November 3, 2026 · Mitt Patel · 6 min read
It's the 15th, payroll is due tomorrow, and you're staring at a spreadsheet trying to figure out why your top injector's commission check doesn't match what you expected. She sold three packages this month, performed two treatments from an old package, and moved some skincare product at the front desk. None of those numbers line up the way you thought they would.
Why this happens
Med spas pay providers in ways that don't exist in most other small businesses. A provider might earn a percentage of the treatment they perform, a separate percentage on retail product they sell, and sometimes a bonus tied to packages or memberships sold in advance.
The trouble starts with timing. A client can pay $1,200 for a package of four treatments in January, but the provider doesn't actually deliver those treatments until February, March, and April. If you calculate commission off the cash collected in January, you're paying the provider for work they haven't done yet. If you forget to pay them later when they do the work, they're short.
Product commissions add another layer. If a provider sells a bottle of retinol at checkout, that sale often gets rung up through the same point-of-sale system as the treatment, which makes it easy to blend the two together in your head, even though they usually carry different commission rates.
When these pieces aren't separated, a few bad things happen. You can overpay a provider based on money that hasn't been earned yet, which is hard to claw back without an awkward conversation. You can underpay a provider for real work performed, which erodes trust fast. And because payroll doesn't tie back to actual services rendered, you lose the ability to see which providers and which services are actually profitable for the business. You end up making staffing and pricing decisions based on guesswork.
A worked example
Say one of your providers, Maria, is paid 30% commission on services she performs and 10% commission on retail product she sells. Here's her activity for a two-week pay period:
- She performed $2,000 worth of treatments that clients paid for upfront, same-day.
- She performed $800 worth of treatments that were part of a package a client had purchased two months earlier.
- She sold $400 in skincare product.
The package treatments matter here. The client already paid for that $800 in value back when they bought the package. No new cash came in this pay period for that work. But Maria still performed the service, so she still earns commission on it.
Her commission for the period looks like this:
- Treatments performed, same-day: $2,000 x 30% = $600
- Treatments performed, from a prepaid package: $800 x 30% = $240
- Retail product sold: $400 x 10% = $40
Total commission owed: $880, covering $600 for same-day treatments, $240 for the package treatment, and $40 for product sales.
Notice that the $800 in package-based services never shows up as new revenue in your bank deposit for this period, because that money arrived earlier. If you only looked at cash received this period to calculate commission, you'd pay Maria 30% on the $2,000 in same-day treatments plus 10% on the $400 in product, totaling $640, and miss the $240 she actually earned for the package treatments. Over a year, across multiple providers, that kind of gap adds up to real money owed or real money overpaid.
How to set it up
- Separate your revenue categories. In your books, set up distinct income accounts for treatment revenue, product revenue, and package or membership sales (recorded as a liability when sold, not income, until the service is delivered). QuickBooks Online lets you set these up as separate accounts or items so reports can break them out.
- Track services performed, not just cash collected. Your scheduling or point-of-sale system should log each treatment a provider actually delivers during the pay period, whether the client paid that day or is working through a prepaid package.
- Build a commission worksheet per provider, per pay period. List same-day treatments, package-redemption treatments, and product sales separately, each with its own commission rate.
- Calculate commission owed from the worksheet, not from the payroll software's default settings. Payroll software is good at cutting checks and handling withholdings, but it usually isn't built to know the difference between a same-day treatment and a package redemption.
- Reconcile the worksheet total to the payroll run before you process it. The number you pay should match the number your worksheet produced, not a rounded estimate.
- Record the package liability correctly when it's redeemed. When Maria performs that $800 package treatment, your books should move $800 out of the package liability account and into treatment revenue, even though no new cash came in. This keeps your revenue reporting accurate.
The mistakes that undo it
- Paying commission on cash received instead of services performed. This is the single most common error and the one that causes the biggest disputes later.
- Blending product and treatment commission rates. If they're different rates, they need to be tracked separately, even if they show up on the same receipt.
- Forgetting to track package liability. If you don't record prepaid packages as a liability when sold, your revenue looks inflated in the month of the sale and understated in the months the work is actually done.
- Letting providers calculate their own commission from memory or a personal log. It should come from the same system every time, reconciled by someone other than the provider.
- Not revisiting the setup when commission structures change. If you add a new service, change a rate, or bring on a provider with a different pay structure, the worksheet and chart of accounts need to be updated to match.
Monthly checklist
- Confirm every provider's commission worksheet matches the services they actually performed that period, not just cash collected.
- Check that package and membership sales are recorded as a liability until redeemed, and reduced when services are delivered.
- Verify retail product commission was calculated separately from treatment commission.
- Reconcile total commission paid against your worksheet totals before closing payroll for the month.
- Review your treatment revenue report against your appointment or service log to catch any mismatches.
Common questions
Should I pay commission when a package is sold or when it's redeemed?
This depends on how you've structured provider pay, and there's no single right answer for every spa. What matters is that whichever method you choose, it's applied consistently and your books reflect it the same way every time.
What if a provider sells a package but someone else performs the treatments?
You'll need a clear policy for split commission in this case, documented ahead of time, so neither provider is guessing what they're owed.
How do I handle refunds on packages after commission has already been paid?
This depends on your refund policy and how far along the client was in using the package. It's worth deciding this in advance rather than figuring it out case by case.
Can QuickBooks Online calculate provider commission automatically?
It can help by tracking separate income accounts and generating reports by service type, which makes building your commission worksheet faster. It won't automatically distinguish between same-day and package-redemption treatments on its own, so that step still needs a worksheet built around your specific pay structure.
Provider compensation is one of the trickier parts of running a med spa, mainly because it touches scheduling, point-of-sale, and payroll all at once. North Hudson Bookkeeping works with med spa clients on this kind of tracking and helps keep it current as commission structures and providers change. The first call is free.
