{"id":22946,"date":"2023-04-03T12:43:48","date_gmt":"2023-04-03T16:43:48","guid":{"rendered":"https:\/\/www.method.me\/?post_type=guide&p=22946"},"modified":"2025-12-14T11:05:16","modified_gmt":"2025-12-14T16:05:16","slug":"how-to-track-commissions-in-quickbooks","status":"publish","type":"post","link":"https:\/\/www.method.me\/blog\/how-to-track-commissions-in-quickbooks\/","title":{"rendered":"How to track commissions in QuickBooks"},"content":{"rendered":"\n
\n

In many industries, it\u2019s common for employees to get paid partially or even entirely by commission. <\/p>\n\n\n\n

The benefit of this pay structure is that you motivate your employees more when they know that their pay is directly tied to their performance. <\/p>\n\n\n\n

However, the downside is that commission is more complicated to calculate, track, and pay out than typical salaries \u2013 especially in QuickBooks<\/a>. <\/p>\n\n\n\n

The good news is that there are ways to improve your QuickBooks commission tracking process to make it quicker and more accurate. Keep reading to learn how to track commissions in QuickBooks and ensure that your employees get paid for their hard work. <\/p>\n\n\n\n

What\u2019s more, discover how sales commission software<\/a> streamlines the process and makes commission tracking a breeze. <\/p>\n\n\n\n

\n

Sick of missing invoices and other data in QuickBooks?<\/h3>\n\n\n\n
\n
See Method’s two-way sync <\/a><\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n

Tracking sales commissions in QuickBooks: The basics<\/h2>\n\n\n\n

When it comes to tracking sales commissions in QuickBooks, the first thing to note is that QuickBooks does not have a built-in sales commission calculator. <\/p>\n\n\n\n

This means that you can record commission in QuickBooks, but you must calculate it yourself. The traditional way of doing this is by using manual sales commission spreadsheets. However, this process is time-consuming and prone to error. <\/p>\n\n\n\n

While QuickBooks doesn\u2019t have a commission tracker, it\u2019s still possible to learn how to track commissions in QuickBooks. However, you must first learn how to set up commission in QuickBooks. <\/p>\n\n\n\n

How to set up commission in QuickBooks: Structure types<\/h2>\n\n\n\n

When it comes to tracking sales commissions in QuickBooks, you must first determine the commission structure that works best for your business.<\/p>\n\n\n\n

Don\u2019t know where to begin? We\u2019ve summarized the top commission structure types to give you a place to start.<\/p>\n\n\n\n

1. Base rate only<\/h3>\n\n\n\n

Paying base rate only isn\u2019t really a type of commission pay. It means that you only pay your sales reps a flat salary, sometimes based on an hourly rate.<\/p>\n\n\n\n

Paying base rate only might make payroll easier, but it doesn\u2019t give your sales reps an incentive to work harder or surpass their goals, which might stump your business growth. <\/p>\n\n\n\n

Either way, if this is the pay structure you choose, you don\u2019t need to know how to track commissions in QuickBooks. <\/p>\n\n\n\n

2. Straight commission<\/h3>\n\n\n\n

Straight commission is the opposite of base rate only. It\u2019s when your sales reps are paid entirely off of commission.<\/p>\n\n\n\n

This commission structure is good for your business, as you only pay based on performance and your sales reps always stay motivated. <\/p>\n\n\n\n

However, this is a high-risk structure for sales representatives. Even though earning potential has no cap, your employees have no consistency or guarantees in their income.<\/p>\n\n\n\n

3. Base + commission<\/h3>\n\n\n\n

In this pay structure, your reps are given a low base rate and receive commission on top of that. <\/p>\n\n\n\n

The base rate is usually low to ensure that the sales rep has some guaranteed income, but is still motivated to close sales and maximize their earnings. <\/p>\n\n\n\n

4. Revenue commission<\/h3>\n\n\n\n

With revenue commission, your sales reps earn a commission percentage of the total revenue they generate. This type of commission is often combined with a low base salary, and is one of the simpler commission structures to calculate. <\/p>\n\n\n\n

For example, if your rep sells $100,000 in revenue in one month, and you pay a 5% revenue commission, they receive $5,000 in commission that month. <\/p>\n\n\n\n

5. Tiered commission<\/h3>\n\n\n\n

With tiered commission, your sales reps\u2019 commission can increase once they pass a certain quota. <\/p>\n\n\n\n

This is a great pay structure to motivate your sales team to keep pushing, but is also difficult for tracking sales commissions in QuickBooks.<\/p>\n\n\n\n

6. Gross margin commission<\/h3>\n\n\n\n

With gross margin commission, you give your reps a percentage of the profits made from a sale.<\/p>\n\n\n\n

However, their commission is calculated with the expenses incurred from production\/distribution. This means that your sales reps must upsell products to earn more from this type of commission structure.<\/p>\n\n\n\n

7. Residual commission<\/h3>\n\n\n\n

Residual commission is when you pay your sales reps commission as long as their client continues business with your company.<\/p>\n\n\n\n

This is a great pay structure to encourage your sales team to build long-lasting relationships with clients and provide the best services. <\/p>\n\n\n\n

8. Draw against commission<\/h3>\n\n\n\n

A draw against commission provides your employees a guaranteed set amount of advanced income for each paycheck, paid out at the beginning of each pay period. <\/p>\n\n\n\n

At the end of each pay period, if your rep fails to match the draw amount, you can carry the discrepancy forward into the next month as accrued debt. If they earn more commission than the draw amount, they keep the balance. <\/p>\n\n\n\n

Now that you know your options for how to set up commission in QuickBooks, it\u2019s time to learn how to track commissions in QuickBooks Online and QuickBooks Desktop. <\/p>\n\n\n\n

\n

Wish you could get more from QuickBooks? Method makes it possible.<\/h3>\n\n\n\n
\n
See for yourself<\/a><\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n

How to track commissions in QuickBooks \u2013 Setting it up<\/h2>\n\n\n\n

As mentioned, QuickBooks doesn\u2019t have commission tracking features. However, setting up commission in QuickBooks prepares you for successful tracking.<\/p>\n\n\n\n

Let\u2019s take a closer look at how to set up commission in QuickBooks Online and QuickBooks Desktop.<\/p>\n\n\n\n

QuickBooks Online<\/h3>\n\n\n\n

When you set up commission in QuickBooks Online<\/a>, you can choose to set it as an employee’s salary or additional pay. <\/p>\n\n\n\n

The process begins the same way for each option:<\/p>\n\n\n\n

    \n
  1. From the \u2018Payroll\u2019 menu, go to \u2018Employees\u2019.<\/li>\n\n\n\n
  2. Select your employee.<\/li>\n\n\n\n
  3. You should see \u2018Pay Types\u2019. Select \u2018Start\u2019 or \u2018Edit\u2019. <\/li>\n<\/ol>\n\n\n\n

    From this point, if you choose to set up commission as employee salary, select \u2018Commission only\u2019 from the \u2018Pay types\u2019 drop-down menu. Then, hit \u2018Save\u2019.<\/p>\n\n\n\n

    If you choose to set up commission as additional pay, look for the \u2018Common pay types\u2019 section and select \u2018Commission\u2019.<\/p>\n\n\n\n

    QuickBooks Desktop<\/h3>\n\n\n\n

    To set up commission in QuickBooks Desktop<\/a>, there are two steps.<\/p>\n\n\n\n

    The first is to set up a commission pay item. To do this, follow these instructions:<\/p>\n\n\n\n

      \n
    1. From \u2018Lists\u2019, select \u2018Payroll Item List\u2019.<\/li>\n\n\n\n
    2. Under the \u2018Payroll Item\u2019 drop-down menu, click \u2018New\u2019.<\/li>\n\n\n\n
    3. Select \u2018Custom Setup\u2019, then click \u2018Next\u2019.<\/li>\n\n\n\n
    4. Select \u2018Wage\u2019, then click \u2018Next\u2019.<\/li>\n\n\n\n
    5. Select \u2018Commission\u2019, then click \u2018Next\u2019.<\/li>\n\n\n\n
    6. Enter the name of the item, then click \u2018Next\u2019.<\/li>\n\n\n\n
    7. Select the appropriate Expense account for the item, then click \u2018Next\u2019 and \u2018Finish\u2019.<\/li>\n<\/ol>\n\n\n\n

      The next step is to add the item to the given employee\u2019s profile:<\/p>\n\n\n\n

        \n
      1. Under \u2018Employees\u2019, select \u2018Employee Center\u2019.<\/li>\n\n\n\n
      2. Click on the appropriate employee.<\/li>\n\n\n\n
      3. Select \u2018Payroll Info\u2019.<\/li>\n\n\n\n
      4. In \u2018Earnings\u2019, add the payroll item that you created in Step 1, then click \u2018OK\u2019.<\/li>\n<\/ol>\n\n\n\n

        Once you\u2019ve mastered how to set up commission in QuickBooks Online or QuickBooks Desktop, you\u2019re ready to use commission tracking software for tracking sales commissions in QuickBooks. <\/p>\n\n\n\n

        How a QuickBooks integration automates commission tracking<\/h2>\n\n\n\n

        Now that you know how to set up commission in QuickBooks, the only thing left to learn is how to track commissions in QuickBooks. <\/p>\n\n\n\n

        QuickBooks commission tracking <\/a>is possible when you use commission tracking software to calculate and manage your commission payouts.<\/p>\n\n\n\n

        Commission tracking software integrates with QuickBooks to calculate your commissions in QuickBooks. So, you don\u2019t have to worry about double data entry. <\/p>\n\n\n\n

        The benefits of integrating sales commission software with QuickBooks include:<\/p>\n\n\n\n