How to include commission on your invoices

Many professions have fairly up-front billing, making it fast and easy to create invoices with the right invoicing software. However, many self-employed also work on sales commission and are looking for the right solution for including this on their invoices.

If you’re not sure, commission refers to any compensation (additional or base) that is earned based on the number of sales an individual makes. In other words, the more sales made, the higher the commission received.

Commission is generally used as an incentive - employers offer the commission on top of a salary to encourage employees to sell more. This can also apply to a self-employed individual with a contract to work with larger companies.

In these cases, charging commission is akin to charging for a service, so any invoice should include the details of what is being billed as though it were a service. If you’re VAT registered, then you’ll need to take a closer look into adding VAT for commission-based services.

Whether you include VAT on your commission depends very much on the type of service provided. If you’re unsure, it’s best to consult your accountant, or even a specialised tax accountant.

Invoicing for commission payments

When it comes to creating an invoice for the work you’ve done on commission, different types of invoicing software may provide you with different options. With SumUp Invoices, for example, you can create an invoice line for the commission charge, just as you would for any other item or service.

The unit can be changed to an option in the drop-down menu, or you can even create a custom unit. The amount can be adjusted as necessary. Don’t forget that you can also save certain commission rates, making it easy to add them instantly to invoices. All you have to do is update the Quantity.

If you do include VAT for the commission payment, your invoice will display a subtotal, the VAT rate and VAT amount, and finally the total due. You can email the invoice directly to your employer/customer and even connect an online payment option to make it easy for them to pay you quickly online.