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For many of us, it's necessary to come up with a procedure to track commissions for our employees and in some cases, outside representatives. Although this isn't a hundred percent automated in QuickBooks, there is a procedure that makes it very simple and very effective. There are three parts we should be aware of. First, we will need to have a Sales Representative List and we will have to choose a sales rep on each of our invoices. Number two, we'll need to monitor a report to see the sales that have been created by each representative and number three, we'll need to add that commission to a payroll check. Now, in the case of a vendor, we would issue them a straight check and not have to worry about any type of payroll liabilities. With our employees, however, we'd like to take their payroll taxes out of that check prior to actually issuing it. Let's talk about commission from the aspect of payroll. First, let's set up our Sales Rep List. Under List, I'm going to go down to Customer, Vendor and Profiles. Here's where I'll find my Sales Rep List. I'll simply come up with a naming scheme. In this case I'm using the initials for the individual. You'll notice Michael isn't actually an employee, so he's a vendor. Vicki and Jonathan are both employees. That's step number one. Step number two is going to be in working with the invoices. Let's go into an Invoice Screen. In our Invoice Screen, it is important to make sure that we have our Representative Category visible. Let's go to a previous invoice. You'll notice on this invoice that there is actually no representative appearing on the screen. Now, if we needed to assign this, what I can do is actually customize this template and put that representative on the screen. Let's go to Customize and in Customize, on the bottom you'll notice where it has Additional Customization. When I select it, you'll notice that there is a selection for our representative. I have a choice of placing it on the screen or print. You'll notice that the layout designer just has to move things around so that it doesn't overlap and that's perfectly ok with me. Layout designer has done its job. Go ahead and say OK. One more time say OK and now you notice I have my Rep Field on my invoice. This allows me to select my employee. When I say Save and Close, once again it tells me that it's changed and I would indeed like to select it. I'll go ahead and close and I'm finished. I now have my invoices being tracked by the sales representative that was responsible for the sale. Under Reports, we will note that there are a number of Sales Reports. Two of those reports will deal with our sales representatives. We can see a summary or a detailed report. Let's go to the summary. You will notice for the month of December I am seeing the sales for each of my representatives. In the case of payroll, I'll need to print this report because I'll need to take note of Vicki's sales. For the ease of typing, let's just pretend Vicki has 20,000 dollars worth of sales. I'm ready to add it to her paycheck. If set up, commission is an actual payroll item that we can go to a paycheck and work with. Let's do that first. I'm going to choose to go to Employees and then go to Pay Employees. I will select Vicki and let's open her paycheck detail. Now, normally Vicki is all clerical, but she's just been promoted and has some commission. I'll go to my pulldown for the item name and you'll notice that there is an item that is commission. Vicki's rate is ten percent. In quantity I simply type in the total sales that she has made for this period. You'll notice it places her commission in and automatically adjusts her federal income taxes. Let's close out of Vicki's check for a moment. We're going to go ahead and discard our changes. I'd like to show you how that payroll item was actually established. Let's go back to List, let's this time go down to our Payroll Item List and here's where you'll notice compensation for our commission. To set this item up, I simply went down to Payroll Item and went up to New. Now, I chose to go to the Custom Setup rather than the Easy Setup and simply went to my next screen. Here it asks me to select the type and I took Wage. You'll notice that commission is included within this wage. On the next screen, once again, it asks me to confirm. I confirm that it was a commission. Next screen. What is the name? And I'll just type in New Commission for this instance. Next screen, what account will be tracking it? Now, this is a General Payroll Expense Account. It may be that you're tracking it through a Commission Account. Once again to next and now what is the default rate? Now, keep in mind this rate can be changed on ever individual paycheck, but this will be the default that will come up to save you some typing time. When I finish, that's it. My commission is in there. From this point on, when I go to Employees to pay an employee, I'll select an employee, I'll go to open the Payroll Detail and now you will see our Commission and New Commission is set up as a Payroll Item. We'll still need to refer to our Sales Report to find out exactly what the sales for the month is, but it's a very quick and easy step to accurately track commissions in QuickBooks.