Payroll
How to Manage Employee Commissions and Include Them in Payroll
Managing employee commissions is essential for motivating your team and tracking financial performance. With Wafeq, you can easily add and calculate employee commissions periodically, whether tied to sales or performance.
Let’s dive into the steps:
Step 1: Create a Cost Center for Each Employee
Before calculating commissions, you must create a cost center for each employee. This will ensure accurate tracking of commissions when logging sales invoices.
- From the main left-hand menu, Select "Cost Centers".
- Click the "Add" button to create a new cost center.
- In the Cost Center creation window:
- Enter the name of the cost center (e.g., "Ahmed’s Commission").
- Click "Save".
Note:
Note:
Ensure that you create separate cost centers for each employee whose sales and commissions you want to track.
Step 2: Assign the Cost Center When Creating Sales Invoices
To track commissions, you need to assign the appropriate cost center when creating sales invoices for the employee responsible for the sale.
When creating a sales invoice:
After entering the basic invoice details, scroll down to the "Cost Center".
Click the "+ Cost Center" button.
Select the appropriate cost center:
Choose the employee's cost center (e.g., "Ahmed’s Commission").
Note:
Note:
You must repeat this step for every invoice generated for the employee to ensure their sales are correctly attributed for commission calculations.
Step 3: Filter Income Statements by Cost Center
To calculate the employee's commission based on their sales, you can use financial reports in Wafeq.
From the main left-hand menu, navigate to "Reports".
Select "Income Statements by Cost Center".
Filter the report by the employee’s cost center for which you wish to calculate the commission.
Extract the data manually to calculate the commission based on the sales results displayed.
Note:
Note:
These reports help you calculate commissions based on the sales assigned to each employee through cost centers.
Step 4: Add the Commission to the Payroll
Once you’ve calculated the employee’s commission, you can directly add it to their monthly payroll.
- From the main left-hand menu, select "Payroll & Employees" then click on "Payroll".
- Choose the employee to whom you want to add the commission.
- In the line item description list, select the row to add a new entry by clicking "Add Item".
- Enter "Commission" as the item description, then input the pre-calculated amount from the report.
- After entering the commission and any other relevant details, click "Save".
You can now process the commission alongside the employee’s salary in the next payroll cycle.
Note:
Note:
The commission is recorded separately from the basic salary to ensure clarity in accounting.
Step 5: Track and Pay Commissions Before or After Payroll
If you wish to pay the commission separately from the regular payroll, you can create an operational expense account dedicated to commissions and bonuses.
To create a new account:
From the main menu, Under the "For Accountants" section, select "Chart of Accounts", then choose "Add Account".
Name the account "Employee commissions", and optionally make it a sub-account under "Employee Salaries and Wages".
Record a journal entry:
You can now record the commission payment through a journal entry by selecting "Manual Journal" from the main menu and clicking "Add".
If the commission is paid before the salary:
- Debit: Employee Bonuses.
- Credit: Bank Account.
If the commission is recorded for later payment:
- Debit: Employee Bonuses.
- Credit: Salaries Payable.
When the payment is made:
- Debit: Salaries Payable.
- Credit: Bank Account.
Note:
Note:
This method allows you to manage commissions separately from the main salary if necessary.
Using Wafeq, you can manage and track commissions accurately and effortlessly through cost centers and financial reports. This approach ensures transparency in financial operations and improves payroll and commission management efficiency.