The Payroll Feature allows you to configure and keep track of employee pay, tips, and commission. Additionally, you can set a Pay Frequency, paying employees weekly, every other week, monthly, or twice per month and run detailed reports, displaying a breakdown of the total hourly pay as well as the commission structure for each employee. You also have the ability to run payroll using our Integration with Gusto, to help streamline your process.
To set up the payroll, follow the steps below.
*Note: To close out the payroll and add it to the Payroll History Report, you have to mark it as paid. Click here for more information. Also, note that the Payroll is based on the Appointment Date and not the date that a transaction is Checked Out or Completed.
Setting up Payroll
1. Click Reports at the top of the screen.
2. Click Payroll Configuration on the left side of the screen under Employees.
3. Select your Payroll Frequency or how often you pay your employees. For example, you can pay employees Weekly, Every Other Week, Monthly, or Twice Per Month (on the 15th of each month and the last day of the month).
* If using the Gusto Integration, your Payroll Frequency has to match the settings in Vagaro and Gusto.
4. If you selected the Every Other Week frequency, you'll be able to set your Payroll Closing Day and Payroll Ending Day. For example, if your first payroll ending date is Friday, the 14th, the payroll period will be the 1st-14th. The next payroll period will be the 15th-28th, ending Friday the 28th. Payroll will continue every other Friday.
If you selected Weekly you will need to select only your Payroll Closing Date.
If you selected the Twice Per Month option, payroll will always end on the 15th and Last Day of each month. Please note, with Twice Per Month payroll frequency selected, you will not be able to run payroll for hourly pay rates. We are not responsible for determining your employee's overtime hours based on the hours worked.
If you selected the Monthly option, your payroll will always end on the final day of the Month. Please note, with Monthly payroll frequency selected, you will not be able to run payroll for hourly pay rates. We are not responsible for determining your employee's overtime hours based on the hours worked.
5. Below the Payroll Frequency option, you can see how the Overtime pay is calculated based on your State's laws.
Click here to learn more State Overtime Laws.
For users outside of the United States, you will be asked to enter the hours under Overtime begins after to set when overtime hours begin for your employees. Then enter the multiplier below Overtime hourly multiplier. This multiplies the employee's hourly rate by the number you've entered. Remember the multiplier applies only to daily pay.
6. Now that we have set the Payroll Frequency as well as the Overtime hours, let's set the tipping and cost to business options when calculating the commission for our employees.
Let's first look at the Include Tips option. When enabling it, keep this in mind:
- Select Include Tips if you want to include all tips, including, cash, and credit card tips, in the payroll.
- Select Include Tips if you allow employees to take cash tips but pay them for credit card tips at payroll. In this case, do not enter cash tips at the checkout screen.
- Do not select Include Tips if your employees are taking cash tips on the day that the service is completed.
7. Select Deduct Service/Class Cost if you want to deduct the service cost from the sales price of the service. For example, let's look at a cut and color service. The service is $75, and it costs on average about $5 dollars to complete the service (the cost to business). If you subtract the cost to business, the net for the service is $70. The system will see this and only give service providers commission on the $70 net gain instead of the $75 sales price.
8. Select Deduct Product Cost to deduct the product cost from the sales price. For example, let's say you have a product that costs $2 and the sales price is $20. If you subtract the cost to business, the net for the product will be $18. The software will see this and only give service providers commission on the $18 net gain instead of the $20 sales price.
9. Select Subtract Discounts from Commission to subtract the sales discount from the service price when calculating commission. Here's an example that highlights this feature. Let's say you are a business owner and you're offering a 50 percent discount on haircuts for a weekend. If this option is selected, the employee will receive a commission on the discounted price, which is $15 in this instance. If this option is not selected on a $30 haircut, the service provider will receive the full $30 commission.
10. Select Subtract Membership Discounts from Commission to deduct a membership discount when calculating the commission for each employee. For example, if you have a product that is $50, but the membership discount is 25%, knocking the price down to $37.50, the employee will make $37.50 in commission. If this option is turned off, the employee will make a commission on the initial $50 price.
Commission Structure Per Employee
Let's now set up the hourly rate as well as the commission structure for each employee. You'll find this towards the bottom of the screen on the Payroll Configuration page. You can specifically set the Hourly Rate ($), Threshold as well as the Commission Threshold Percentages for services and products for employees. You can also set a commission structure for classes.
Threshold and Commission Percentage
To get started, click the Percentage tab to set a commission structure for your service, product, and class sales.
The Commission Threshold tells the system to stop paying one commission and start paying another. Let's take look at the commission structure for Amanda G, the first employee in the example below, and let’s focus on the commission for her service sales.
We've entered 1500 for the Service Threshold ($), 45 for the Service Commission Below Threshold (%) and 50 for the Service Commission Above Threshold (%). In this case, Amanda will receive the 45 percent commission (the below threshold) if she sells less than 1500 dollars in sales, but if she sells more than this amount, she will get the 50 percent commission, the above threshold. You also can set the threshold for Product and Class sales for each employee.
To set a flat commission, enter the same percentages for the below and above threshold. Then enter "0" in the Threshold ($) field. You can do this for services, products, and classes.
Click Save at the bottom of the screen once you're finished setting up your payroll. Click Save and Run Payroll if you're ready to run payroll.
Select the Class Flat Rate option to set up a commission structure based on the number of attendees in a class. Let's take a closer look at this feature!
Class Flat Rate
This option allows you to set a commission structure based on the number of attendees that show up to an appointment or class. Let's explore this feature in more detail.
1. Click the Class Flat Rate tab on the Payroll Configuration screen.
Click Check-In or Paid to give commission to an employee if an attendee has checked in (marked as Show) or has paid for the service or class.
Click Paid to give commission to an employee only if an attendee is marked as Paid, meaning they have been checked out and paid for the service or class. If you select Paid and the attendee is marked as "Check-In," but does not pay for the class, the employee will not receive a commission.
Click Check-In to give commission to an employee only if the attendee checked into the class or has been marked as Show.
2. Let's now set the commission for an employee. Let's look at Allegra S, who is the first employee in the example below. We've entered 5 in the box under No Show. This means that Allegra will receive a flat rate of 5 dollars if a customer does not show up to an appointment or class.
Let's look at the next column. We've entered 10 in the box under 1 attendee. This means Allegra will earn 10 dollars in commission if at least one client makes it to the appointment or class.
Let's now look at the third column. We've entered 20 in the box under 5 attendees and 30 in the box under 10 attendees for Allegra. In this case, the employee will receive 20 dollars in commission if 5 to 9 customers participate in the class, but she will receive 30 dollars in commission once the class capacity reaches 10.
She will receive 40 dollars in commission once the attendee list reaches 25 as we have assigned the 40 dollar commission to 25 or more attendees.
Adding an Additional Commission Column
Click the blue +Add link on the right side of the page to add an additional column and set a new commission structure for each employee.
Removing a Commission Column
1. To remove a commission column, place your cursor in the box where you set the Attendee number. Then click the trash icon.
2. Click Remove.
Copying Commission Structures
To make the commission the same for all employees in a commission column, place your cursor in one of the boxes in which you set your commission for an employee. Then click Copy to All. In the example below, we were able to copy the commission of 20 dollars to the other employees.
Service Flat Rate
This option allows you to set a dollar flat rate commission for each service performed by your employees. This gives your business more specific control over how much you pay your employees.
1. Click the Service Flat Rate tab on the Payroll Configuration screen.
2. Let's start by selecting the Service Category you would like to edit your commission.
3. Now set the commission for an employee. Let's look at Adrian T, who is the first employee in the example below. We've entered $20 commission for Child's Haircut. This means that Adrian will receive a flat rate of $20 for performing a Child's Haircut.
4. Now you can continue to manually set flat rate commissions for each service and employee or you can speed up the process by copying commission rates to other employees or to other services within that category.
Note: If you set an employee's service flat rate commission to $0.00, then they will automatically receive the percentage commission for services. If you would like to avoid this, zero out the commission percentage for that employee.
Click Save at the bottom of the screen once you're finished setting up your payroll. Click Save and Run Payroll if you are ready to run the payroll.