How to build your own real estate net income statement

A usable agent profit-and-loss is a two-hour job, and it comes from four documents you already have. Closing statements, your business bank account, the card you put business things on, and your brokerage's year-end summary. That is the whole list.

The reason most agents have never built one is not that it is difficult. It is that nobody ever told them which four documents to pull, so the job feels like an accounting project instead of an afternoon.

This is the mechanics post. No arguments, no comparison, no pitch — just the order to work in and what goes where. At the end you will have a single number for what your business actually cost to run last year, and a second number that matters more: what it cost you per closing.

Why your brokerage statement is not this number

Your brokerage can tell you precisely what it paid you. It cannot tell you what you spent, because most of what you spend never touches it.

That is true at every model and it is not a complaint about any of them. A brokerage sees the commission side of your business. Postage, pop-bys, your CRM, the conference hotel, the sign order, the lockboxes, your board dues — those leave from your accounts, on your decision, and no one is adding them up on your behalf.

So the year-end summary is an input to this exercise, not the answer to it. It gives you one line: what arrived. You supply the other side.

The four documents

The seven steps, in order

1. Pick your twelve months. Last calendar year is easiest because your brokerage summary already matches it. If you are mid-year and want a current picture, use the trailing twelve months instead — just be consistent on both sides of the subtraction.
2. Total your gross commission income. Add up the commission on every closing statement, before any split. This is GCI. Write down the number of sides alongside it; you will need the count in step seven.
3. Write down what actually reached you. From the brokerage summary: the total paid to you after the split, and separately anything withheld — fees, insurance, per-file charges. Do not net these in your head. Keep them as their own line so you can see them.
4. Export twelve months of bank and card activity. CSV, into a spreadsheet, all accounts in one place. Do not filter yet. The goal at this stage is completeness, not tidiness.
5. Sort every outflow into three buckets. Fixed annual, per-transaction, and discretionary marketing. The table below shows what belongs where and why the split matters.
6. Add the spending that never hit a business account. This is the step that gets skipped and it is usually the biggest correction. Mileage. The personal card you used at the printer in March. Cash for the cleaning before a listing shoot. Whatever you paid for out of the household account because the business account was thin that week.
7. Do the subtraction, then do the division. What reached you, minus everything in step five and six, is your real net. Then take just the fixed annual bucket and divide it by your side count. That second number is your fixed cost per closing, and it is the one that behaves badly in a slow year.

The three buckets, and why the sorting matters

Nearly every agent who does this for the first time lumps all spending together. Do not. The three buckets behave completely differently when your production changes, and that difference is the entire point of the exercise.

E&O deserves a moment because it moves between buckets depending on where you are. Some firms bill it monthly, which makes it fixed. Ours is charged per transaction, and it is paid by the agent. Find out which yours is before you sort it, because putting it in the wrong bucket will flatter your slow-year math.

The Arkansas lines that are fixed no matter what you sell

Four lines belong in the fixed bucket for every licensee in this state, and unlike your dues they are published, so you can enter them exactly.

• Renewal, every year, by September 30. $60 for a salesperson and $80 for a broker on time. Miss the deadline and it is $80 and $110 — a $20 penalty for salespersons, $30 for brokers.
• Seven hours of continuing education, due no later than December 31 for active status. The course cost is yours to look up; it varies by provider.
• The activation fee, if you slip. Renew but submit no CE record and the licence goes inactive, with a $30 fee to activate it again. That is a different failure from not renewing at all, which expires the licence on January 1 and sends you down the reinstatement path instead.
• Board and MLS dues. The largest of the four and the one we cannot give you, because the Little Rock REALTORS® Association, CARMLS and the state association publish no individual figures. Your January bank statement has the real number. Use that, not a figure from a blog.

Fees and dates roll each year. Pull the current renewal form from arec.arkansas.gov when you build this, and again next year.

What the finished number is good for

Two things, and it is worth being clear about the limits.

It tells you what your business costs to run, which almost no agent can state from memory. And it gives you a fixed cost per closing, which is the figure that decides whether a compensation model is working for you or quietly working against you.

What it does not do is make the decision. A number is an input. Post four in this series takes the fixed-cost-per-closing figure into the case where a high-split model is genuinely the better answer — including the year where it stops being one.

If you build this and the answer is that your costs are in hand and your model suits you, that is a real result. You will have spent two hours and can stop thinking about it, which is worth more than most of what gets written for agents.

What happens next

Block out two hours and pull the four documents before you start. If you only have ninety minutes, do steps one through four now and the sorting later — the export is the part people never get around to.

Whatever the number says, read your own independent contractor agreement and policy manual before you act on it. They govern what you owe, what is withheld, and what happens to work in progress, and they override anything anyone tells you in a recruiting conversation, ours included.

The earlier posts in this library cover the move itself rather than the math: what Arkansas agents actually keep after fees is the post this one follows, and from the previous series, what switching brokerages actually costs in Arkansas and the readiness checklist.

Frequently asked questions

How long does it actually take to build an agent net income statement?

About two hours the first time, if you pull all four documents before you start. The export and sorting take the bulk of it. In later years it is closer to thirty minutes, because the categories are already built and you are only adding twelve months of rows to them.

What if my brokerage does not give me a year-end summary?

Ask for one in writing; most back offices can produce it. If it does not exist, rebuild the figure from your closing statements and your deposits — commission per side, then what landed in your account. It is slower and it is a fair question to ask any brokerage you are considering.

Should I run the calendar year or the last twelve months?

Calendar year if you can, because your brokerage summary and your licence renewal already line up with it. Use trailing twelve months if you are mid-year and want a current read. The only rule that matters is using the same window on both sides of the subtraction.

Which Arkansas licence costs are fixed every year no matter how much I sell?

Renewal at $60 for a salesperson or $80 for a broker when filed on time, seven hours of continuing education, and your board and MLS dues. A $30 activation fee applies if you renew but submit no CE record. Confirm current amounts at arec.arkansas.gov, since they roll annually.

Do I have to renew my Arkansas licence and finish my CE at the same time?

No, and this catches people out. They are two separate deadlines: renewal by September 30 to avoid a penalty, continuing education by December 31 for active status. Meeting one and missing the other is the most common way a licence ends up inactive.

What do agents most often leave off the expense side?

Everything that never touched the business account. Mileage, the personal card used at the printer, cash for a pre-listing clean, the household account covering something in a thin month. It is rarely one big item and it is almost always enough to move the total.

Is this the same thing my tax preparer already does?

No. A Schedule C is built for the IRS and organised around deductibility. This is built for a decision and organised around behaviour — what changes when your production changes. You need both, and you need a tax professional for the first one. We are not licensed to give tax advice and this series does not attempt to.

About the author

Amanda Galbraith is the Principal Broker and owner of Arkansas Property Management & Real Estate in Maumelle. She taught public school mathematics for twenty-three years before real estate became full-time work, which is roughly why this post exists in the form it does.

This post is general information for licensed Arkansas agents, not legal, tax or financial advice. Your independent contractor agreement and your brokerage's policy manual govern your own situation — read them, and do not take anything here as advice to act against them. Verify current licensing rules and fees with the Arkansas Real Estate Commission. Nothing here is a guarantee of income or production.

Arkansas Property Management & Real Estate | 501.851.7771 | www.ar-property.com