Need a Template for a Sales Commission Plan?

First, you can find a sales commission and compensation plan template in our Media Gallery that will give you an idea on what to include in your own company’s sales commission form. How you pay out commission depends upon what type of commission plan you have.

Basically there are two kinds, a recoverable draw and a non-recoverable draw. If you click on the image to the right, you’ll see an example of both a recoverable draw and a non-recoverable draw. Now let’s explain the difference.

• Recoverable Draws – In this type of commission pay plan, the salesperson is given a draw against their commissions with no federal, state, social security or Medicare taxes taken out. Recoverable draws are usually paid between the 1^st and the 5^th of each month. When actual commission are paid out later in the month, if the commissions made exceed the draw previously paid, the salesperson is paid what is owed, less the draw received earlier in the month.
• Non-Recoverable Draws – This works much the same where the salesperson receives a draw early in the month and when actual commission are calculated if the commissions exceed the draw, the salesperson is paid that amount less the prior draw. The difference here is that if the salesperson's commission is less than the draw received, he or she does not “owe” the draw back and the board or commission plan is wiped clean for the next month.

In these types of sales commission and compensation plan template examples, the salesperson is taxed on the draw when its commission payday, not on draw day. Consider a draw as a way to keep the employee financially afloat until commission payday.

Along with your sales commission agreement, there are two types of sales commission and compensation template examples that you can create using Microsoft Excel or purchase from companies that specialize in sales commission forms.

Great American offers two types of commission form, a sales voucher and a sales commission report.

In today’s world of accounting software systems, however, it’s best to utilize the accounting program to keep track of sales commission through journal entries made to the general ledger as each item is sold. The forms offered by Great American are hand fill-in forms and not computerized forms.

Sales vouchers are helpful to salespeople, however, to keep track of what they can expect come sales commission payday. Once the commission is calculated in the accounting software program, the sales manager can use this three-part sales voucher, seen here at the left, and give one to the salesperson, keep one for the sales folder, and give one to the accounting department.

When you create a sales commission and compensation plan template, make sure you make it industry specific based on whether or not you will include draws and how you will keep track of each salesperson’s commission due. If you do pay employees on commission, you may also want to explore sales commission software like Qcommission that integrates with accounting systems like Intuit’s Quickbooks.