Hello CaroD213,
There are two ways on how to record commission pay.
The first one is to include it on the employee's regular paycheck. Taxes calculated will be based according to the normal federal and state withholding.
Another one is to create a separate commission paycheck. If the employee receive is outside the regular paycheck, then it becomes a supplemental wage. It will taxed at a rate of 22% and subject to FICA. Please see section 7. Supplemental Wages in Publication 15 2019 for more example on how taxes are calculated.
With that being said, QuickBooks automatically calculates the taxes for you. For now, you'll need to set up a payroll item for commissions. Here's how:
- In QuickBooks Desktop, click Lists and choose Payroll Item List.
- At the bottom left of the Payroll Item List, click the Payroll Item drop-down button, and choose New.
- Select Custom Setup and click Next.
- In Payroll item type choose Wage. Click Next.
- From the Wages list, choose Commission. Click Next.
- Enter the Item Name which prints on payroll checks and reports. Click Next.
- Enter an Expense Account. Click Next.
- In the Default Rate window, enter an amount or percentage to calculate this commission.
- Click Finish.
If you have any questions, please let us know.
