Commission-Only Job: Self-Employed?

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Hello everyone,

This kitten has been job-hunting since last June, when I lost my beloved library job (due to reorganization). I've actually had a job since October, tutoring kids after school, but the program (and thus the job) ends this week.

Enter Craigslist, which I've been checking daily all this time. An actual job in my area showed up there; I applied, and I have an interview about 7 hours from now.

It's as a "Sales Rep" for a small web development company. In learning more about it, the job sounds a lot more like customer service than sales.

I'd be working from home, making and taking all the calls related to the business, doing project plans, tech support, follow-up, and working with the programmers and owner.

I'd be self-employed. I'm not wild about the idea, frankly, given the taxes and extensive bookkeeping involved, but it IS a job.

I'm also not crazy about the "always on" plan. I'd have to be tied to a cell phone/laptop pretty much all the time. Then again, I'm hardly in a position to be fussy right now, and it's better than Wal-Mart.

When I meet with the owner this evening, I need to be able to negotiate what percentage of profit/net income I'd want as commission. I've NO idea. He says the company's gross sales are around $100K/yearly right now.

I'd probably need to buy a new cell phone, as mine is truly ancient. I might be able to borrow one of their old laptops; I do have a good home computer & broadband. I'd also need caller ID & call forwarding for the phone. Just thinking, here, but these would be up-front expenses for me.

Ideas on what % to request? Comments? Suggestions?

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Type: Discussion • Score: 12 • Views: 11,335 • Replies: 60

It depends on how your wages are reported to the Social Security Administration. If you received a Form W2 from your employer, you are not considered to be self-employed. If you receive a Form 1099, you would likely be considered to be self-employed (or at least, you would be considered to be an independent contractor). This is something of which you should be informed before hand by your prospective employer.

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Whoa . . . wait a minute, i just read that again . . . this "company" is making $100,000 a year ? ! ? ! ? That's not a company, that's an individual. My bullshit detector is ringing madly. You'd be well advised to check this out very thoroughly

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GENERALLY - You are probably going to be paid commission on your billable hours or sales or whatever they use as commisionable sales. It can range from 5 to 20% - AND you usually have to wait until the invoice is paid to get your commission. Takes about 6 months to get the "flow" working. Expect to pay up front for mileage, phone bills, etc.

Be sure you find out everything about the structure and talk to another like sales person to find out the real scoop.

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If this clown has $100,000 a year in gross sales, i sincerely doubt that there are any other sales people.

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By the way, if BK him/herself made $100,000 in sales in one year, at the outside, with a 20% commission, that would be $20,000. There are 2080 hours in a standard 52 week, 40 hour/week year. So that would not even amount to $10.00 an hour if one were being paid hourly.

If it looks like bullshit, and it smells like bullshit . . .

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@Setanta,

Setanta wrote:

Whoa . . . wait a minute, i just read that again . . . this "company" is making $100,000 a year ? ! ? ! ? That's not a company, that's an individual. My bullshit detector is ringing madly. You'd be well advised to check this out very thoroughly

I agree to check it out like Setanta suggested, but I do know that small business' can and do make $100,000 a year.

Find out what type of business it is as far as sole proprietor, partnership, corp-subchapter s, LLC etc....
Also, ask to see the "books" and if everything is legit, then I would also ask for a % of the company's yearly growth in income.

Good luck and I hope it works out for you.

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@Setanta,

Forgot to say, yes it would be a Form 1099 (NO Like!).

And yes, it's like a micro-business at $100K (and that's Gross Sales!) yearly.

Good idea to ask to see some books tonight; I hadn't thought of that. At least a balance sheet & income statement, right? He should be able to email me them.

I'm sure there are no other salespeople, just the owner. And I think there's only one programmer, though they may have someone else sort of on-call.

The owner says he's sending out 800 "generic proposals" to possible customers this week. I haven't seen this proposal yet.

He does say the commission happen immediately, on his $33K in Accts Receivables, on 14 accounts. I wonder if he'd want me to try and collect on those accounts? Yuck!

I'm having doubts, but I'll certainly meet with him. At least he has an 800 number!

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Firstly:
1) calculate the total costs to get this off the ground
2) estimate how many hours you will be putting in per week
3) figure out what you think you are worth under these conditions
4) find out if you are likely to get that as a wage

Secondly:
1) double your estimate for costs
2) half your estimate for income

Thirdly:
Diligently continue to find employment with more clearly defined parameters

Fourthly:
Find out which jobs in your area are most in demand and educate yourself to meet those job requirements

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@Chumly,

Smart and succinct; thanks, Chum.

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@BorisKitten,

BorisKitten wrote:

At least a balance sheet & income statement, right? He should be able to email me them.

It depends on the type of company on whether there is a balance sheet. I don't keep one on ours because I am not required to per the IRS and I don't find it necessary. I do have an income and expense statement and also a Federal ID #.

If this company is going to issue a 1099, then they either have to use a Federal ID # (business one) or their SSN. They should definitely have an income and expense statement imo. If this person files a Schedule C, then I would ask to see that and there are ways to verify that it is the one filed with the IRS, not one that is made up. There are also ways to verify that it is the person's real SSN. Same is true for a Federal ID #.

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@BorisKitten,

And of course all the very best in your endeavors!

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@BorisKitten,

Setanta's arithmetic works out. Add in the self employment tax and your $10.00/hour (maybe) drops to $9.52. Walmart is starting to look better all the time if they are hiring.

I wonder what you have to do to earn the commission, and what is meant by customer service. The description makes it sound like a pretty technical job. Are you going to be paid for training. You are NOT going to pay this guy for any training or materials. NOT.

Actually, if the business and and the job are real, I don't think he is going to be in business for long. Gross sales at 100,000.00 and 33% is tied up in accounts receivable? That's a lot of receivables on gross sales.

Okay, I'm negative on the deal. Go talk with him, but in do way do you pay for training, materials, or anything else.

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What about Medical/Dental coverage?

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@roger,

You know, I was kind of surprised by that, too, the $100K gross sales VS $33K receivables. Isn't that an awful lot in receivables? Seems like there must be something wrong there.

Owner also said he hasn't done anything with this business for the past 2 months... He's been working 9-5 for that time. I wonder if he's even answered phone calls?

And actually I thought self-employment tax would take up a huge chunk of any income I might make: after all I'd be paying Medicare & Social Security, would I not, with a 1099?

1 Reply

@roger,

Oh, forgot to mention, you're darned straight I'm not paying for any materials!

He thinks he can give me a laptop to use, since I don't have one that works. He also says he's been writing a manual for this position.

And yeah, it is technical, but that's my field. I've done network administration, Info Center, computer classes, systems and data analysis, operations, and technical writing for, cripes, forever.

My skills are outdated now since no tech folk seem to work part-time, nor are there any tech jobs in this (rural FL) area.

Jeez I'm just nattering here.

This all seemed much more positive... yesterday!

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@Heeven,

I wasn't even going to ask about Medical/Dental. Usually with a 1099 you get Nothing other than the money, 1/3rd of which will go to the government in taxes.

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@TTH,

Ah, some very good points there, TTH! Just the sort of info I was looking for.

Heck, I think _I_ would have to file a Schedule C next year, wouldn't I, with a 1099? That particular tax form is like a Tax-Kiss-of-Death, in my experience. I hates it.

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BK,

My company has worked with an organization that is based in FL. They contract with companies to answer their phone calls. The people answering the phones get paid on a per call basis, work from home and are considered independent consultants very much like the job you have listed above, with the exception that you get paid just for 'taking' calls and you don't have to sell anything.

I'll PM you the info.

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Oh, yeah, and Another thing I didn't like: yesterday I checked his site, which offers web development services, y'know.

So I click on his site's "Portfolio" tab, then click on the first site listed, as an example of his work.

Guess what? There's a big fat coding error right at the top of the page. It's supposed to display a video, but has pasted HTML on top of the video. It looks bad.

Some portfolio. I emailed him about it; it's still there today. He could at least move that "work sample" to the bottom of the Portfolio page. How hard would that be?

Anyway I'm feeling a bit crabby today.

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Commission-Only Job: Self-Employed?

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