How Does Calculating Commission Pay Affect Payroll?

By Stefan Schumacher, editor of The Payroll Blog

There are a number of different commission types that can be implemented. A straight commission salary means an employee does not receive any guaranteed pay. Base plus commission refers to when an employee receives base pay plus commission. Lastly, draw against commission means that an employer pays a set amount each period regardless of what is actually earned. The small business owner draws against the commission an employee earns, which means that the employee gets a steady paycheck each period.

All of these variations can present a collective challenge to running payroll in terms of assuring that compensation is being properly administered. Base pay plus commission can be particularly difficult to manage because the employee is receiving a regular rate of pay as well as their commission, which requires different sets of calculations.

In our next post, we will look at how commission overtime pay is calculated.

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