W2 vs 1099 Sales: What's the Best Fit for You?

W2 vs 1099 Sales: What's the Best Fit For You

Not sure whether W2 or 1099 sales is right for you? Customodal has options for both. Let's explore them!

W2 Sales (Employee Model)

Pros:

1. Steady Base Pay: W2 employees receive a stable salary or hourly wage, offering financial security. The provided chart illustrates how Customodal's W2 Account Executives benefit from a spin-up base and commission during the initial months, ensuring minimum earnings even in slow periods.
2. Employee Benefits: Employees are often eligible for benefits such as health benefits, retirement plans (e.g., 401(k) at Customodal), paid time off, and disability insurance. This provides peace of mind and a safety net.
3. Company Support & Resources: W2 employees typically receive more direct support from the company, such as onboarding, sales training, mentorship, and marketing resources. Customodal’s onboarding process includes spin-up phases, target setting, and a review system to ensure growth.
4. Career Growth: Customodal provides career growth opportunities with performance-based reviews and improvement plans, helping W2 employees who may struggle initially.

Cons:

1. Lower Commission Rates: W2 employees often receive lower commission percentages compared to 1099 contractors. In Customodal’s model, commission for W2 employees starts at 15% but increases to 25% with experience.
2. Less Flexibility: W2 employees usually have more structured work environments and schedules, which can limit flexibility in terms of when and where work is completed.
3. Company-Set Targets: Customodal's W2 model holds employees accountable to monthly GM targets, with performance improvement plans in place for those not meeting targets.

1099 Sales (Independent Contractor Model)

Pros:

1. Higher Commission Rates: 1099 contractors typically earn higher commission percentages. In Customodal's 1099 model, commission starts at 50% and reduces slightly to 35% as sales increase, offering much higher earning potential for top performers.
2. Flexibility: 1099 contractors have more freedom to set their own schedules and work independently. This can be appealing to individuals who value autonomy and work-life balance.
3. No Salary Caps: As a contractor, there is no base salary, but the earning potential is much higher. Customodal’s model shows that high performers can earn substantial commissions as their Gross Margin (GM) grows.

Cons:

1. No Employee Benefits: 1099 contractors are responsible for their own benefits like health benefits, retirement plans, and paid time off. They don’t receive additional perks like employees at Customodal (e.g., health reimbursement plan, 401(k)).
2. Inconsistent Pay: Without a base salary, income is entirely commission-based, leading to inconsistent earnings, especially during early stages or slower sales periods. Contractors at Customodal are more dependent on their performance from the very beginning.
3. Tax Responsibility: 1099 contractors must manage their own taxes, which can be more complex and time-consuming compared to W2 employees where taxes are automatically withheld.
4. Must Form an LLC: Customodal will only contract with an LLC and not an individual.

How Customodal Supports Career Growth for Both Models

1. Structured Onboarding & Training: Whether you’re a W2 employee or a 1099 contractor, Customodal’s onboarding process sets you up for success by providing essential sales training, mentorship, and goal-setting.
2. Mentorship & Guidance: Customodal emphasizes mentorship for W2 employees who may need additional support in meeting targets. Contractors also receive guidance, especially during their initial growth phase.
3. Performance-Based Earnings: Both models at Customodal allow for performance-based earnings with potential for substantial growth. For W2 employees, commission increases with GM progression, and for 1099 contractors, higher commission percentages provide strong earning potential.
4. Growth Opportunities: W2 employees are offered promotions and bonuses based on performance, while 1099 contractors can maximize their independence and earnings as they build their book of business. Customodal provides the infrastructure for both career paths to thrive.

Choosing between W2 and 1099 sales depends on your preferences for financial stability, flexibility, and long-term growth. If you’re looking for career development with a strong support system, Customodal’s model offers clear paths for success in logistics sales, regardless of the option you choose.