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Thread: Correct accounts to use for retained commission.

  1. #1
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    Question Correct accounts to use for retained commission.

    I would just like some accounting information please!

    I am currently using Sage One (accounting & payroll).

    I have an employee who doesn't want to take all of her commission earned every month. Currently she takes a fixed amount of commission every month, so I want to allocate the excess commission due to her correctly in the system.The payroll does the allocation of the commission correctly to the Commission account in Sage One and is offset to the Salary Control account after actual payment.

    Can I create a liability account for her for the excess commission due? If so, which account do I debit when I credit this liability account, so that all is correct in the accounting system?

    In my mind, I will debit the commission account and credit this liability account? And then when there is a month where she doesn't earn enough for her fixed amount, or wishes to take extra commission than actually earned, I will still pass that commission amount through the payroll and then do a journal where I debit her liability account and credit the Commission account (this account is listed under Expenses) for the excess amount I am paying her?

    I hope my question makes sense and apologies for the newbie (sort of) question.

    Regards
    Brian

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    Hi there,

    There are many ways to go about this. Right now, the outstanding balance should be your salary control account, if there are no other unpaid items etc. You can create a new supplier and name it commission and the personís name, then do a supplier journal where you debit the salary control account and credit the supplier. Then when you pay the person, you deduct it from this account.

    You can also create a general ledger account (current asset) and debit the salary control account and credit the new account.

    I hope this makes sense?

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