1. What is a Draw Against Commission?

A draw against commission is an advance payment made to a salesperson against future commissions. It provides regular income while working on sales, with the advance being deducted from earned commissions later.

2. How the Calculator Works

The calculator uses the formula:

Where:

• Sales Amount — Total value of sales made
• Commission Rate — Percentage commission on sales
• Draw Amount — Advance payment received

Explanation: The calculator first computes gross commission (sales × rate), then subtracts any draw amounts already received to determine the net commission payable.

3. Understanding the Results

Positive Result: Indicates additional commission is owed to the salesperson beyond the draw amount.
Negative Result: Means the salesperson owes money back as their draw exceeded earned commissions.

4. Using the Calculator

Tips: Enter sales amount in dollars, commission rate as a percentage, and draw amount in dollars. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between draw and salary?
A: A draw must be repaid from future commissions, while salary is fixed pay regardless of sales performance.

Q2: Are there different types of draw arrangements?
A: Yes, including recoverable (must be repaid) and non-recoverable (not repaid if commissions don't cover it).

Q3: How often should draw be reconciled?
A: Typically monthly, but depends on the compensation plan. Some reconcile quarterly or annually.

Q4: What if commissions don't cover the draw?
A: Depends on the agreement. Some companies carry the deficit forward, others may require repayment.

Q5: Is draw taxable income?
A: Yes, draws are taxable as wages when paid. Any repayment may be deductible in the year repaid.