In Accounting What Is Commissions?

A commission is a fee that a business pays to a salesperson in exchange for his or her services in either facilitating, supervising, or completing a sale. ... If an employee is receiving a commission, then the company withholds income taxes on the amount of the commission paid to the employee.

Is commissions paid an expense?

Most sales commissions are a selling expense, and so should be reported on the income statement as part of operating expenses. Often, they will appear under the selling, general, and administrative expenses (SG&A) category.

What type of account is commissions paid?

Commissions are compensation for obtaining sales. Hence, sales commissions are a selling expense and will be recorded in general ledger accounts having Sales Commissions Expenses in their title. Sales commissions are considered to be operating expenses and are presented on the income statement as SG&A expenses.