We are a Canadian company looking to hire commission based sales reps out of the US.. The sales reps would represent the company name to sell web based digital services. Checks would be made out to our company name and we would mail out their commissions.

They would be independent contractors responsible for filing their own income tax

What forms would they be required to fill if any ?

Thanks

Patrick

Canadian company hiring independant sales contractors in the US
We are a Canadian company looking to hire commission based sales reps out of the US.. The sales reps would represent the company name to sell web based digital services. Checks would be made out to our company name and we would mail out their commissions.

They would be independent contractors responsible for filing their own income tax========>Correct; they need to file Sch C/SE and also need to pay self-employment taxes and quarterly estimated taxes to the IRS/ their states as 1099 independent contractors.They are not an independent contractor if they perform services that can be controlled by an ER,i.e., what will be done and how it will be done. This applies even if they are given freedom of action. What matters is that the ER , the company, has the legal right to control the details of how the services are performed.However, aslongas an employer-employee relationship exists regardless of what the relationship is called,they are not an independent contractors and their earnings are generally not subject to Self-Employment Tax/ estimated taxes.
However, your earnings as an employee may be subject to US FICA (Social Security tax ) and income tax withholding for both irs/ state.

What forms would they be required to fill if any ?====>> As U.S. citizens or residents, they must file the U.S. tax return if they meet the filing requirements.They must report their world-wide income even the income on which they paid the taxes in the foreign country. If their ER pays tax(es) on their income to CRA, then they can get credit for the taxes paid in Canada; they need to file Form 1116 to claim foreign tax credit on 1040 line 47 or itemize it on Sch A line 8 and on their state returns too. The need to file federal form 1040 and their own state return forms to report the foreign income that they earn from Canadian firm.

Thanks for your response, very much appreciated

I have question in regards to the following statement: "They are not an independent contractor if they perform services that can be controlled by an ER,i.e., what will be done and how it will be done."

Maybe you can help me with some clarification in regards to what constitutes the difference between an independent contractor vs employee status.

Here is an outline on the current plans of operation: Could the following be considered as independent contractor status or would this be more of a directive of "what will be done and how it will be done" scenario thus constituting more of an employment status ?

The rep will be trained on what the product is and how it works: They will be provided with business card and brochure templates under our company name, however they will be responsible for the printing and all expenses incurred for these and any materials

They will have flexibility in regards to price range on what they charge the client for the product given that there will be a minimum base price that our company will accept.

They will not be required to work a minimum amount of hours per week, this will be at their sole discretion

As mentioned in the original post , checks will be made out to our company and we will mail out the commissions to them


I understand that this may be more generic area , but any insight on the question would be greatly appreciated

Thanks

Patrick