Should I accept commission or basic salary?

My boss if offering to split my salary into salary and commission checks. Will this be any benefit or loss to me? (Will I end up paying more taxes?) He says it will help both of us save some money in taxes but I dont trust him. NYC

16 Answers

Relevance
  • John
    Lv 6
    1 month ago

    The only way he would save money from such a division would be if he illegally treated your commissions as being for an independent contractor.  One cannot choose to be a common law employee or an independent contractor.  Rather, the circumstances determine the status.  Ones pay cannot be split between the two.

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    Salary vs commission doesn't save anyone money on taxes.  Income taxes are based on INCOME.  Both of these are income.  Commissions are based usually on production so you may make more, or you may make less.  You don't give enough information for us to know which is better but if he thinks it will save him money, he thinks you will make less.

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    Save money?  I wonder if he means you can avoid reporting your commissions to the IRS?  Because you can't. Both salary and commissions are reportable, taxable income and they are taxed at the same RATE. That means that if you (example) earn $100K per year and another $100K in commissions, your taxable income is going to be $200K. Not just your salary. If you have a good year, lots of sales, high commissions, your income will be higher--and as you know, the higher your income level the more income tax you will owe. Have a bad year, and you pay less tax. It's pretty simple. 

    The problem comes when sales people do not REPORT commissions as income. This is tax fraud. It will probably get you audited, and you will be dragged through that process--which is harrowing. It's YOUR responsibility to report commissions correctly and accurately. 

    I don't see how paying both salary and commissions saves anyone money unless they UNDERreport them. 

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    If you don't trust him then believe yourself and do not go for the commission. Go for a fixed salary it is better. 

    • Commenter avatarLog in to reply to the answers
  • What do you think of the answers? You can sign in to give your opinion on the answer.
  • 1 month ago

    He thinks he can pay you the commission via 1099, and he cannot.  Keep it all as one check, better for you.  

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    If you don't KNOW you can make more on commission than salary, that is your answer.

    Note: For income tax purposes, salary and commission are EXACTLY THE SAME.

    • Commenter avatarLog in to reply to the answers
  • Anonymous
    1 month ago

    I am self employed.

    Salary, and commission is something I would get if work was offered to me. I don't think it's bad to work based on salary, and commission.

    For me it's a benefit because I would have more time to produce something, so I would get paid based on what I produce instead of the time it takes me to produce something. What I produce could take a lot of time. If I have to continue working on whatever I produce after that I finished producing something then I would be earning salary.

    Commission is a 1 time deal thing with a customer, so what I mean about that is that you would earn a certain amount of money based on whatever you do, for a customer. Maybe you might get a lot of time, or a short amount of time to do something, for a customer, so you would get paid in accordance with what you do, for a customer. If you don't do anything, for a customer then you won't earn money this way!

    Hypothetically speaking lets say I make something, and then I would sell what I make. If I sell whatever I make then I will get all of the money, for whatever I sold since I am self employed, but in your case you probably won't get all of the money, for whatever you sell, and what I am talking about refers to commission.

    Salary would be if you have ongoing work, so you would be able to ask, for an hourly rate.

    I think if you were to get less money then you most likely would have to pay less taxes, and I don't think the method of you getting paid relates to how much taxes you have to pay.

    • Commenter avatarLog in to reply to the answers
  • Anonymous
    1 month ago

    < My boss if offering to split my salary into salary and commission checks. >

     

    Depends on what the offer is and how good at selling you are or think you are.  Could be beneficial, might not be.  Not nearly enough information to say yes or no.

     

    < He says it will help both of us save some money in taxes >

     

    That sounds like BS.  Have him show you the numbers.

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    ☑I would recommend that you stay salaried.

    ☑Therefore,  you will have a dependable amount of money arriving in your account each and every week.

    ☑Whereas if you get paid by commissions, it'll be great if you get a $70K commision, but if it doesn't happen til 5 months from now you're screwed.

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    That doesn't make sense because commissions are taxable just as salary is.  It sounds like he wants to pay you under the table for part of your income.  Great - you're working for a criminal.

    • Commenter avatarLog in to reply to the answers
Still have questions? Get answers by asking now.