One method for expanding your sales without incurring the overhead of full-time employees is to hire independent sales representatives. Advantages of hiring independent sales contractors include avoiding the payment of employee benefits and other overhead costs, such as office space. Before you consider hiring independent contractors to sell your products or services, make sure you have covered critical points in a sales commission agreement you require them to sign.
The agreement should clearly state that it is at the independent contractor's discretion about how he performs his work. Work hours and work location will not be specified by the company. In addition, the agreement should state that independent contractor will not receive any employee benefits, such as sick pay, health care and vacation.
The contractor shall retain ownership of all of its customers or clients. The contractor, however, has no rights to approach customers of the company he has contracted to work with.
Taxes and Other Licenses
The contractor is solely responsible for the filing and payment of local, state and federal income taxes and other related taxes and fees, such as Social Security, worker's compensation, self-employment taxes and FICA. She is also totally responsible for filing any required documents and for paying all filing fees. The company is not responsible for and will not assure compliance with any of the aforementioned filings and fees.
The conditions for termination of the contractor should be included in the agreement. Such conditions could include the death of the contractor, any failure by the contractor to make payments back to the company who hired him when such payments are due, and any gross negligence on the part of the contractor, such as misrepresenting the company or his relationship with the company as solely an independent contractor.
Should the contractor be terminated, what and how the contractor will be paid should be specified. For example, will the contractor be paid commissions on orders taken to be delivered at a future date?
The contractor must notify the company contracting with him of any discrepancies or other commission claims within 30 days of the period where such payment was due; otherwise, the company will not be responsible for considering payment of any claims.
If an attorney is required to interpret any disputes or enforce any terms of the agreement, the prevailing entity will be required to pay those fees.
The agreement prepared is the only basis for the agreement with the independent contractor, and no other document or communications, such as verbal, govern the terms to which the independent contractor is bound.
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