A chart of accounts for an estate agency
Which income and expense accounts an estate agency should set up so commission, letting fees and agents' costs read clearly, and what Achekam does today.
By Achekam · · 5 min read · For Real estate businesses in South Africa, Nigeria, Kenya
An estate agency's principal wants three answers from the books every month: how much commission came in from sales, how much the rentals side earned, and what it cost to get there. Too often the income statement gives one line called "fees" and one called "sundry expenses", and the answers have to be dug out of a spreadsheet.
The chart of accounts decides whether the books can answer those questions at all. It is worth an hour of thought before the first transaction is posted, and it is much harder to fix after a year of postings have gone to the wrong places.
Starting from the standard chart
Each business in Achekam has its own double-entry ledger, with a standard chart of accounts created when the books first open. Accounts can be added, renamed or switched off. You are not starting from a blank page, and you do not need to build a chart from nothing.
The sensible approach is to start from what is there and adapt it in three steps:
- Read through the standard chart and note which accounts the agency will use as they are.
- Rename where the standard name will confuse the agency's staff.
- Add the accounts specific to estate agency work, and switch off the ones you will never use.
Keep the chart short enough that staff choose the right account without thinking. An agency with a dozen income accounts will find half of them used inconsistently.
Sales commission and letting fees
Most agencies have at least two streams of income that behave quite differently:
| Income | How it behaves |
|---|---|
| Sales commission | Large, irregular, arrives on registration of transfer |
| Letting fees | Smaller, often recurring, earned when a tenant is placed or monthly |
| Other fees | Valuations, admin fees, marketing recoveries |
Separate accounts for each let the principal see the mix at a glance in the management accounts, which show an income statement for a chosen period beside the period before, and a balance sheet at period end, exportable as PDF or CSV.
There is a current limitation to plan around. Today, all invoice revenue in Achekam posts to one account, Professional Services Revenue (4100), and an invoice line cannot name a different sales account. So an agency that creates separate commission and letting accounts will find its invoiced income landing in that one account regardless.
Two practical responses:
- Keep one income account for invoiced fees, rename it so staff recognise it, and analyse the split between sales and lettings outside the ledger, from the invoices themselves.
- Reclassify at month end with a manual journal from the single revenue account to the separate income accounts, prepared from the month's invoices and reviewed by a second person. A business can post manual journals; an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal.
Whichever you choose, apply it every month, or the comparison with the previous period becomes meaningless.
Agents' commission, advertising and portal costs
The expense side is where an agency's profitability is decided. Accounts worth having:
- Agents' commission, split between employed agents paid through payroll and independent agents who invoice the agency, because the two are treated differently for tax.
- Referral and sharing fees paid to other agencies on joint sales.
- Advertising and property portals, so the cost of marketing listings is visible.
- Signage, photography and marketing materials.
- Vehicle and travel costs for agents on the road.
- Professional fees and regulatory costs, such as registration and audit fees.
- Office rent, telephone and software.
Commission paid to agents is usually the biggest cost an agency has. Keeping it apart from salaries lets the principal compare commission paid with commission earned, which is one of the most useful ratios in the business.
Keeping money held for others out of income
Estate agencies often handle money that is not theirs: buyers' deposits, tenants' deposits and rentals collected for landlords. That money must never appear as the agency's income.
In South Africa, the text of section 54 of the Property Practitioners Act sets out every property practitioner's duty to keep separate trust accounts for client money, when that money may be invested and when it may be paid out. Nigerian and Kenyan agencies holding deposits for clients should take advice on the equivalent rules that apply to them.
In the agency's own chart, the practical rules are:
- never post a deposit or a rental collected for a landlord to an income account;
- record commission only when it is earned and invoiced, not when the buyer's deposit lands in trust;
- agree with your accountant or auditor how the trust bank account and the amounts owed to clients are to be kept and reported.
Bringing balances across from the old system
A business can bring in its accounts, customers, suppliers and an opening-balance journal from CSV or Excel. The move reconciles to the cent before a second person approves the cut-over.
Before importing, map the old system's accounts to the new chart. Where the old system used a single "commission" account for both sales and lettings, decide whether to split the opening balances or start the split from the cut-over date. Starting fresh is usually simpler; note the decision so the first comparison with the prior year is read correctly.
Nigerian and Kenyan agencies should know one more current limitation: the ledger screens show every amount in rand and the chart of accounts is stored in ZAR, even for a Nigerian or Kenyan business. Read figures with that in mind.
Switching off accounts you will not use
Accounts in the standard chart that an agency will never need, such as any for stock it does not hold, are better switched off than left lying around. A visible account invites a posting.
After the first month, look at the trial balance, which shows each account for all time, for a period or at a date, and says whether debits equal credits. Any account with a handful of odd postings is a sign the chart is confusing someone.
For a practice with similar client-money questions, compare the approach in a chart of accounts for a law firm. If the agency runs several companies, each needs its own chart; see running several agency entities.
Sit down with whoever does the books this week, agree the income and expense accounts on one page, and switch off what you will not use before the next month's postings begin.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
