Sales Commission Calculation Template

Start from the signed plan, not a summary slide or an offer letter. Those give a headline rate and leave out the rules that change it.

State law can set rules for the plan itself. New York, for example, requires a commission salesperson's terms to be in writing, signed by both sides and kept for at least three years. The writing must describe how commissions are calculated¹.

If the plan is silent or unclear on a rule, get the plan owner's answer in writing first, because a wrong guess repeats on every rep. If you're still designing the plan, test it against last year's deals before anyone signs it.

Sort the closed-won export by rep and close date. A deal's rate can depend on the running total just before it, so a deal worked out of order can land on the wrong side of quota. If the plan keeps renewals out of quota, give them their own running total, or track, so they never move the new-business total.

1. 1

   Classify the deal

   Match it to the plan's deal types by what the contract adds, not how the rep logged it.

2. 2

   Find the running total

   Look up the rep's running total on that deal's track, as it stood just before this deal.

3. 3

   Apply the rate

   Base rate below quota, accelerator above it. On a marginal plan, a deal that crosses quota is split at the line.

4. 4

   Note the clause

   Record the plan section behind the rate, so anyone can check the deal without redoing the quarter.

Commission is earned on one date and paid on another, and the gap is money the company owes. If commission is earned at signing and paid the following month, anything closed in a period's last month is still unpaid when the period ends.

Track it in an accrual schedule: the opening balance, plus commission earned, minus commission paid, gives the closing balance. List the deals behind that balance, and book it as an accrued liability at each month-end close.

The earned date also decides what a departing rep is owed. California's Labor Commissioner says commission earned by the day a rep leaves is due with their final pay², not at the next commission run. Commission still waiting on a condition, such as the customer paying, is due as soon as that condition is met. Add earned commission to the rep's final pay calculation.

For employees, commission is wages, and the IRS lists it as supplemental wages³ in its 2026 employer's tax guide. If you pay it separately and already withhold from the rep's regular pay, you can withhold federal income tax at a flat 22%. Supplemental wages above $1 million in a year must be withheld at 37%.

If a rep is eligible for overtime, federal rules treat commission as pay for hours worked. It goes into the regular rate overtime is based on⁴, even when it is paid weeks later, and can mean extra overtime for the weeks it was earned⁵.

Under US GAAP, commission that is an incremental cost of winning a contract is recorded as an asset and amortized, if you expect to recover it. A practical expedient lets you expense it instead when the amortization period would be a year or less. PwC's accounting guide explains which commissions qualify⁶; confirm the treatment with your accountant and write it into your revenue recognition policy.

A clawback recovers commission when a customer cancels inside a window the plan sets. Apply the plan's formula exactly, even when another seems fairer. A prorated formula lets the rep keep the share for the months the customer stayed; a full-recovery formula takes it all back.

Say a rep was paid $6,400 on a deal with a 12-month window, and the customer cancels after five full months. Proration recovers the share for the seven months left, $3,733.33, and the rep keeps $2,666.67. Record both figures the day the cancellation is confirmed, so the next payment run picks them up.

Give each rep a statement with every payment: each deal, the running total, the rate, the clause and the result. In New York, a commission salesperson can ask in writing for a statement of earnings paid or due and unpaid¹, and the employer must provide it.

When a rep disputes a figure, settle it against the plan clause and the number already on the sheet, and log the outcome either way. If the dispute shows the plan was misread, fix the reading and recalculate every deal it touches, not just the one the rep noticed.

The template on this page keeps the plan's rules, the deal math, accruals, clawbacks and disputes in separate files. Open it with Edit with AI, and River reads your plan first, then works out each deal with the clause behind its rate.