View Full Version : Is my business considered a MLM if I have a sales team?

True Self Organics
01-20-2014, 01:11 PM
I've been thinking about hiring a sales team to go out and sell my skincare line. They will be doing all their scheduling from home and just meet with potential buyers. I will be paying them a commission plus bonuses. Now, since I will make money off their sales Does that mean my business is a MLM structure? I just wanted to be prepared for any questions before I start hiring people.


01-21-2014, 01:37 AM
No, it would only be an MLM structure if your sales people were to earn commission from sales made by people they recruited, and then you were to get a (probably smaller) commission from these third-level affiliates' sales too. In other words, you would have a three-tier structure (or more tiers, perhaps, if those new affiliates were to build their own downlines of affiliates). The general definition of MLM is three or more levels including the originator at the top, so your setup would be an ordinary affiliate structure.

01-21-2014, 02:47 AM
Oregano is correct. Your business structure does not reflect an MLM. The source of your business income is based solely on the sales generated by your sales team. There is no mention of having your sales team recruit others to be part of their own sales team, and so on. Since your business does not include the building of downlines and benefiting from the sales of downlines, your business is not an MLM.

01-21-2014, 07:09 AM
Also be careful when it comes to how you define their role in your business. Some people find out in the worst way that what they thought were independent contractors turned out to be employees.

One detail that will blow you out of the water every time is the distinction of whether you are in control or if they (employees) are in control of:

1. Where they perform their work.

2. If they set their schedules, or if you set schedules.

If you control these two factors it will be next to impossible to claim they are independent contractors so do your homework on this part, don't just try to find what you want to hear. Look at other businesses and see how that works for them.

The IRS will decide this according to their tests and formula, not what you and your partners have agreed to.

01-21-2014, 07:31 AM
It sounds like you are just an employer for these people. An MLM or Multi-Level Marketing business is structured in such a way that those who are on top of the tier will get most of the profits since everybody whose under them will work for, sell, buy products which are already marked up at a certain price thus making the topmost individual a chain of income just by doing nothing. All the workers or people under the top person or persons in an MLM business will have all the profits and none of the work. The lower-tiered individuals must recruit hoping to have profits just as the top individual and depending on their sales pitch, can also have some profit but not as much as the person who is at the top.

02-17-2014, 01:40 PM
What you are offering is a direct sales position. They would be independant contractors, they should sign a contract stating that they understand they are responsible for their own taxes and the make commissions from the sale of your product and that there is no salary.

07-18-2014, 11:47 PM
No your business structure will not make your business MLM.It will depends upon the output of your sales team.

07-23-2014, 10:42 PM
No, that doesn't really make your business a MLM kind. Since you are paying them for their success in selling off your products, they are considered as part of your recruitment team. But if you insist that they form downlines, then that's the time you are starting your own MLM business.

12-28-2017, 12:23 PM
Hi Melissa,
Do you onw manufacturing or Distributor of skincare line? For me, thats what i called it Direct selling program. If you are still looking for other source of income. Please let me know. Best regards

01-05-2018, 01:32 AM
Hi Oregano,
Great explanation.Generally, Generally, MLM is a business structure in which a company recruits distributors to sell the company's products directly to the public.

01-05-2018, 01:33 AM
Hi Oregano,
Great explanation.Generally, Generally, MLM is a business structure in which a company recruits distributors to sell the company's products directly to the public.

09-03-2018, 02:24 AM
MLM business is a different thing..