Paying agents' commission through payroll
How an estate agency can pay employed agents their monthly commission through payroll, and recover advances against commission still to come.
By Achekam · · 5 min read · For Real estate businesses in South Africa, Nigeria, Kenya
An estate agent's pay is lumpy by nature. One month two sales register and the commission is substantial; the next month nothing transfers and the agent is living on a small basic salary, or on nothing at all. Add an agent who asks for an advance against a sale that has not registered yet, and the payroll spreadsheet starts to carry notes in the margin that only one person understands.
Running commission through a proper payroll fixes most of that. Each month's commission is entered for that month, deductions are worked out from the tax table, advances come off each run until repaid, and the whole run posts to the agency's books.
One point first. This applies to agents you employ. Many agencies also work with agents who invoice them as independent contractors, and those are paid as suppliers, not through payroll. Which category each agent falls into is a question for your accountant and the agent's contract.
Commission as this month's variable input
In Achekam a business sets itself up as an employer under South African, Nigerian or Kenyan rules, chosen when the employer is created. Pay runs can be monthly, fortnightly or weekly, and each period's overtime, commission, allowances, reimbursements and unpaid leave are entered as variable inputs on the run.
For an agency, that means the agent's basic salary, if there is one, stays on their record, and the commission earned in the month is typed in as an input for that run only. Next month starts clean. There is no separate bonus, correction or final-settlement run: those amounts also go in as variable inputs on the regular run, which keeps everything in one place.
Before any run calculates, the tax table must be confirmed. Achekam ships its payroll tables pre-loaded but unconfirmed, and no run uses a table until a named person in the business confirms its own copy. Do that once per tax year, against the tax authority's published figures. In South Africa, SARS's guide for employers in respect of employees' tax sets out the individual tax tables, rebates and thresholds for the tax year and how employers must deduct PAYE.
A practical rule for commission: pay the agent's share only once the agency's own commission has been received. Many agent agreements say so, and it avoids paying out on a sale that later collapses. If one does collapse after you invoiced, see when a sale falls through after you invoiced.
Advances against commission still to come
Agents often ask for an advance when a deal is close to registration but the money has not arrived. Salary advances and staff loans are recorded in payroll and recovered from each pay run until repaid.
A worked example in words. An agent has a sale lodged for transfer and expected to register next month, and asks for part of their share now. You record a salary advance for the agreed amount and pay it. On every following run the recovery comes off their pay until the advance is cleared. When the commission does arrive, it goes in as that month's variable input as usual, while the recovery carries on until the advance is cleared. Nobody has to remember the arrangement, because payroll does.
Put the terms of any advance in writing, including what happens if the sale fails or the agent leaves before it is repaid.
One person prepares, another approves
A pay run is approved by someone other than the person who prepared it, and nobody can approve a run that pays themselves. Once approved, a run is never recalculated. So a business needs at least two people in payroll roles to run payroll.
In a small agency this usually means the office administrator prepares and the principal approves. If the principal draws a salary through the same payroll, they cannot approve that run, so a second senior person needs approval rights. Plan for this before the first month-end, not on the day pay is due.
Bank details get the same treatment. An employee's bank account entered or changed by one person must be verified by another before it is paid in the payment schedule or bank file. When a new agent joins, or an existing one changes banks, the second check stops a fraudulent change from going straight through.
Because an approved run is never recalculated, a commission figure entered wrongly is corrected on the next run as a variable input, not by reopening the old one.
Payslips on the agency's letterhead
Payslips are PDFs carrying the business's logo and details. They can be downloaded or e-mailed one per person, and an employer setting sends them automatically when a run is approved, with a delivery log showing what went out. E-mailing needs an e-mail service configured on the server.
For commission earners, the payslip matters more than usual. It is the agent's record of which commission was paid in which month, and the first thing they will check when a registration they expected does not appear.
What reaches the books
An approved pay run is posted to the business's own ledger as a wages journal, with amounts owed to the tax authority and funds recorded as liabilities. Your accountant sees commission cost in the month it was paid, without a separate journal typed from a spreadsheet.
Paying the agents is still your job. Each approved run has a payment schedule you can download as CSV, and marking it paid only records the fact: Achekam moves no money. You make the payments from your own banking.
A month-end routine to start from:
- List the commissions received this month and each agent's share.
- Enter each share as a commission input on the run.
- Check that advances are being recovered as agreed.
- Have the second person review and approve the run.
- Pay from the schedule and mark it paid.
If you run more than one agency company, each one sets itself up as its own employer; see keeping books for more than one agency entity.
Getting the first run right
Start with one month. Set up the employer, confirm the tax table, add your employed agents and enter their commission as inputs. Ask your accountant to review the first wages journal before you approve the second run, and the routine will look after itself from there.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
