Commission-only agents who invoice the agency
How an estate agency records and pays independent agents who invoice their commission, including VAT, Nigerian withholding tax and payments.
By Achekam · · 5 min read · For Real estate businesses in South Africa, Nigeria, Kenya
Many agencies work with agents who are not on the payroll. They earn only commission, run their own diaries and invoice the agency when a deal registers. For the agency this keeps fixed costs down. For the bookkeeper it creates a stream of supplier invoices that look nothing like the rent or the portal subscription, and that carry their own tax questions.
Getting the records right protects both sides. The agent wants to be paid correctly and on time. The agency wants commission costs it can trust, tax deducted where the law requires it, and no agent's invoice paid twice.
Employee or independent: decide it with your adviser
Before anything is recorded, the agency must be clear on what the relationship is. Calling an agent "independent" does not make them so. Tax authorities look at the substance: who controls how and when the work is done, whether the agent works for other agencies, who provides the tools and the office, how they are paid.
Get this wrong and the agency may owe employees' tax it never deducted, with penalties. The decision belongs with the agency's tax adviser, made on the facts of each relationship and written down.
If an agent is in substance an employee, their commission goes through payroll as a variable input on the regular run, which is covered in paying agents' commission through payroll. The rest of this article is about agents who genuinely invoice the agency.
Agents on the supplier list
Each independent agent is a supplier. In Achekam, a business keeps one supplier list with duplicate checks by name or VAT number, and quotations, orders and bills pick suppliers from it.
Add each agent once, with the details you will need every time:
- full name, or trading name if they invoice through a company;
- contact details and the bank account they are paid into;
- their VAT number, if they are registered;
- their tax identification number, especially in Nigeria where withholding tax applies;
- the signed agreement setting out their commission split.
The duplicate check is there for the day two people in the office both try to add the same agent. Take any warning it gives seriously, because two records for one agent is how invoices get paid twice.
The agent's invoice, with VAT only if they are registered
When an agent invoices, record it as a supplier bill. A business records supplier bills line by line with VAT. A bill without a purchase order waits for approval before it posts, and can then be paid in full or in parts from a chosen bank account.
Check each invoice against the deal before approving it: the property, the registered sale, the commission earned, the agent's agreed share. The person approving should not be the agent's own manager if that manager's commission depends on the same deal.
VAT is the line that needs most care:
| Agent's position | What to record |
|---|---|
| Not registered for VAT | No VAT on the bill; set the line to 0% |
| Registered in South Africa | VAT on each line, at 15% or 0% as the invoice shows |
| Registered in Nigeria or Kenya | See the limitation below |
A South African business's supplier bills take 15% or 0% VAT per line, and bills post input VAT to the ledger. For Nigerian and Kenyan agencies there is a current limitation: supplier bills do not use the local VAT rate. They offer 15% or 0% and default to 15%. A Nigerian or Kenyan agency must therefore set lines from unregistered agents to 0% deliberately, and agree with its accountant how to record VAT charged by a registered agent until bills follow the local rate.
Where the agency issues purchase orders for agents' commission, posting a matched supplier invoice puts it in the ledger as expense, input VAT and trade payables, and the supplier's invoice number stops it being posted twice.
Nigeria: withholding on commission, at the time of writing
Nigerian agencies paying commission must consider withholding tax. At the time of writing, Nigerian withholding tax on commission, consultancy, technical, management and professional fees is 5% for resident recipients and 10% for non-residents. These rates come from the Deduction of Tax at Source (Withholding) Regulations 2024, which the Nigeria Tax Administration Act 2025 keeps in force.
The deadlines carry real cost. Withholding tax not remitted to the NRS by the 21st of the following month attracts 10% a year plus interest, and failing to deduct it at all attracts a 40% penalty.
PwC's summary of Nigerian withholding taxes sets out the current rates by type of payment. Rates change; check before each year and ask your adviser how the withheld amount should be recorded in your books.
South African and Kenyan agencies should confirm with their advisers whether any withholding applies to their independent agents.
Paying and recording each payment
Paying a supplier in Achekam only records the payment. No bank payment file is produced for suppliers. The agency pays the agent through its own online banking and records the payment against the bill, from the bank account the money left.
A routine that keeps it tidy:
- Approve the agent's bill once the commission has been received from the conveyancer, if the agreement says the agent is paid after the agency.
- Make the payment through the bank, net of any withholding where it applies.
- Record the payment against the bill on the same day.
- Keep the proof of payment with the bill.
Statements agents can check
Agents keep their own records and will query anything that does not match. Send each agent a short monthly summary from the agency's records: the bills received, the amounts approved, any tax withheld and the payments made, with dates. An agent who can see the whole month at a glance has fewer reasons to phone.
On a joint sale with another agency the same supplier-bill approach applies to the other agency's share; see sharing commission with another agency.
Pick the agents you pay most often, check this month that each is on the supplier list once with complete details, and agree the VAT and withholding treatment with your adviser before the next payment run.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
