How Gross Commissions appear on your Xero Income Statement
When we set your Brokerage up we generally use a standard for mapping top line commissions as more than 90% of our Brokerages like to view the top line Gross Commissions and compare it against the outgoing commissions to Agents and third parties.
Its also a useful way to calculate your Brokerage income as a percentage of the gross commissions!
This is the default on how we set up the mapping to your accounting system.
Income Accounts:
Income Account: Commission Income (this is the total commissions on deals)
Income Account: Income to the Brokerage (the fees that are taken from the Agents commissions)
Cost of Sales or Expenses: (you can choose which type this account is in Xero)
Direct Cost: Commissions paid to Agents (this is their total commissions not their net pay)
Direct Cost: Commissions to outside Brokers (not everyone pays outside brokerages but if they do it can be recorded separately)
In our normal set up, this is a sample P&L layout;
Some of our clients find it helpful to group these accounts so it is clear which accounts are actual income to the Brokerage and which are the top line and total commission expenses. Xero allows customization of their reporting to make this easy. This is a sample of what the P&L might look like if you wanted to group the top line commissions so they are not included in the Costs of Sales / Direct Costs section of the financial statement. This is a sample of the same data, just grouped a little differently :)
If this isn't ideal, we can map the expense lines to the income lines for the top line commissions and the expense side so the GL account should always balance to $0 and not show values on the Income statement.
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