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Hiring marketers paid by commission

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NoSheetSherlock

Junior Member
I am in Washington State and recently started a digital service business for which I would like to hire marketers to sell my service by internet marketing, offline marketing, or cold calling but would not like to take them on as an employee per-se, but rather pay them solely commission. I don't want to have to take care of their taxes or track their pay, etc. Is this at all possible? And what are my requirements and legal obligations to do something like this?
 


TheGeekess

Keeper of the Kraken
I am in Washington State and recently started a digital service business for which I would like to hire marketers to sell my service by internet marketing, offline marketing, or cold calling but would not like to take them on as an employee per-se, but rather pay them solely commission. I don't want to have to take care of their taxes or track their pay, etc. Is this at all possible? And what are my requirements and legal obligations to do something like this?
What did your accountant say when you asked him/her this question? :cool:
 

Antigone*

Senior Member
I am in Washington State and recently started a digital service business for which I would like to hire marketers to sell my service by internet marketing, offline marketing, or cold calling but would not like to take them on as an employee per-se, but rather pay them solely commission. I don't want to have to take care of their taxes or track their pay, etc. Is this at all possible? And what are my requirements and legal obligations to do something like this?
You will need to familiarize yourself with the requirements for an independent contractor.
 

LdiJ

Senior Member
I dont have an accountant which would be why I am asking this here.
If they don't work exclusively for you, and are in the business of being independent sales reps you most likely would be legally sound to pay them as independent contractors. HOWEVER...you would still have to track their pay for two reasons. One, you won't be able to deduct it from your own taxes as an expense unless you track it and two, you will have to issue them a 1099-Misc at the end of the year.
 

cbg

I'm a Northern Girl
OUTSIDE sales can legally be paid on commission only. INSIDE sales cannot.
 

cbg

I'm a Northern Girl
And you and I both know the odds that these marketers will actually qualifies as IC's.
 

LdiJ

Senior Member
What if I were to call them affiliates rather then ICs or employees?
Don't play games with semantics. They are either outside independent sales reps and therefore independent contractors and you have to track what you pay them and issue 1099-MISC's or they are inside sales, employees and you have to withhold taxes and issue a W2.

In both cases you have to track what you pay them. There is nothing that is going to get you around that.
 

NoSheetSherlock

Junior Member
All I am saying is that I want little to no control over how they make a sale but I will pay them a commission per sale they make. I guess the difference would be whether they simply refer a customer to me or actually make the sale themselves. So it comes down to what exactly I want them to do. I may decide to simply have affiliates for the time being. I appreciate the advice for ICs though. Before asking this question I was not aware that that is what they were called so I did not know how to research the laws regarding it.
 
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cbg

I'm a Northern Girl
Calling them affiliates is not going to change a thing. There is no classification under the FLSA called "affiliate". There are only IC's and employees - they have to be one or the other. There is no other option. You can call them affiliates; you can call them Gary; you can call them toasters. Doesn't change the fact that they ARE either IC's or employees.

There are distinct legal definitions for both IC and employee. Employee is the default. They are employees until you are able to prove, using the legal definition of IC, that they are not.
 

LdiJ

Senior Member
All I am saying is that I want little to no control over how they make a sale but I will pay them a commission per sale they make. I guess the difference would be whether they simply refer a customer to me or actually make the sale themselves. So it comes down to what exactly I want them to do. I may decide to simply have affiliates for the time being. I appreciate the advice for ICs though. Before asking this question I was not aware that that is what they were called so I did not know how to research the laws regarding it.
Even affiliates are independent contractors and you have to track their earnings and issue 1099-MISC's. You should not be going into business for yourself if you cannot grasp basic concepts that are being explained to you.
 

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