October 14, 2026 · Mitt Patel · 5 min read
You're running payroll on a Friday afternoon, and your comfort advisor asks why their commission looks light this week. You pull up the spreadsheet you've been updating since March, scroll past three jobs that got crossed out and re-added, and you're still not sure which invoices actually got paid. This happens almost every pay period, and it costs more than the ten minutes you spend untangling it.
Why this happens
Commission plans usually start simple. A technician earns a percentage on an install, or a flat amount for selling a maintenance plan. You track it in your head, or in a spreadsheet someone built a few years ago.
The trouble starts when the business gets busier. You have more technicians, more add-on sales, and jobs that get invoiced in one month but paid in another. The spreadsheet doesn't know which invoices were actually collected. It just has a running list someone updates when they remember.
Once that happens, payroll and your job costs stop matching. You might pay a commission on a job the customer hasn't fully paid for yet. Or you forget to pay one that closed quietly without fanfare. Over a year, these small misses add up to real confusion about which jobs are actually profitable, because the commission expense isn't sitting next to the job it came from.
The bigger cost is in decisions. If you're looking at job profitability to decide whether to push more install sales or more service agreements, and the commission numbers are guesses, you're deciding based on a guess too.
A worked example
Say you have two comfort advisors, Dana and Marcus. Your plan pays 3% commission on the sale price of any install, paid out after the customer pays the invoice in full.
In one pay period, three jobs closed:
- Dana sold a $9,000 install. The customer paid in full.
- Marcus sold a $12,000 install. The customer paid half, with the balance due next month.
- Dana sold a $4,000 install from last month. The customer's final payment just came in.
If you calculate commissions off the sales log, Dana and Marcus both look like they earned commission on their full sale amounts this period: $270 for Dana's new job, $360 for Marcus's job, and $120 for Dana's older job. That's $750 total.
But Marcus's job isn't fully paid. Under a "paid in full" commission plan, he hasn't earned his $360 yet. The correct commission this period is $270 (Dana's new job) plus $120 (Dana's older job, now paid) equals $390. Marcus's $360 gets paid next period, when the balance clears.
If you'd paid Marcus early, you'd have overpaid him, and if that customer never pays the balance, you're now trying to claw back commission from a paycheck. That conversation is worse than the ten minutes it takes to check which invoices actually cleared.
How to set it up
- Write down the commission rule in plain terms. Decide if commission is paid on invoicing, on partial payment, or only once an invoice is paid in full. Put this in writing, even if it's one paragraph, so there's no relying on memory later.
- Create a commission expense account in your books. In QuickBooks Online, set up a specific expense account, something like "Commissions - sales staff," separate from regular wages. This keeps commission costs visible on their own line instead of buried in payroll.
- Tag each commission to the job it came from. Use QuickBooks Online's job or class tracking to link the commission expense to the specific invoice or project. This is what lets you later check that a job's profit is net of the commission paid on it, not just the straight sale price.
- Pull a paid-invoice report before every payroll run. Before you calculate commissions, run a report showing which invoices were actually paid in that pay period, not just invoiced or sold. This is the step that gets skipped most often.
- Calculate commission from that paid-invoice list, not the sales log. The sales log tells you what was sold. The paid-invoice report tells you what's actually collected. Commission should be based on whichever one matches your written rule from step 1.
- Record the commission as a journal entry or bill tied to the job. This keeps the expense in your books in the same period you pay it, and tied to the job, so your job costing stays accurate month to month.
What undoes this
- Paying commission on invoiced amounts instead of paid amounts, when your plan says paid in full. This is the single most common drift point.
- Letting the spreadsheet become the system of record. If the spreadsheet and the books disagree, treat the paid-invoice records in the books as the more reliable source.
- Mixing commission into regular wages in one lump sum, which makes it impossible to see later how much commission cost you by job or by technician.
- Forgetting partial payments. A half-paid job isn't half a commission unless your written rule says so. Be clear about this up front so technicians aren't surprised.
- Not tying the commission entry to the job. Without that link, your job costing reports will understate the true cost of the sale, which skews how profitable a job type looks.
Monthly checklist
- Pull a paid-invoice report for the pay period before calculating any commission.
- Compare the paid-invoice list to your commission plan rule, especially for partial payments.
- Record each commission to the commission expense account, tagged to its job.
- Reconcile total commission expense for the month against your payroll register.
- Spot-check one or two jobs to confirm the commission on the books matches what was actually paid out.
Common questions
What if a customer pays late, after commission was already calculated?
Pay the commission in the period the payment actually clears, not the period the job was sold. This keeps your commission expense tied to real cash, and avoids clawing back pay later.
Should commission be based on the sale price or the amount actually collected?
That depends on your plan. Some owners pay on the full sale price once any payment clears; others pay only on the portion collected. Whichever you choose, write it down so it's applied the same way every time.
How do I handle commission on a job that gets partially refunded?
This depends on the refund terms and your written commission policy. If the sale amount changes, you may need to recalculate the commission against the new amount, but how you handle commission already paid is a judgment call specific to your situation.
Can QuickBooks Online help track commissions?
QuickBooks Online doesn't calculate commission rates for you, but it can track paid invoices by job and let you record commission expense tied to those jobs, which is most of the work.
North Hudson Bookkeeping sets up commission tracking like this for heating and cooling businesses, and keeps it current month to month so payroll and job costs stay lined up. The first call is free.
