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, allow you to further refine how earnings are calculated. When you run your payroll,
Note
Commissions for customer deposits are paid after the appointment is checked out and completed, unless the deposit is paid with an invoice. Your employees will receive their commission as soon as the invoice is paid. 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.
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.
Before you can run payroll, you must set a pay schedule for your employees. The pay schedule can be set to weekly, bi-weekly, twice per month, and monthly.
To pay your employees weekly:
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Under Payroll Frequency, select Weekly.
Additional settings will appear.
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In the Day of Week list, choose the day your employees will receive their pay.
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In the First Pay Date on New Schedule list, choose the first pay date from the calendar.
Once selected, you’ll see the Deadline to Run Payroll appear just below. This is the latest date you can process payroll to ensure your employees get paid on time
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In the First Pay Period End Date list, choose the end date of the last pay period. The system will use this date to calculate future pay periods.
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Select Save.
To pay your employees bi-weekly
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Under Payroll Frequency, select Every Other Week. Additional settings will appear.
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In the Day of Week list, choose the day your employees will receive their pay.
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In the First Pay Date on New Schedule list, choose the first pay date from the calendar.
Once selected, you’ll see the Deadline to Run Payroll appear just below. This is the latest date you can process payroll to ensure your employees get paid on time
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In the First Pay Period End Date list, choose the end date of the last pay period. The system will use this date to calculate future pay periods.
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Select Save.
To pay your employees twice per month:
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Under Payroll Frequency, select Twice Per Month. Additional settings will appear.
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Under Monthly Pay Days, choose an option:
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To pay your employees on the 15th and last day of the month, select 15th and Last Day of Month.
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To choose two specific days, select Other, then select the First Pay Day of Month and Second Pay Day of Month.
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In the First Pay Date on New Schedule list, choose the first pay date from the calendar.
Once selected, you’ll see the Deadline to Run Payroll appear just below. This is the latest date you can process payroll to ensure your employees get paid on time
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In the First Pay Period End Date list, choose the end date of the last pay period. The system will use this date to calculate future pay periods.
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Select Save.
To pay your employees monthly:
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Under Payroll Frequency, select Monthly. Additional settings will appear.
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In the Day of Month list, choose which day your employees will receive their pay.
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In the First Pay Date on New Schedule list, choose the first pay date from the calendar.
Once selected, you’ll see the Deadline to Run Payroll appear just below. This is the latest date you can process payroll to ensure your employees get paid on time
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Select Save.
There are many options to configure how and what to include or exclude in your employees' payroll.
Below the Payroll Advanced Settings, configure your payroll settings:
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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 want to include tips from credit card sales on payroll, do not log tips paid directly to the employee in cash during checkout as these values will be paid out again during payroll.
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If customers pay tips to your employees directly or tips are paid out at the end of each day, do not enable the option to include tips on payroll. Your employees will be paid for their tips twice.
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Deduct Service/Class/Add-on 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 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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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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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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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.
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.
Only employees who earn hourly wages are eligible for overtime. Check your State Overtime Laws to determine how overtime wages are calculated and paid.
To create and assign pay rates and commissions:
Comments
2 comments
Deposits should not be included in payroll, even if paying via invoice. The point of it being a deposit is that the service has not yet been completed, so why would paying one via an invoice suddenly change that?
Hi Brittany, thanks for providing your feedback. If you'd like to see a change to this feature, I recommend submitting a feature request: https://support.vagaro.com/hc/en-us/articles/360021060374-Submit-a-New-Feature-Request.
Thanks,
Jamie
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