types of deductions below, that the Ledger type, found in your General Ledger Section, matches the Deduction type. Example: if your Deduction type is Income, then the Ledger type must also be Income, see screenshot below. There are exceptions to this rule: If you're wanting to track your Payable Type Deductions, you can add another instance of a Ledger type field, set that type to Standard and select the G/L you want to track this fee with. Learn more

Types of Deductions

Income

A Deduction that contributes to the reporting of income to the Brokerage.


Standard

A Deduction that does not contribute to Brokerage income and is primarily set up as a flow through. Example: You collect $ on behalf of another vendor, such as Franchise fees.

Payable

A Deduction that pays out to another source (typically billed and paid out one time, , such as: tax withholding, Garnishee, Mentor fee, etc. If you're collecting funds for an outside vendor and payout once monthly/yearly, use the standard type deduction. Learn more about how to set up a payable type fee

Credit

A Deduction that creates a credit note and applied to an invoice created in your Accounting Software. The offset is ALWAYS defaulted to commission payable.

Reduce AR

A Deduction that reduces the expected funds to be received on a deal. The offset is ALWAYS defaulted to commission payable.

Deduction Template Field Guide

Knowing what each field’s function is and how it is chosen in each field determines/changes the function of a deduction is crucial in setting up your deduction successfully.  When creating a deduction, you have a handy tooltip guide in the form of ? icons.  Click the icon to expand the tooltip and learn more about that field. Click the tooltip icon or the x to collapse the tooltip description.


General Settings

Type

This field determines what type of deduction you want.  Please refer to the above section called ‘Types of Deductions’ for a detailed explanation or to the tooltip on the deduction edit mode page. *Important! Whatever option you choose in your deduction type field, you MUST choose the same type in the Ledger Type field under the General Ledger Accounts mapping field.

Name

This field will contain the name of your deduction.

Deal Side

This field determines the side(s) your deduction will be populated on. Please refer to the tooltip for a more detailed description.

Deal Types

This field determines the deal types(s) your deduction will be applied to. Please refer to the tooltip for a more detailed description. *Please note, if you want the deduction to apply to all types, choose all options available.

Team Deduction

This field determines if the deduction is a team deduction or not. Please refer to the tooltip for a more detailed description. *Please note, team deductions apply ONLY to teams, learn more

Deal Property Types

This field determines the deal property types(s) your deduction will be applied to. Please refer to the tooltip for a more detailed description. *Please note, if you want the deduction to apply to all property types, choose all options available.

Dependencies

This field determines any deduction(s) added to the field to calculate BEFORE the deduction you’re creating.  Please refer to the tooltip for a more detailed description.

Does Sales Tax Apply?

This field determines if the deduction is subject to sales tax being applied.  Please refer to the tooltip for a more detailed description.

Reduce 1099/T4A by this Fee?

This field determines if the deduction will reduce your agent’s reportable income.  Please refer to the tooltip for a more detailed description. Learn more about adjusting your deductions for tax reporting.

Percent or Dollar

This field determines if the deduction will be calculated as a percentage or as a dollar amount.  Please refer to the tooltip for a more detailed description.

Percentage Based On


This field is conditional to the above field,  if the deduction is calculated as a percentage choose how the percentage will be based on. The following options are available:
Commission - Commission amount of agent on the deal (allotted allocation)
Other Income - Other income amount 
Current Sale Price - Current Sale Price for this deal.
Y-t-d Commissions - Cumulative Commissions for the year.
Y-t-d Sell Price (Volume) - Cumulative total Volume (sales prices x end) for the year.
Current Brokerage Commissions - Current Brokerage income on the deal.

Based On (Range)

This field determines how your deduction’s range will be based on. The following options are available:

YTD Deal End - YTD Deal End Include both list ends and sell ends, so add the number of ends you want your deduction to be ranged on.
YTD for this Deduction - How much the brokerage has received or the agent has paid into this particular fee.
YTD Agent Commission before deductions - This calculates based on gross commissions.
Current Deal Sale Price - Current Sale Price for this deal.
YTD Sale Price - Cumulative total sales prices for the year.
Current Deal Volume - Current volume for this deal for the agent. (Sale Price x end count)
YTD Deal Volume - Total year to date volume for the agent.
Always - No range based on.

How Does The Fee Apply?

This field determines the side(s) your deduction will be applied. Please refer to the tooltip for a more detailed description.

Prorate Levels?

This field determines whether or not the deduction will prorate when nearing your deduction’s range to level. Please refer to the tooltip for a more detailed description. Click to view Prorate Calculator

Roll Over

This field determines if your deduction’s last level will roll over on Calendar year or the Agent’s Anniversary year. Please refer to the tooltip for a more detailed description. *Please note that the Agent's anniversary date is determined on the corresponding anniversary date in the agent’s profile.

Payable Settings

This section opens up when creating a payable type deduction. 

Withhold Payable In Bank

The bank you’re paying this deduction from

Are you paying an agent or broker?

No, if not a licensed agent or Broker, yes if so.

Payee

Choose the name of the payee

Taxable

Is the payee taxable, check the box if so.

General Ledger Accounts

When creating a deduction, the edit mode creates the first default ledger mapping.  This is sufficient for most brokerages, however, if your deduction has sales tax applicable to it or you want to track it in a separate GL, you will need to create a second mapping line to track the deduction in your accounting software.  Learn more about GL tracking, refer to Option 2 in the article. Below are the 3 components you need to map your deduction to.

Ledger Type

By default, you will choose the same type you choose in the ‘Type’ field in your General Settings. *Important! Payable type deductions should always have the payable type chosen in this field. 

Account Number

This will be your Chart of Account’s GL you’ll track your deduction to. Here’s a handy guide to what GL account you should map your deduction to based on the type you chose:
Income - Revenue or Income type GL’s (typically your 4XX/4XXX GL accounts)
Standard - Liability GL’s (typically your 2XX/2XXX GL accounts)
Payable - This deduction should always be tracked to your Commission Payable (2150) account, and if you want to track it in an additional GL, add another mapping line and choose the GL you want to track to.
Credit - This deduction is ALWAYS mapped to commission payable(2150).
Reduce AR - This deduction is ALWAYS mapped to commission payable(2150).

Percent Share

The percentage of the deduction you want mapped to a GL in your Chart of Accounts.  The percent share should always equal 100%, however, if you’re wanting to track the deduction to multiple GL accounts, you can add additional mapping lines and distribute the 100%.

Levels

This is an optional part of setting up your deduction.  The following fields are as follows:

Name

Name the level(s) of your deduction (label)

Amount

The dollar or percentage amount of the level(s) of your deduction

Range From

The range starting point of your level(s)

Range To

The range ending point of your level(s)

Before we made deduction overrides available on Agent’s profile, this is where you would set up your Levels for the deduction to be tiered and capped.  If all your agents are on the same Levels & Cap plan, You can add your levels and caps to these fields and add the deduction template to each agent's profile. If your agents are on similar plans but their % or cap differs, you can add the same deduction to each of their profiles but then override the amount and Range from/to levels to change their cap amounts, this allows for more flexible deduction plans.  Learn more about Agent deductions and overrides.


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