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. We offer many ways to customize your commission, from paying per service or product to tiered percentages or dollar amounts. You also have the ability to run payroll using our Integration with Gusto, which allows you to pay your Employees using Direct Deposit, set up tax withholding, and more.
To sign up for your 3 month free trial of Gusto click here.
To set up the payroll, follow the steps below.
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 you are using the Gusto integration, your Vagaro Payroll Frequency must match the Pay Schedule settings in Gusto. Click here for more information
4. If you selected Every Other Week, you'll be able to set your Payroll Closing Day and Payroll Ending Day. Your Payroll Closing Day will be the day of the week your payroll ends, and the Payroll Ending Day is the last date of the current Payroll period. These settings determine the hours worked for payroll purposes.
For example, if your first payroll ending date is Friday, the 14th, the payroll period for hours worked 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.
If you selected the Monthly option, your payroll will always end on the final day of the Month.
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.
Tiered Commission Per Employee
The first option that you have for commission rates for your employees is Tiered Commission by Revenue. This allows you to customize multiple percentages or dollar amounts based on the dollar amount that is charged by an employee.
Tiered Commission by Revenue is the default and any product or service specific commissions will override the revenue commission.
For example, if you set a Tier 1 commission for sales between $0 and $499 and a Tier 2 commission for sales between $500 and $749, Alisha Cooper who sells $300 in Services would get the Tier 1 commission of 35%. If she sold $600, Alisha would get the Tier 2 commission of 40%. You can add as many Tiers as you need, giving you more control over how you pay your employees. This can be set up for Services, Products, or 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.
Tiered Commission by Class Attendees
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 Classes 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 has not yet paid for the class, the employee will not receive a commission.
Click Check-In to give commission to an employee 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 Alisha C, who is the first employee in the example below. We've entered $5 in the box under No Show. This means that Alisha will receive 5 dollars if a customer does not show up to an appointment or class.
Let's look at the next column. We've entered $15 in the box under 1 attendee. This means Alisha will earn 15 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 $25 in the box under 5 attendees and $35 in the box under 10 attendees for Alisha. In this case, the employee will receive 25 dollars in commission if 5 to 9 customers participate in the class, but she will receive 35 dollars in commission once the class capacity reaches 10.
She will receive 60 dollars in commission once the attendee list reaches 20 as we have assigned the 60 dollar commission to 20 or more attendees.
Commission by Class
When you select Classes, you will see a tab for Commission by Class. You can set specific commission amounts for different classes and customize the amounts for each employee. Each instructor’s commission can be customized by a dollar amount or percentage of the class revenue.
In the example below, Joanna receives $20 for each Aerobics class she teaches while Melissa receives $25 and Kevin makes $10 for each class he teaches.
Commission by Service
This option allows you to set a dollar or percentage commission for each service performed by your employees. This gives your business more specific control over how much you pay your employees, including a way to offer an incentive for employees to upsell specific services.
Tiered Commission by Revenue is the default and any service specific commissions will override the revenue commission.
For example, you can set Tiered Commission by Revenue for all of your employees, and you can have a specific higher commission for one specific service that you offer you can do that by entering it in the Commission by Service tab for each employee.
1. Click the Services tab on the Payroll Configuration screen. Then you will want to select Commission By Service. Your list of Services will populate, so you can enter in the details for each one.
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 Miranda C, who is the first employee in the example below. We've entered $10 commission for Makeup- Application. This means that Miranda will receive the specific commission of $10 for performing a Makeup- Application.
4. Now you can continue to manually set specific 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.
Commission by Product
This option allows you to set a specific commission for each product sold by your employees. You can select a dollar or percentage amount. This gives you more specific control over how much you pay your employees when they sell retail products.
Tiered Commission by Revenue is the default and any product specific commissions will override the revenue commission.
For example, you can set Tiered Commission by Revenue for all of your employees, and you can have a specific higher commission for one specific product that you sell, you can do that by entering it in the Commission by Product tab for each employee.
1. Click the Products Tab on the Payroll Configuration screen. Then you will want to select Commission by Product.
2. Start by selecting the Brand of product you would like to edit.
3. Enter in the dollar amount or percentage of how much commission you want to give any employee who sells that product.
For example, you could select that Alisha gets a 10% commission for every Redken All Soft Shampoo sold, while Tanya gets $3 of the sale price for her commission.
4. Now you can continue to manually enter the specific commissions for each product or copy commission rates across all employees and/or products within that brand.
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 Tier or 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 the Copy button with the Up and Down arrows next to it. In the example below, we were able to copy the commission of 20 percent to the other employees. Commission can also be copied to other Tiers as well, using the Copy button with the Left and Right arrows next to it.
This option allows you to enter in an Hourly Pay Rate for each employee and assign an Employee Card ID to each employee as well. The Employee ID Card is used for the Time Clock function of Vagaro. For more information on How to Clock In and Clock Out Employees, click here.
1. Choose the employee you want to enter an hourly pay rate for, then enter the dollar amount into the box next to their name. Do this for all employees to ensure your payroll goes smoothly.
2. To enter in an Employee Card ID, click into the Employee Card ID box next to the name of the employee you want to assign the card to, then scan the card using your barcode scanner.
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 payroll.