Paying Employee Commission

This topic details two methods for paying employee commission.

Commission Payment Methods

You can choose one of two methods to pay commissions to employees:

• On paychecks, commission payments show on the check stub as a payroll earning item.

  To pay commissions on paychecks, you must use SuitePeople U.S. Payroll to pay your employees. See Payroll Setup.

• On payable checks, NetSuite treats commission payments as an accounts payable transaction.

If you use SuitePeople U.S. Payroll, you set your preferences to pay commissions on paychecks.

To pay commissions on paychecks:

1. Go to Setup > Payroll > Setup Tasks > Set Up Payroll (Administrator).

2. In the Paychecks section, check the Pay Employee Commissions on Paychecks by Default box.

   Note:

   If you do not check this box, commissions are paid on a separate check as accounts payable transactions. To pay commission through payable checks, first create a journal entry for the payment, and then process the payment. You can process the payment at Transactions > Payables > Pay Bills.

3. Click Save.

   Now you can pay approved commissions at Transactions > Employees > Create Payroll.

   Important:

   You can change the state of the Pay Employee Commissions on Paychecks by Default box. However, the method to pay existing commissions transactions depends on the preference state at the time the commission is authorized, not at payment processing.

   For example, you check the Pay Employee Commissions on Paychecks by Default box. Then, commission transaction #1 is created and pending authorization. Before you authorize commission #1, you clear the box. Then, commission #2 is created. After you authorize each commission, you pay both commissions on a check separate from the employee's paycheck.

Paying Commissions using Accounts Payable

To create a bill credit for the commissions payable:

1. Go to Transactions > Financial > Make Journal Entries (Administrator).

2. Choose the posting period and date you want this journal entry to apply to.

3. On the Lines subtab, in the Account column, select the payables account to pay this commission.

4. In the Debit column, enter the commission amount.

5. In the Name column, enter the name of the sales rep.

6. Click Add.

7. In the Account column, select the bank account for this payment.

8. Click Add.

9. Click Save.

Make a note of the journal entry reference number.

To offset the bill credit to commission and process the commission payment:

1. Go to Transactions > Financial > Make Journal Entries (Administrator).

2. Choose the posting period.

3. Select the payable account for this commission.

4. Choose the bank account for this payment.

5. Check the box in the Pay column next to the commissions payable.

6. Check the box in the Pay column next to the Bill Credit that corresponds to the commissions payable.

7. Click Save.

NetSuite processes the commission payment and you can print the check for the sales rep.

Related Topics

Commissions

Setting Up an Employee for Commission Payments

Employee Commission Schedules

Employee Commission Plans

Authorizing Employee Commission

Commission Reports

General Notices