An independent sales representative works with a company under a contractor agreement. He's not an employee, but rather a self-employed person who sells the company's products for a share of the profit. Independent sales lacks the certainty of a regular wage, but has a potential for earnings far beyond what a regular employee makes.
Not a Salary
The first thing to understand about an independent sales income is that it's not actually a salary. The overwhelming majority of independent sales agents work on commission only. If they make sales, they get paid; if not, they don't. This is a very different arrangement from the regular paycheck a salaried employee receives just for showing up.
Income ranges for sales agents vary from industry to industry. For example, the U.S. Bureau of Labor Statistics reports wholesale and advertising sales representatives made a median income of $73,710 in 2010. The median income for insurance agents was $46,770 in the same year. In retail that year, the average salesperson made $20,670.
Independent sales agents rarely receive health benefits, vacation pay or other side compensation associated with regular employment. They are instead expected to pay themselves those benefits out of their increased income. One benefit largely unique to independent sales is the concept of residual income. If a salesman makes a deal that pays multiple invoices over time, he generally receives a commission on all subsequent sales. Residual commissions can add up to very high income over the course of several years in the industry.
One final implication of an independent sales agent's pay arrangement applies to taxes. A salaried employee pays each month toward Social Security and Medicare, and his employer matches that payment. As both employee and employer, the independent contractor is responsible for both halves of that payment. This can mean he pays as much as 30 percent of his gross income in taxes. However, he is also permitted to write off many of his expenses to a sole proprietor business, which mitigates this tax burden.