For some salaried employees, such as sales reps, you may wish to represent a commission paid in addition to the base salary. At this time, LivePlan has no automatic calculator to build commission payments based on a percentage of your sales. Instead, you'd manually calculate the percentage you'd like to pay, and enter these amounts into your forecast.
There are two important assumptions to consider before setting up commission entries in your forecast:
Base salary and commission require separate entries. For each employee or group of employees who will be paid commission, you will need to create two entries in your forecast: one Personnel entry representing the base salary, and one Expense entry representing the commission.
Even if your base salary is direct labor, the commission will be an overhead expense. Commission payments are usually considered to be operating expense. So, even if you are considering your employees' base salary to be direct labor, we recommend using an Expense entry to represent their commissions.
Creating the base salary entry
Please see Entering Personnel for instructions on how to create the salary entry. You can create an entry for an individual employee or a group of employees. Many commissioned employees are considered direct labor employees - if you're not sure which option to use for this entry, see What is the difference between direct labor and regular labor?
In the example below, we've forecast a salary for group of five sales reps. The monthly salary and employee-related expenses are now shown in the Personnel table:
Creating the commission entry
Remember, you'll want to make manual calculations to arrive at your commission payment amounts. It can be helpful to use your revenue forecast as a basis for these calculations. For more on creating revenue streams, read Forecasting your revenue streams.
- In the Forecast tab, click Expenses:
- Click the Add Expense button:
- Give the entry a title, and select Other expense. Click Next:
- In the lower half of the overlay click Varying amounts over time. Then add the commission amounts you project to pay in the months you'll pay them:
- Click Save & Close.
The Expenses page of your Forecast tab will now show the commission entry:
More on personnel:
- What is the difference between direct labor and regular labor?
- Changing the Burden Rate for employee-related expenses
- Understanding head count details for personnel
- How can I represent part-time personnel in my forecast?
- How do I locate my salaries and wages in the Profit and Loss?