Commission
Commission is a type of payment earned based on performance — usually a percentage of sales, revenue, or successful transactions.
In Filipino MSME terms: ito yung “kita na porsyento” na binabayad kapag may nabenta, na-close na deal, o natapos na service.
Commissions are common in sales, real estate, insurance, freelancing, and agency work.
Why Commission Matters
For Filipino MSMEs, commission-based work is important because it:
- Motivates performance — mas mataas ang kita kapag mas mataas ang benta
- Reduces employer risk — you pay only when results are delivered
- Supports flexible work — ideal for part-time or remote earners
- Helps businesses scale without hiring full-time staff
- Creates income opportunities for agents, resellers, and freelancers
Commission systems are widely used in the Philippines because they reward effort and results.
Common Types of Commission
- Percentage Commission — a fixed percentage of sales (e.g., 10%)
- Tiered Commission — higher rates for higher sales volume
- Flat Commission — fixed amount per sale or transaction
- Residual Commission — recurring earnings from repeat customers
- Override Commission — earned by team leaders from their team’s sales
Example / Context
Example 1 (Real Estate Agent):
You earn 3% of the selling price of a house you successfully sell.
Example 2 (Online Reseller):
You earn ₱50 per item sold through your affiliate link.
Example 3 (Insurance Agent):
You earn a percentage of the client’s premium, plus renewal commissions.
Example 4 (Freelancer):
You earn a commission for every client you refer to a partner service.
Related Terms
FAQs
1. Is commission considered income?
Yes. Commission is taxable income and must be reported to the BIR.
2. Do commission earners need to register with the BIR?
Yes. Agents, freelancers, and resellers earning commissions must register and issue official receipts.
3. Can commission be combined with a salary?
Yes. Many businesses use a salary + commission structure to motivate performance.
4. When is commission paid?
Usually after a sale is completed, a contract is signed, or payment is received — depending on company policy.