How to record sub-broker commission expense
Records the commission liability owed to a producing sub-broker or retail agent for policies placed through the MGA or wholesale broker.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Commission Expense - Sub-Brokers | Expense | 1,500.00 | - |
| Commissions Payable - Retail Agents | Liability | - | 1,500.00 |
💡 Accountant's Note
When an MGA acts as a wholesaler, they must record the portion of the commission that is passed through to the retail broker who originated the business.
Practitioner & Systems Framework
💻 ERP Architecture
Triggered during the posting of the premium invoice in the agency management system.
⚠️ Audit Flags
Mismatch between gross commission income and sub-broker payout ratios defined in agency agreements.
📄 Required Documentation
Sub-broker agreement and premium bordereaux showing commission splits.
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Related Journal Entries
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Discussion & Community Questions
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