Independent Contractors

2284103

We are hiring some independent contractors to do sales for us. They are paid straight commission with no benefits.

Any entertainment expenses they want help with must be pre-approved by the Company. However, we are thinking of giving them a phone allowance up to $75 per month for business related calls. They must submit the detail of their phone bill and indicate which calls were business related. Do we jeopardize the independent contractor status by doing either the entertainment help or the phone allowance?
KathyD

Shadowfax

Sure you do. Any time you treat them more like em/ees, you jeopardize the status. One of the tests is the ability to make a profit or to lose money on the contract. If expenses are reimbursed..well, you get the point. Why do you want to make them independand Ks instead of commissioned sales people? independants are, and should be, scarce as hens teeth.

Don D

Why should they be 'scarce as hen's teeth'? The IRS may suggest that to be true; however, it's often a goal in itself in certain industrial segments.

2284103

Thank you for your reply. The reason we're looking for independent sales reps is really two fold. Our CEO is an old school door knocker (peddler, as he puts it). He believes a person will work harder if they know the money doesn't come in if they don't get out and sell something, and some people are confident enough to enjoy the fact there is no cap on their salary.

The other reason is simply no fringe expense.

Jayhawk

I think we may have your CEO's long lost twin....he is exactly the same way! How are you handling the contract language and complying with the IRS so the contractors don't look like employees?

2284103

If you give me your email address I'll send you some of the wording we're using.

Jayhawk

Thanks so much for offering to forward the wording you are using.

My email is: [email]koliver@hrserase.com[/email]

Jayhawk

We are having the same issue with our company right now. Our company wants to contract with some independent sales people, not give any benefits, etc. We are only paying them commission on sales they make. I am curious as to what your contract looks like? Could you email me a copy with the confidential info taken out? We are struggling with abiding by the IRS rules but still want to maintain some control...

Or if anyone else has a good sales agent contract they could provide.....Thanks!

[email]koliver@hrserase.com[/email]

2284103

We are using a letter agreement or letter of intent. It's broader than a lengthy contract, which can work in either favor based on interpretation. Similar to a gentlemen's agreement, it's short and sweet, right to the point.