Beginning Balance/Mid Year/Year End Commission & Deduction adjustments

Beginning Balance/Mid Year/Year End Commission & Deduction adjustments

When switching Back office software Mid year we require to add ytd adjustments for agents commissions, production and fee information in order to have accurate 1099 and T4A information. This is also the case for agent's switching from being payable as an Individual to being paid as an Organization.

Starting With Loft

Commission adjustments:  Capture the agent's GCI from your prior software before Loft and will only need to added once, please refer to the below section 'Commission Adjustments'
Deduction adjustments:  Capture the agent's deduction contribution from your prior software before Loft, please refer to the below section 'Deduction Adjustments'  
If the deduction rolls over and caps on the calendar year, you're only required to make the one adjustment
  1. The adjustment will be from the Agent's anniversary date to Dec 31
If a deduction rolls over and caps on the agent's anniversary date, you will need to do two adjustments per fee:
  1. The 1st adjustment will be from the Agent's anniversary date to Dec 31
  2. The 2nd adjustment will be from Jan 1 to the date before you will be going live with Loft.
To enter year to date adjustments you can head to the Agents profile> Commission or Deduction Adjustment sections, click 'New' to add your adjustment


Deduction adjustments

Click 'New' add in the adjustment date, if new to Loft, the adjustment date will be your going Live date, the Net amount (before taxes) the agent paid toward the fee, if applicable, the tax amount paid, the property type, and the Deduction Template (Fee name), click Save to add the adjustment.

Fees Capping on Agent Anniversaries

Fee caps and levels often reset based on Agent Anniversaries which can fall prior to or after the conversion date. We will walk you through both scenarios and how to adjust the agent's profile in Loft to accommodate both.

Anniversary Date is prior to the conversion date

Example: Shelly is an agent with an Anniversary of May 25th

Her Brokerage has joined Loft on July 1st

Her year to date information to June 30th is as follows:

Volume $1,545,000

Ends 4

Commissions $26,000

Split Fees $5,200


Since her Anniversary is prior to the conversion we need to enter two separate adjustments for her. 

The first one should be dated May 24 and one date June 30th, the first adjustments will show what has been earned to May 24.

Volume $1,000,000

Ends 2.5

Commissions $16,000

Split Fees $3,000


The second adjustment will be the earnings since May 25th to the end of June is an adjustment at June 30th

Volume $545,000

Ends 1.5

Commissions $10,000

Split fees $2,200

Anniversary Date is after the conversion date

Example: Shelly is an agent with an Anniversary of Oct 25th

Her Brokerage has joined Loft on July 1st

Her year to date information to June 30th is as follows;

We are going to add an adjustment for the current year from January to June 30th then add a second adjustment for her performance in the prior year from her anniversary date to the end of the year. 

2017 Adjustments - Adjustment date of June 30th

Volume $1,545,000

Ends 4

Commissions $26,000

Split Fees $5,200


Since her anniversary is October 25th we want to make sure we capture the prior year performance that will apply to her current year settings. 

In the year prior to conversion (from Oct 26th to Dec 31st) her production volume was as follows

Volume $350,000

Ends 1

Commissions $4,500

Split Fees $900


Total amounts that will apply to her Anniversary caps

Volume $1,895,000

Ends 5

Commissions $30,500

Split Fees $6,100.00

Commission adjustments

We encourage you to add an adjustment for your agent for each side your agent has represented and been paid as well as any team commissions they've been paid on for the best possible outcome on any future reporting you want to do in the future.
Click 'New' add in the adjustment date, end count for each side reporting/adjusting, Commission amount NET (before taxes), if applicable, taxes, choose the side you're reporting/adjusting and the Property Type, add the total Sales Volume for the side reporting/adjusting, and if applicable select the team name, click Save to add the adjustment.

Rinse & repeat for the other side, and if applicable, both sides of any team commissions. So you could have up to 4 different adjustments in this section depending on how granular you want future reporting to be. :)

Best practices for when your agent switches Mid Year [Preparing for 1099/T4A reporting]

It’s best to record the agent’s ytd totals in their profile notes, see 'Profile Notes' section per contact type, at the time they switch, so these amounts are easily accessible for your year end adjustments. The information you want to record depends solely on how you're reporting, learn more about the different values you can report to your Governing Tax Institutes. That said, we highly encourage that the following be recorded per adjustment:


Commission Adjustments:
Commissions Net (not Gross) for the adjustment period in question.

Deduction Adjustments:
Each Deduction Net (not Gross) for the adjustment period in question.
*Please make sure you separate out any collected or paid taxes when recording in your profile notes, this will ensure the correct amounts per each field when you do your adjustments year end.
Olive Klim was paid as an agent from Dec 01 - 09 and then paid as her ORG from Dec 10 - 31

Before Olive was switched to being paid as an org, her YTD totals were added to a profile note, those amounts correspond to her YTD in her Financial section of her profile.

Agent Individual Financial YTD


Profile Note

Amount paid from date deals paid as an Individual


The same steps need to be done at the End of the Year to record the amounts paid to the Agent as an ORG

Profile Financial YTD


Profile note 


Amount paid from date deals were paid as an ORG to End of the Year
You should now have 2 profile notes:
  1. You're Agent's paid as an Individual totals
  2. Your Agent's paid as an ORG totals


Adjustments in Profiles 

In order to report your agent's ORG totals correctly, you will need to follow these steps:
  1. Remove the organization from your agent's profile (this will default your agent's profile to be payable to agent)

  3. Make sure your agent's address, SSN are updated, read more about this here https://support.loft47.com/portal/en/kb/articles/agent-tax-ids-and-organization-business-tax-numbers#Agent_Tax_ID
  4. Switch your agent's ORG contact to an agent type.  You will have 2 agent types for to report, the agent and the org, like so

  6. Then make your adjustments

Agent Profile Contact
You will make NEGATIVE adjustments to reduce the total reportable income to report the Individual income only. Based on how you're reporting, see above section above called Types of Reporting depends on if you'll add negative Deduction adjustments as well.


ORG Profile Contact Adjustments
You will make POSITIVE adjustments to reduce the total reportable income to report the Individual income only. Based on how you're reporting, see above section above called Types of Reporting depends on if you'll add negative Deduction adjustments as well.

CAN Clients

XML Reports
If you report under 100 slips to CRA, you can use the webform reporting option, if over 100, you are required to report via XML upload to CRA, learn more here https://support.loft47.com/portal/en/kb/articles/tax-filing#Canadian_Clients
There's an extra step you must take and it's as follows:
You will need to now create an org named the same as your ORG as an agent type and couple it to this contact, like so


You will have 3 contacts in total.  One, your Individual Agent, two, your ORG as an Agent contact, and three, an Org coupled to your Org as an Agent Contact (i know, very meta)

Make sure your Org coupled to your ORG as an Agent has the org's address and business number correctly added, for more info, read here https://support.loft47.com/portal/en/kb/articles/agent-tax-ids-and-organization-business-tax-numbers#Agent_Tax_ID
and download your XML file for tax reporting

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