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QuickBooksHelp
QuickBooksHelp
Intuit
posted
‎09-08-2019 11:26 PM
last updated ‎December 17, 2019 4:42 PM
10 helpful votes

Pay employees a commission

Learn how to set up and pay commission to an employee.

What is a commission?

Commission is a form of compensation that's typically based on an employee's sales performance or completion of a task. Commission can be paid in addition to a salary or instead of a salary. Hourly employees who also receive a commission must be paid at least the minimum wage for hourly workers.

For commission employees, federal and state law require the employee to get paid at least the minimum wage. If the employee's commission is low enough, they'll need to be paid the difference to meet the minimum wage limits.

As a state regulation, hours are still required to be entered for commission-only employees in:

  • Washington
  • Oregon
  • Rhode Island

To pay commission to your employees, follow the steps below:

Step 1: Set up commission as employee's salary or additional pay

You can either set an employee's pay to commission only or add commission as an additional pay type. Here's how:

Commission as employee's salary

  1. Go to Employees.
  2. Select the employee's name.
  3. In the Pay section, select Edit.
  4. Select the small arrow icon ▼ in the How much do you pay section, and choose Commission Only.
  5. Select OK.
  1. Got to Workers and select Employees.
  2. Select the employee's name.
  3. Select the edit ✎ icon next to Pay.
  4. In the How much do you pay employee section, select the small arrow ▼ icon and choose Commission Only.
  5. Select Done.

Commission as additional pay

You can pay your employees a commission along with their regular pay. To do that, you need to add a commission pay type first. Here's how:

  1. Go to Employees.
  2. Select the employee's name.
  3. In the Pay section, select Edit.
  4. In the What additional ways do you pay employee section, select Commission.
  5. You can change the Commission name if you want.
  6. Select OK.
  1. Go to Workers and select Employees.
  2. Select the employee's name.
  3. Select the Edit ✎ icon next to Pay.
  4. In the How much do you Pay employee section, select the Edit ✎ icon  or +Add additional pay types.
  5. Select Commission.
  6. You can change the Commission name if you want. Select the Edit ✎ icon to change it.
  7. Select Done, then Done.

Step 2: Pay employees a commission

Pay commission only paycheck

How is a commission only paycheck different from a regular payroll with commission pay? To learn more, see Pay commission separate from regular pay.

Note: Split direct deposit or direct deposit to 2 accounts is not applicable for commission only paychecks.

To create a commission only paycheck, follow the steps below for your payroll service:

  1. Go to Payday.
  2. Select the employee's pay schedule.
  3. From the Check Type drop-down, select Commission checks.
  4. Select Go.
  5. Choose the appropriate settings.
    • Use a federal tax rate (22% or 37%).
    • Include deductions and contributions such as retirement, HSA, and garnishment.
  6. Select a Period Start, Period End Date, and a Pay Date.
  7. Select the employees you want to pay, then enter the commission amount.
  8. When you're ready, select Create Paychecks and Approve Paychecks.
  1. Go to Workers and select Employees.
  2. From the Run Payroll ▼ dropdown, select Commission only.
  3. Select the edit ✎ icon next to Payroll Options and select the following options:
    • Use supplemental tax rates: You can use supplemental rates and the system will determine which rate is used based on the YTD of the last paycheck.
    • Include retirement deductions if applicable: This will appear if an employee is set up for these.
    • Add pay period: Option to add pay period will show once you select Apply.
  4. Select Apply. Note that Garnishments by default will be deducted.
  5. Enter commission amount.
  6. Select Preview payroll, then Submit payroll.
  7. Select Finish payroll.

Pay commission along with the regular pay

On top of the employees' regular pay, you can also pay commission to them. Here's how you do it in your payroll service:

  1. Create Scheduled Payroll or Create an unscheduled payroll for the employee you want to pay commission.
  2. Enter an amount in the Commission field.
  3. Select Preview Payroll, then Submit to Intuit.
  1. Create Paycheck for the employee you want to pay commission.
  2. Enter an amount in the Commission field.
  3. Select Create Paychecks, then Approve Paychecks.
  1. Create Paycheck for the employee you want to pay commission.
  2. Enter an amount in the Commission field.
  3. Select Preview payroll, then Submit payroll.
  4. Select Finish Payroll.

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