Gretchen Posted January 22, 2006 Share Posted January 22, 2006 Apparently a rep saw my candles in one of my retail accounts and expressed an intrest. I am to the point where I would be ready to have a rep, I just don't know quite how that's handled. I realize they work on commission, but that's all I know. Is the norm a flat commission, a sliding scale, complx or simple? I'm also they'd get a 1099 from me at the end of the year, or maybe quarterly? Any insight, even to issues I may not be aware of, would be greatly appriciated. Gretchen Quote Link to comment Share on other sites More sharing options...
Gretchen Posted January 23, 2006 Author Share Posted January 23, 2006 Ok; close to 24 hours and no replies! No one using a rep? Are there negitives to doing this that haven't occured to me?Gretchen Quote Link to comment Share on other sites More sharing options...
BJ~ Posted January 23, 2006 Share Posted January 23, 2006 Gretchen I will take a stab at it even though I currently do not have reps for my candles since they are only a part time biz for me and I have about all I can do to keep up as it is. DH and I had a wholesale giftware biz for years and had sales reps...I'm assuming this is a wholesale rep. We always did a flat commission but it's really up to you. Most wholesale reps get 10-20% commission so you will have to make sure you have that included in your wholesale price. Candles are so cost intensive that a lower commission would be better. On the other hand, a higher % gives your rep more of an incentive to push your product. Also you will be expected to pay the rep a commission on repeat orders even if they are placed directly with you.We did issue our sales reps a 1099 annually but not everyone does. Our CPA insisted on it even though many of my reps said that their other lines did not issue them. Find a good CPA..it is important. We got audited by the IRS early on and he was worth his weight in gold.The last thing I will say is make sure you have an honest sales rep and one that you genuinely like because you may have a relationship for years to come. We never signed a contract with any rep or sales company...if we didn't like doing business with each other, we were free to part ways and that was the way most other small companies we knew did it. A noncompete contract might not be a bad thing though.Good luck...it's a good thing to have a growing business. Quote Link to comment Share on other sites More sharing options...
Gretchen Posted January 23, 2006 Author Share Posted January 23, 2006 Hey thanks! I do have a good accountant so that's covered. And thanks for the commission range! That's what I was thinking. Anyone else?Gretchen Quote Link to comment Share on other sites More sharing options...
Spellkast Posted January 23, 2006 Share Posted January 23, 2006 I've been looking into it, and MOST, not all, reps are considered independent contractors, which means that they are responsible for paying their own taxes. They are not considered to be your employee legally. So make sure they know this from the onset, and if they'd prefer to be considered an employee, make sure you get yourself a good lawyer who can write up legal documents for the rep to sign, and then YOU'RE responsible for taking taxes out of their paycheck. I personally am looking into having an independent rep who I pay a set commission to. I was thinking about 15% and DEFINITELY factor that into your wholesale cost, as already stated. I actually hired a friend of my cousin's who lives across the state recently to do home parties for me. We came to the agreement that she'll keep 15% of whatever she sells and she's responsible for the taxes on her earnings. But she will not be starting this until I get the proper legal paperwork together. You never know, even with family and friends, what may happen in the future...so make sure you have some good professionals to back you up!!! Good luck and congrats on being successful enough to need a rep!!! Quote Link to comment Share on other sites More sharing options...
Sweet68cam Posted January 23, 2006 Share Posted January 23, 2006 Also a good thing to remember is that they do not have to claim any taxes on anything $600 or less..I know that you would like to make more then this but just a good thing to know for someone who may not sell alot of product, that if they make less then $600 in sales (what they keep) it does not have to be turned in with a 1099. Quote Link to comment Share on other sites More sharing options...
vinnibeast Posted January 24, 2006 Share Posted January 24, 2006 Actually, that's not entirely true. You don't have to issue a 1099 for less than $600, but that doesn't mean you don't have to pay taxes on $600. The government is funny like that. You might be able to skate by without notice, because the gov't would not have been notified (that you made $600) but they expect you to pay taxes on ALL of your income. Quote Link to comment Share on other sites More sharing options...
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