There are a number of situations where it may be necessary to calculate and track commission based on a percentage of sales. For example, you may want to calculate a percentage commission on a sale for a particular sales rep, or calculate various percentages of overall sales for a show or event to go to individual employees.
This article provides steps on how to create a group item which allows one or more fixed percentages to be calculated based on a given sales item. The percentage commission is posted to a liability account and the amount is offset to a clearing or pass-through account. It also shows how to create and use a report to track commission accrued and to clear the commission liability balances when commission is paid to reps or employees.
To calculate one or more percentages based on sales, you will need to create a group item for each employee/rep where the items in the group may be modified based on what is sold. The group item contains an item to track sales as income, another to track commission as a liability, and an item to offset the liability to a clearing account, so that the total amount is not overstated on the sales transaction.
Intuit recommends you to contact your professional bookkeeper or accountant to verify the accounts to be used in the following steps.
In this example, an Other Current Liability account is created to track the commissions. You should always refer to your professional bookkeeper or accountant for accounts to be used.
Create a Discount item for each different percentage commission which will be paid.
Set up a group item Sales Commission for each Employee or Rep:
When creating an invoice or sales receipt enter the Sales Commission group item and edit it as follows:
After your pay your employees their commissions, you need to create a credit memo using the commissions and commission offset items
to remove the amounts from your reports.
The amounts for each commission item on the Commission by Rep report are now reduced by the amount by which the employees or reps have been paid.