Why the written terms matter more than the pitch
Commission disputes almost never come from bad intent at the start. They come from things nobody wrote down: whether a client who bought six months after an introduction still counts, whether a discount reduces the commission, what happens to monthly revenue after the rep leaves. In a salaried job, those gaps are absorbed by payroll. In commission-only work, they are the whole income.
That is why an independent sales rep agreement is worth reading slowly, even when it comes from a company you like. Templates and PDF downloads are a reasonable starting point for understanding structure, but they are generic by design. The terms that protect you are the specific ones: definitions, numbers and timelines that match how this company actually sells.
This page is general information, not legal advice. For anything significant, have an attorney in your state review the agreement before you sign.
The clauses to find and understand
Whether you are reviewing an independent sales representative contract template or a company's own commission based sales contract, look for each of these. If one is missing, ask for it in writing.
- Independent contractor status: confirms you are not an employee, you control your methods and schedule, and you are responsible for your own taxes.
- Commission basis: exactly what the percentage applies to, such as list price, net price, collected revenue or a floor price, and how discounts change it.
- Attribution: how a client is credited to you, how long that credit lasts and how conflicts are resolved when two people touch the same account.
- Payment timing: when commission is earned, when it is paid, any minimum balance and how you will see the status of each deal.
- Recurring revenue: whether you are paid on monthly fees for as long as the client pays, or only on the first payment.
- Chargebacks and refunds: what happens to commission if a client cancels or does not pay.
- Termination: notice periods and, critically, what happens to commission on open deals and existing accounts after the agreement ends.
- Exclusivity, non-compete and non-solicitation: whether you can carry other lines and what restrictions apply after you leave.
- Compliance and disclosure: any obligations to disclose compensation to clients and to follow rules specific to your profession.
Red flags in a commission only sales rep agreement
Some terms should stop you, or at least slow you down until you get a clear explanation. None of these are automatically illegal, but each one shifts risk onto you in ways a fair partner rarely needs.
- A fee to join, a required starter kit, inventory purchases or paid training as a condition of earning.
- Commission tied mainly to recruiting other reps rather than to sales to real clients.
- Vague attribution language such as at the company's discretion, with no way for you to see your own referrals.
- A right for the company to change commission rates at any time without notice.
- Commission that stops the day the agreement ends, even on deals you closed and accounts still paying.
- Broad non-compete clauses that would restrict your main job or practice.
- Control terms that look like employment, such as fixed hours, mandatory meetings and scripts, while you are paid on a 1099.
How contractor status is judged, regardless of the wording
An agreement that says independent contractor helps, but the IRS's independent contractor guidance looks at the substance of the relationship, generally grouped into behavioral control, financial control and the relationship of the parties. State laws can apply different tests. If the company's day-to-day behavior contradicts the contract, the behavior can matter more. An attorney or tax professional can help you assess your own facts.
Questions to put in writing before you share a contact
Reading an agreement is half the job. The other half is asking the company to answer, in writing, the scenarios the contract does not address. A short email thread is enough, and it becomes part of your record if a question ever comes up.
Pick the situations most likely to happen in your world. If you refer business owners, ask what happens when an owner you introduced brings in a second company they own. If you work with larger accounts, ask how credit is handled when a deal is sourced by you but negotiated over several months by someone else. If the company sells subscriptions, ask whether a client who pauses and restarts still counts as yours.
Then keep a simple log of every referral you make: the date, the contact, the offer and how you introduced them. Good companies track attribution for you, and you should be able to see it, but your own notes cost nothing and settle most questions in minutes. They also help your tax adviser at year end, when your 1099-NEC arrives and you want to reconcile it against what you expected.
- Ask how long a referral stays attributed to you if the client buys later.
- Ask whether upgrades, renewals and add-on purchases carry commission.
- Ask who you contact if a payment looks wrong, and how quickly it is reviewed.
Random Income's terms, summarized
We think a partner should be able to read our commission terms in a minute. This is the summary; read the full written Strategic Partner terms before you refer anyone, and ask us if any line is unclear.
Strategic Partners are 1099 independent contractors, never employees. There is no fee to join, no inventory, no quota, no territory and no recruiting pyramid; you earn only on sales to clients. You refer, and in-house Random Income reps handle discovery, proposals, negotiation, delivery and support.
- Stack products: a percentage of retail calculated on redline, the price floor. 20% when the client buys entirely online untouched, 12% when our in-house rep works the deal, pro-rata to redline if we negotiate the price.
- Fast Start ($32,500 a month) and the Joint Venture build ($18,200 a month): your percentage of the monthly SaaS fee actually collected, with no equity, success-fee commission or other upside.
- Investor-funded deals: a one-time $5,000 referral fee, nothing else.
- Business-posted offers: 50% of what the business pays Random Income.
- Attribution: every click, form and quote request on your referrals is visible in your back office.
- Payment: on the 21st of the month after Random Income is paid, once your balance reaches $500, by Stripe or PayPal, after ID upload and a W-9. We issue a 1099-NEC.