Bookkeeping and Accounting for Mortgage Brokers

As a mortgage broker, there are several specific expenses that you can deduct for tax purposes. These include:

• Office rent and utilities, such as electricity and internet
• Equipment like computers, software, and office furniture
• Insurance premiums for any business-related policies
• Professional service fees, including legal and accounting
• Marketing and advertising costs
• Mileage and travel expenses, if they're for business
• Continuing education expenses that are related to your business
• Licensing fees and industry association dues

Ensure you keep clear records of these expenses, keep your personal and business expenses separate, and consult a tax professional for advice tailored to your specific circumstances.

In the mortgage brokering industry, commission accounting typically operates on an accrual basis. Fees or commissions are recognized as revenue when the loan agreement is legally enforceable, regardless of when the actual cash payment is received. This usually happens when both the borrower and lender sign the loan agreement.

Therefore, when a mortgage broker arranges a loan, they will record their commission as accounts receivable. At this point, they would debit their accounts receivable and credit their sales revenue. Later, when they receive the commission payment, they'll debit their cash account and credit their accounts receivable.

It's important to note that accurate accounting for commissions is essential in this industry as the timing discrepancy between commission recognition and cash receipt can often lead to challenges in cash flow management. Reliable bookkeeping services can assist in effectively managing these aspects.

The kind of bookkeeping system best for managing financial transactions as a mortgage broker is cloud-based software. These systems are more advanced and are easier to use compared to traditional systems. Through cloud-based software like Bench Accounting, transactions are automatically recorded, tracked, and organized. This allows mortgage brokers to easily access their financial data in real-time, reducing the chance of errors and simplifying the tax process. The ability to upload receipts, invoices, and other documents also helps to keep transactions in order, making financial management more efficient.

Nope! All bookkeeping is completed in-house.

Your bookkeeper will be your main point of contact, but at times you might hear from another member of your team. This is usually when your bookkeeper goes on vacation, is sick, or otherwise unavailable.

We handle the bookkeeping for you but sometimes we’ll need your input, especially at year-end. On average, expect to spend 15 minutes each month answering questions for your bookkeeper, or uploading supporting docs.