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Tracking draw versus commisison when employee's draw is paid on w2 with deductions

I pay my employees a draw versus commission, I have been booking my payroll manually detailed per employee but I need to keep track of their draw accounts, now that the gross pay is under Payroll Expenses under Gross Wages I can't have a separate Draw account listed as Other Asset as most instructions advise.  How to I keep track of their draw while recording their W2 weekly payments in my payroll clearing account or do I have to set it up totally different?
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Best answer 12-10-2018

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Established Community Backer ***

First, it doesn't matter what you call it. If it is taxed...

First, it doesn't matter what you call it. If it is taxed when paid out, as Wages or Compensation, you can call it Draw or Advanced Draw or Advanced Commisison, or whatever. It still is Taxable Compensation.

Second, the function of Employee Advance tracked into an Other Asset account is for Loans to be repaid to you, that you gave to an employee, and that was not Taxed when giving them funds. This does not apply to what you are describing.

Don't get caught up in terminology. Examine what you are doing and not what it is called by others.

So, "I enter my payroll into QuickBooks as gross wages"

If part of this needs to be tracked separately, for clarity, you need to Split your data. The pay entry might be:

Gross Payroll $400
Advanced Commission $200

And this = $600 to be taxed.

Then, if you are asking about this because you need to offset it next time, then entry would be, as an example:

Gross Commission earned $600
Advanced Commission -$200

That would show I earned $600 but you paid me in advance $200 of it, so I don't get that whole amount this time.

Or:

Gross Commission earned $600
Advanced Commission -$200
Advanced Commission $300

This would give me $700 gross earnings.
8 Comments
Established Community Backer ***

First, it doesn't matter what you call it. If it is taxed...

First, it doesn't matter what you call it. If it is taxed when paid out, as Wages or Compensation, you can call it Draw or Advanced Draw or Advanced Commisison, or whatever. It still is Taxable Compensation.

Second, the function of Employee Advance tracked into an Other Asset account is for Loans to be repaid to you, that you gave to an employee, and that was not Taxed when giving them funds. This does not apply to what you are describing.

Don't get caught up in terminology. Examine what you are doing and not what it is called by others.

So, "I enter my payroll into QuickBooks as gross wages"

If part of this needs to be tracked separately, for clarity, you need to Split your data. The pay entry might be:

Gross Payroll $400
Advanced Commission $200

And this = $600 to be taxed.

Then, if you are asking about this because you need to offset it next time, then entry would be, as an example:

Gross Commission earned $600
Advanced Commission -$200

That would show I earned $600 but you paid me in advance $200 of it, so I don't get that whole amount this time.

Or:

Gross Commission earned $600
Advanced Commission -$200
Advanced Commission $300

This would give me $700 gross earnings.
BRC
Established Community Backer ***

I see how this could work, but why would anyone do this?...

I see how this could work, but why would anyone do this? Seems like make work and that is is over complicating the basic problem (I'm still not sure what the OP is trying to accomplish.).
Established Community Backer ***

I wanted to clarify there is a significant difference bet...

I wanted to clarify there is a significant difference between a "draw" that is an advanced payroll payout (perhaps to be offset later) and a "draw" that is a loan or advanced funds (to be repaid by the employee later).

As to why someone might do this, every business has its reasons. I know furniture stores do a lot of advanced commissions and also State laws may require a minimum hourly rate equivalent wages payout, which would be calculated as from their commission due at a later date.
Not applicable

Thank you, yes, I appreciate your answers and information!

Thank you, yes, I appreciate your answers and information!
BRC
Established Community Backer ***

Can you restate the situation?  What is it you're doing w...

Can you restate the situation?  What is it you're doing with a draw? It doesn't even sound legal, but it could be.
Not applicable

It's legal, I pay a draw versus commission, the draw is t...

It's legal, I pay a draw versus commission, the draw is taxed paid on w2 I just don't know how to track the draw in QuickBooks, I enter my payroll into QuickBooks as gross wages and payroll liabilities so I just need an idea how to track the advanced draw in another account but the payroll has already been booked so I don't want to duplicate the payroll I just need to track the advance.
BRC
Established Community Backer ***

Sorry, that doesn't make any sense to me.  It sounds like...

Sorry, that doesn't make any sense to me.  It sounds like you want to enter the same thing twice and only expense it once.  I still don't know what you mean by "I pay a draw versus commission". What does paying a draw mean?  Generally only the owners take draws from the business.
Not applicable

He means its a draw against future commissions.  You want...

He means its a draw against future commissions.  You want to track how much you have paid out and book commissions agains it.  FOr example you pay $5,000 a month as draw against commission and they dont get paid any commission until they earn over that $5,000 they have been paid to live on.