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shah821
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Salesperson at used cars dealership work independently sell cars through advertisement etc. Get commission through cash. Am I self employeed or employee of the business?

 
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4 Replies

Salesperson at used cars dealership work independently sell cars through advertisement etc. Get commission through cash. Am I self employeed or employee of the business?

Did you receive a W2?
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shah821
New Member

Salesperson at used cars dealership work independently sell cars through advertisement etc. Get commission through cash. Am I self employeed or employee of the business?

No
shah821
New Member

Salesperson at used cars dealership work independently sell cars through advertisement etc. Get commission through cash. Am I self employeed or employee of the business?

I work on my own schedule. No control by him. I do advertisement and sell for him and get paid after successful sale on flat rate. Not getting any medical or other benefits. No relationship, can leave any time. He paid me cash/cheques only, no w2, no 1099-MISC.

Salesperson at used cars dealership work independently sell cars through advertisement etc. Get commission through cash. Am I self employeed or employee of the business?

Generally, a car salesman would be classified as an employee.  To determine if you are an employee or an independent contractor the IRS has a few criteria:

  • Behavioral Control:  A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised. Behavioral control categories are:

    • Type of instructions given, such as when and where to work, what tools to use or where to purchase supplies and services. Receiving the types of instructions in these examples may indicate a worker is an employee.
    • Degree of instruction, more detailed instructions may indicate that the worker is an employee.  Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.
    • Evaluation systems to measure the details of how the work is done points to an employee. Evaluation systems measuring just the end result point to either an independent contractor or an employee.
    • Training a worker on how to do the job -- or periodic or on-going training about procedures and methods -- is strong evidence that the worker is an employee. Independent contractors ordinarily use their own methods.

    Financial Control: Does the business have a right to direct or control the financial and business aspects of the worker's job? Consider:

    • Significant investment in the equipment the worker uses in working for someone else.
    • Unreimbursed expenses, independent contractors are more likely to incur unreimbursed expenses than employees.
    • Opportunity for profit or loss is often an indicator of an independent contractor.
    • Services available to the market. Independent contractors are generally free to seek out business opportunities.
    • Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission. However, independent contractors are most often paid for the job by a flat fee.

    Relationship: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes:

    • Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status.
    • Benefits. Businesses providing employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay have employees. Businesses generally do not grant these benefits to independent contractors.
    • The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent was to create an employer-employee relationship.
    • Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company.S

If you find that the company you are doing work for has some or all of this type of control over when, where and how you perform your job, then you are an employee.  Based on what you have stated, I have highlighted a few things that may indicate you are an employee.  

Here is a link to an example from the IRS to help you decide if you are an employee https://www.irs.gov/businesses/small-businesses-self-employed/employee-common-law-employee

As an employee you would still be able to deduct all of those business expenses, you will just need to itemize them and they will need to exceed 2% of your AGI to be deductible. 

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