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Understanding a Commission Paid Job

By July 3, 2019 No Comments

You are leaving Uni and head off into the workplace. Chances are you’ll encounter at least one commission paid job in your search for employment.

But do you know what makes earning commission different from a ‘normal’ salary? Is one better than the other?

We’re here to help you with some basic info. Help you understand what you’re in for before signing your first employment contract.

What is commission?

Commission is typically awarded to employees in sales positions. Some examples many include the real estate industry or the ad sales industry. The restaurant industry or any job where you would need to sell services or products to clients.

A percentage of sales that the employee makes for the company, is paid as earnings. The percentage of commission and way its structured varies from company to company. Some companies may offer commission as well as a small basic salary. Others are only commission based. A commission salary can be a set percentage. Or it can be on a sliding scale that increases if the employee makes more sales.

If you’re considering a commission paid job, it’s important that you ask questions. Get all the info from your prospective employer. Find out what the percentage of commission is. How its calculated, and when its paid. This could be monthly, quarterly or only after a sale has ‘gone through’.

Are commission earnings taxed?

One of your biggest concerns at any job is working out your nett salary – the money that you take home after tax. Commission earnings are taxed. The good news is, that you can reduce your tax if commission makes up more than 50% of your total taxable salary.

If you qualify, you can deduct expenses such as cell phone, internet, wear and tear on a laptop. Even travel and entertainment.

A commission-based salary gives you the opportunity to earn far more money than you would on a set salary. With a commission paid job, the harder you work, the bigger your pay-check.

At least that’s how it should be – and it is most of the time. Bear in mind though, that a commission salary is not as stable or guaranteed as a set salary. You could put in hours of effort, and have a sale fall through at the last minute.

If you’re thinking of accepting a commission paid job, you should be driven and goal oriented. It’s also important to be budget conscious and save a portion of your earnings. That way you have money to fall back on during quiet, low commission months.

In the end it’s up to you – yes, your earning potential is generally greater on commission. But you’ll need to be hard working, resilient and strive to meet your sales targets and salary goals.

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