What are the advantages/disadvantages of a draw vs. base pay?
Points regarding Draw vs. Base Pay. • Both have similar impact on taxes and other contributions • Draw can be set to be for a certain period. For example, first 6 months after hire. • It is very hard to change a Base Pay structure to anything else. But a Draw can be set and then cancelled. • Base Pay is guaranteed income. • Draw can be either guaranteed or recoverable against future earnings. Is a draw safe? We want to be sure we have a set income each month. We also want to be sure we don’t have to pay it back if for any reason we are under the amount of the draw for the year. I am confident in my sales but certainly know things can happen and I wouldn’t have anyone to fall back on. From a salesperson’s perspective salary is always safer. But many companies will not provide that option. A draw where you don’t have to pay back should be called a “Guaranteed draw”. It is pretty much negotiable. The amount of the draw per period, the number of periods for the draw (how long the draw will
