FAQs
Being an expense for the business, it should be debited to Profit and Loss A/c, according to the rule of nominal account. Brokerage paid on sale of goods is debited to Brokerage A/c.
What is the brokerage paid to a broker for? ›
A brokerage fee is a fee or commission a broker charges to execute transactions or provide specialized services on behalf of clients. Brokers charge brokerage fees for services such as purchases, sales, consultations, negotiations, and delivery.
Should payment of brokerage on purchase of shares be debited to? ›
When brokerage is paid for purchase of shares, it forms part of the purchase cost. Hence, one needs to debit the cost of brokerage to the amount of shares/ investment only.
Is brokerage an expense? ›
Expenses such as brokerage charges, stamp duty, exchange levy, etc., can be claimed as expenses on your Income Tax Returns (ITR).
What is a brokerage debit? ›
Brokerage accounts hold securities such as stocks, bonds, and mutual funds and some cash. A bank account only holds cash deposits. A bank account lets you write checks and use a debit card. Some brokerage accounts also provide a debit card and allow you to write checks.
At which rate brokerage is paid or received? ›
However, SEBI (Securities and Exchange Board of India) has specified the maximum brokerage that a broker can charge. SEBI states that brokerage fees should not exceed 2.5% of the total value of the transaction done by the client. Therefore, a broker cannot charge more than 2.5% brokerage.
What is brokerage pay? ›
This brokerage fee is the remuneration a broker receives for facilitating trade. Typically, it is a percentage of the total trade value that is charged as brokerage. Brokers levy this fee over and above the original trade value and deduct it from a trader's portfolio.
What is one example of a service offered by a brokerage? ›
Full-service brokerages, also known as traditional brokerages, offer a range of products and services including money management, estate planning, tax advice, and financial consultation. These companies also offer stock quotes, research on economic conditions, and market analysis.
What happens to money in a brokerage account? ›
A brokerage account is an investment account that allows you to buy and sell a variety of investments, such as stocks, bonds, mutual funds, and ETFs. Whether you're setting aside money for the future or saving up for a big purchase, you can use your funds whenever and however you want.
What is the biggest disadvantage of a brokerage account? ›
Cons of Brokerage Accounts
- May Charge Fees. You are likely to encounter a variety of fees when you open a brokerage account and purchase investments. ...
- They're Taxable. ...
- They Involve Risk. ...
- May Have Minimum Deposit and Balance Requirements.
Understanding Brokerage Charges
You should remember that a brokerage charge has to be paid both during the buying and the selling of a share. You might find some brokers who are exceptions to this, in that they charge fee only once, for either the buying or selling.
Do I need a brokerage account to buy shares? ›
Usually you need to open an account with a broker to buy and sell stocks online. Some publicly traded companies, however, do offer a direct stock purchase plan (DSPP), where you can buy shares directly.
What kind of expense is brokerage fee? ›
Brokerage fees are any commissions or fees that your broker charges you. Also called broker fees, they are generally charged if you buy or sell shares and other investments, or complete any negotiations or delivery orders. Some brokerages also charge fees for consultations.
Which account is brokerage? ›
A brokerage account is an investment account used to trade assets such as stocks, bonds, mutual funds and ETFs.
Is brokerage a liability? ›
A broker can be liable for certain misrepresentations even if they contradict the terms of the policy and the insured did not read the policy before relying upon the broker.
How is brokerage paid? ›
Brokerage fees are any commissions or fees that your broker charges you. Also called broker fees, they are generally charged if you buy or sell shares and other investments, or complete any negotiations or delivery orders. Some brokerages also charge fees for consultations.
How is brokerage charged? ›
Understanding Brokerage Charges
Brokerage charge is 0.05% of the total turnover. Suppose the stock you buy costs Rs 100. Then the brokerage charge is 0.05% of Rs 100, which is Rs 0.05. Then, the total brokerage charge on the trading is Rs 0.05+ 0.05, which is Rs 0.10 (for buying and selling).
What happens when you sell a stock in a brokerage account? ›
The proceeds from the stock sale will be deposited into your brokerage account or sent to you in the form of a check. The amount of money you receive will depend on the price you sell the stock and any fees or commissions charged by the brokerage firm.
What happens when you sell a brokerage account? ›
"The sale of an investment held for greater than one year is treated as long-term capital gains and subject to taxation at long-term capital gains tax rates that, like qualified dividends, are taxed at a favorable rate that can range from 0% to 20%."