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How does a payroll draw program work?


looking to offer a draw against commission pay plan to a perspective employee but not quite sure how they work.

OK. Since the draw is not guarenteed, what works best when the employee's commissions are not reaching the draw amount? Is there a standard way of handling this during a 3-6 month cycle, asides of course from terminating the employee for non-performance?

You set a specific draw amount, say $1000 a month, which would be $461.54 per paycheck if you pay every 2 weeks. When the employee's calculated commissions go over that after closing the month out, they will get the difference. Let's say their commission figures out to be $1058.42. Then you subtract the $1000, and pay them $58.42 as commission for that month. I know you are not paying them $1000 in draws every month, but it does work out to $12000 a year.
This enables the employee to receive some money every paycheck so they don't have to wait a month to get paid.
To figure commissions, decide what the sale is worth. Say, every sale is worth 8%. So, they would have to sell $13230.25 in product/service to earn $1058.42, but you already pay them $1000 a month in draw against commission, so one check they will get a draw AND $58.42 commission

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