One thing we hear often from brokerages - especially large ones - is that it’s complicated to create, track, and file 1099s for their staff. However, doing so is absolutely critical so that they don’t get into trouble with the IRS, causing more administrative strife in the process. We hear time and time again that it’s stressful to get all of the documents out on time, and some companies have even missed the deadline, putting themselves and their agents in an uncomfortable position.

As a refresher, many brokerages leverage 1099 professionals - or contract, non-full time employees - as agents. Typically, real estate agents receive a 1099-MISC tax form and receive compensation as an independent contractor. This means that for tax purposes, real estate agents are considered self-employed. As such, a schedule C (Profit or Loss From Business) must be filed. The more agents that a brokerage has, the more difficult the process becomes to manage all of the paperwork - and the more likely that an error will get made in dealing with real estate agent taxes or 1099s.

Brokermint offers several tools to help streamline back office procedures, including new functionality that helps ensure the 1099 process goes smoothly and more quickly than ever before. By partnering with an innovative company called Track1099, Brokermint allows brokerages to manage 1099 forms and then track and file them all in one convenient place. Track 1099 will automatically create the proper tax forms for filing based on the contractor information you uploaded from Brokermint. Upload as many individual contractors as you need to, and schedule e-file and e-delivery with prompts on the appropriate dates. This solution allows companies to pay per contractor, with a credit card. Filing 1099s has never been easier! And to make the process even more scalable, you can create further time savings by using last year’s information when filing for a new year. If your agents haven’t changed, simply select “Import from prior year's Track1099” to complete the process each year. Never again will you be tempted to procrastinate this process, or worry about missing deadlines and creating extra work.

Assist your agents at tax time.

We also suggest helping your agents plan for their portion of tax responsibilities, including understanding real estate agent tax deductions. For tax purposes, agents are typically considered self-employed. That means that no taxes are withheld directly from them, and they are responsible for making estimated tax payments quarterly. This can be a difficult habit to get into for new agents, but learning the ropes now will help save them time over the course of their career.

One benefit of this arrangement is that agents can deduct certain things from their income. Real estate agent tax deductions include items such as automotive expenses, certain meals and entertainment, fees and other professional services, and home office expenses. Even if agents work from a corporate office, they might be able to claim a real estate agent tax deduction for an area of their home that’s used exclusively for business.

It’s important that agents practice careful record keeping and develop a detailed system for filing receipts and mileage logs. They may even want to set up a separate bank account and credit card so that they don’t intermingle business and personal funds.

Stop stressing at tax time and start leveraging tools that keep your entire team on the same page, with less effort and resources than before. If you want your brokerage to grow in a way that’s truly scalable and manageable, you need a complete system that handles management and all back office administrative work. Brokermint will help with end-of-year payments and tax to-dos, but the platform can enable your brokerage with so much more! From helping you to create complex commission structures to tracking agent performance and teamwork, to allowing all parties in a contract to sign paperwork digitally rather than trying to chase down everyone to get their signature, Brokermint turns ordinary, cumbersome tasks into much more efficient jobs that can be done faster and with greater accuracy.