What Commissions Do
Commissions are additional earnings paid to employees based on sales, performance, or company policy. In payroll, commissions increase gross pay and may affect taxable income depending on setup.
Practical Example
An employee earns a $500 sales commission for the pay period. Payroll adds the commission so gross pay increases by $500. Taxes and deductions are then calculated based on the configured rules.
When To Use Commissions
Use commissions when:
- Employees earn variable pay from sales or performance.
- Commission amounts should appear on payslips.
- Payroll needs to include commission in gross pay.
Common Mistakes
- Adding commission as a non-taxable item when it should be taxable.
- Entering commission in the wrong pay period.
- Adding the same commission both manually and through import.
- Forgetting to review Draft Review after adding commission.
Related Articles
- Employee Salary Profile
- Payroll Items Overview
- Payroll Item Tax Behavior