Setting up payroll and commissions in Vagaro ensures that employees are paid accurately for working at your business. Vagaro allows you to configure your payroll frequency and pay structure, and automatically calculate commissions for services, classes, and products. Additional payroll options, such as deducting costs and discounts from commissions, allows you to further refine how earnings are calculated. When you run your payroll,
Note
Commissions for customer deposits are paid depending on whether the customer paid before or after the appointment. All appointments must be marked as Checked Out or Completed for those employees to be paid work. If you don't have Vagaro Payroll, you'll also need to mark your payroll as paid after running the Payroll report and add it to the Payroll History Report.
Important
We are not responsible for determining your employee's overtime hours based on the hours worked. This is because overtime occurs after hours worked in a day or total hours worked in a week. Not all calendar months have the same number of weeks or days in them; therefore, we cannot calculate hours and overtime hours worked for these odd months.
Prerequisites: This feature is available for all Vagaro businesses only on the web, tablet, Pay Desk, or PayPro. At least one employee profile must already be set up. In the US, Vagaro Payroll is recommended if you want to send your employees direct deposits and withhold their income taxes.
Select how often you want to pay your employees.
Note
Only employees who earn hourly wages are eligible for overtime. Check your State Overtime Laws to determine how overtime wages are calculated and paid.
If you migrated your Gusto account into Vagaro Payroll, your Payroll Frequency must match the pay schedule settings in Gusto.
To select your payroll frequency:
If you pay your employees Every Other Week, select which day of the week you'll pay your employees and your Payroll Ending Day.
For example, if your first payroll ending date is Friday, February 14, the payroll period for hours worked will be from February 1 to 14. Your next payroll period will start on February 15th and end on Friday, February 28. Payroll will continue every other Friday.
Paying your employees Twice Per Month will pay them on the 15th and last Day of every month, excluding hourly pay rates. For hourly employees, overall earnings are calculated based on settings on the Hourly Pay and all commissions tabs. To run payroll employees who are paid hourly wages, you must select Weekly or Every Other Week.
For salaried employees (Vagaro Payroll only), salaries are calculated based on settings on the Salary tab and each of the commission tab.
Paying your employees on a Monthly basis will pay them on the last day of each month. To run payroll for employees paid an hourly wage, you must select Weekly or Every Other Week instead.
For salaried employees (Vagaro Payroll only), salaries are calculated based on settings on the Salary tab and each of the commission tab.
There are many options to configure how and what to include or exclude in your employees' payroll.
To select your payroll options:
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Below the Payroll Frequency settings, toggle on your payroll options:
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Include Tips: Whether to include cash and credit card tips that are recorded at checkout when calculating commissions.
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If you allow employees to take cash tips but pay them for credit card tips at payroll do not enter cash tips on the Checkout screen.
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Do not toggle on this setting if your employees accept cash tips on days when they complete a scheduled service.
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Deduct Service/Class Cost: Whether to deduct the cost of your services from their sales prices when calculating commissions. For example, if a service costs $75 but has a $5 business cost, the net profit for the service is $70. Vagaro will calculate commission only on the $70 profit instead of the $75 sales price.
Note
If the business cost exceeds the commission amount, the commission for the service will be $0.
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Deduct Discounts: Whether to subtract sales discounts from their service prices when calculating commissions. For example, if you offer a 50% discount on $30 haircuts, the employee will receive a commission on the discounted price, which is $15. If this option is not selected, the service provider will receive commission on the full $30.
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Deduct Product Cost: Whether to deduct product costs from their sales prices when calculating commissions. For example, if your product costs your business $2 to purchase but you sell it for $20, the profit is $18. Vagaro will calculate commission only on the $18 profit instead of the $20 sales price.
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Subtract Membership Discounts from Commission: Whether to deduct membership discounts when calculating commissions. For example, if you offer a product for $50 and provide a 25% discount to members, the price is reduced to $37.50; therefore, the commission will be based on the discounted price of $37.50. If this option is toggled off, the commission will be based on the original price of $50.
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Only Pay Hourly Rate or Commission (Whichever is Larger): Whether to pay only the larger of the commission amount or total hourly pay for all or specific pay rates. For example, if an employee worked 30 hours at $15/hr during a weekly pay period ($450 total) and also earned $1000 in commissions, you can choose to pay only the $1000 commission because it is more than the regular wages earned. Conversely, if the employee earned $1000 in hourly pay but only $450 in commissions, you can choose to pay only the employee's hourly wages.
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Apply to all hourly pay rates: If the commission earned during a pay period exceeds the total hourly pay, then only the commission will be paid. If the total hourly pay during a pay period exceeds the commission earned, then only the hourly pay will be paid.
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Apply to specific pay rates: Whether only Select Pay Rates (created on the Hourly Pay tab) in the list will be paid the larger of earnings by their hourly rate or commissions.
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Paid Time Off (Vagaro Payroll only): Whether to withhold PTO if the commission is greater than the total number of hours worked and their PTO balance, or to always give PTO in addition to the greater of their commission earned or total hourly pay. In the same example above, you can choose to withhold paying the employee's PTO because the earned commission is more than what would be earned during PTO
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PTO will not be paid if the commission is greater than the combined total of hours worked and the PTO balance.
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The employee will always receive PTO in addition to the larger of their commission earned or total hourly pay.
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Select Save at the bottom of the screen.
Assigning pay rates and commissions to your employees requires that you enter their amounts on each tab at the bottom of the Payroll Configuration screen. You can then select the Hourly Pay tab to assign varying pay rates based on the tasks your team members perform at your business. You can even offer commission for completed sales, services, and classes. As a further incentive, consider setting up tiered commissions so your employees earn more if they bring in more revenue.
If Vagaro Payroll is activated, each employee and contractor to be paid must first be added on this screen to set up their hourly rates, salaries, and commissions.
To create and assign pay rates and commissions:
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