[JMKFunding]

What is the industry practice for those sales reps that report to an office but are paid by commission only or commission primarily (1099 or w2)? Please advise as I see that the tax rate for commission compensation is fairly high.

[MCNetwork]

1099 unless he also gets a salary. Then he can be W2.

[JSL23]

I have actually seen a couple of instances where a commission only Sales Rep had a W2. It's very rare and makes no sense, but can happen.

[JMKFunding]

Can be or should be?

[funding pro]

This is an age old issue that comes up in any industry that employs sales reps or those that have short-term employment. This was pushed to the forefront much more during the great recession as there was a lot of cracking down to help the government collect taxes through the employer rather than the ICs. As the saying goes, if it looks like a duck and it quacks like a duck, its probably an employee (or something like that?). On the one side it is cost effective to have all sales reps as 1099 ICs, but if you were to get investigated/audited the penalties could include fines AND CRIMINAL PENALTIES (yes, but highly unlikely). If you aren't sure, take a look at this to see what you should be doing

IRS Gives 10 Tips on Employees Versus Independent Contractors