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The Hourly Intern & The Southwestern Advantage Sales Intern

The Hourly Intern & The Southwestern Advantage Sales Intern

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Guaranteed hourly pay is a great fit for many people. It frustrates others to feel that they outwork their co-workers only to be paid the same rate. They would rather be paid according to their effort. In this article, we compare how savings can work between an hourly college intern (W-2) versus what a first year Southwestern Advantage sales intern (1099-MISC) can save. Sometimes this money & tax stuff gets dense. We'll try to keep this readable.
$20 Bills

Let’s say you intern at a local firm. This firm pays you a very generous $20 per hour and you work 35 hours each week. Your gross pay will be $700 ($20 X 35) per week. You’re happy, your friends envy you, your parents are proud, life’s great! But then, Uncle Sam immediately shows up to take his share: Social Security tax, Medicare tax, and Income tax. (State income tax varies; a few lucky states don’t have this tax.)

Net Pay
Your net pay is what’s actually on your paycheck once taxes are taken out. If you make $700 one week, your taxes may look something like this, depending on the state:

 

Federal income tax
11 % of gross pay
$700 x .11
= $77.00
State income tax*
4 % of gross pay
$700 x .04
= $28.00
Social Security tax
6.2 % of gross pay
$700 x .062
= $43.40
Medicare tax
1.45 % of gross pay
$700 x .0145
= $10.15
Total taxes
$158.55
 
$700 – $158.55 = $541.45 on the paycheck
 
x12 week summer: $6,497.40
Expenses

Expenses

Oh right, it costs money to live life. Let’s be very conservative and assume you only spend a combined $100 per week on food, rent, transportation, and other expenses. After 12 weeks, you would have spent a minimum of $1200.


Your in-hand savings:  $5,297.40

Now, let’s look at a first year Southwestern Advantage sales intern (1099-MISC)

For context, in 2019, the #100 ranked First Year SWA Salesperson made a gross pre-tax profit of $8,827 which historically in our program is pretty standard for that ranking.
 
Not high, not low, very normal.
 
How might this sort out with 1099-MISC tax status? First, you are not taxed immediately on your gross-profit. You are able to deduct your business expenses.
 
Let’s take that $8,827 as our gross profit for this example. Let’s pretend that this individual was the spendy-type who did not keep their professional expenses low. Let’s say they went a little overboard and spent $2,500 during the summer (dude, too much).
 
The amount they’re taxed on is now at $6,327.

Next, you get to deduct what’s called a per-diem rate. Uncle Sam offers a variety of daily deductions for small business owners to help them better-afford food, travel, etc. Let’s use a common per-diem rate of $20/day. After 12 weeks, that’s $1,680.

Now, this doesn’t decrease our in-hand money (you already deducted your expenses), this decreases the amount that’s taxed, which brings us down further to $4,647.

Mileage
Every mile driven earns you 58¢ per mile in deductions. Let’s say you drove 700 miles each week of the summer, for 8,400 total miles. You pick: deduct about $750 in total gas expenses or deduct $4,647 in mileage (pick mileage).

Good news, there are even more deductions you can take! But instead, let’s stop there. Why? Because your deductions have brought you down to $0 that Uncle Sam will now tax you on.

What if you don’t make it down to $0? You can take advantage of the Qualified Business Income Deduction. QBID says that if you end up above 0 after you’ve exhausted all of your deductions, you can chop 20% more off that number before taxes kick in. Compare that to the $20/35 job with $158.55 taken out weekly for taxes.

Remember that $750 you spent on gas, though? That dropped your in-hand money from $6,327 to $5,577. So, in this hypothetical situation, you as an SWA sales intern finished the summer having made $8,827 total, but after expenses, ending up with $5,577 in-hand. The $20/35 job had $5,297.40 in-hand.


These numbers are kinda close. So…
Consider This
  • How likely is it to find a $20 per hour 35 hours per week summer job? Possible, sure; but probable? Is it more realistic to earn $15/hr and work fewer than 30 hours per week? 
$15 x 30 x 12 weeks = $5400 – taxes = $4,177
 
  • Say you land a $15/30 job, how likely is it that you’ll only spend $100 per week? Is it more realistic that you’ll spend ~$200/wk for 12 weeks?  
$4,177 – $2,400 = $1,777 saved
 
Consider what actually ends up in your pocket – the amount you save.
 
Hypothetical hourly intern: $1,777
 
Hypothetical SWA sales intern: $5,577
Lastly, cut $1,000 cash from the SWA sales intern’s savings, and give a $1,000 cash bonus to the hourly intern. The SWA salesperson has still saved 80% more. This student is in a far better position to afford school, life, and start a Roth IRA. This is still before prize/contest money and incentive trips that are available.
 
Southwestern Advantage interns understand that, in sales, working 3x as hard can save them 3x or more by the end of their summer. 
 
So, do you think out of all the other rookies, you could finish in the top 100?

The above content was made possible by Southwestern Tax Services – a full-service tax firm within the Southwestern Family of Companies.

Learn more about average student profitability on our Disclosure page.

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Categories
Programs

College Internships & Becoming a Great Job Candidate

College Internships & Becoming a Great Job Candidate

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The Southwestern Advantage Sales Intern
College Internships & Becoming a Great Job Candidate

As a college student, you know internships are important. You know there are many to choose from. So, how will you find the right one for you? How will you become the right person for them? How will your internship springboard you into a fulfilling post-grad career?

Let’s start here…
 

3 Qualities of a Great Internship

Challenge

You may have expected “experience” to be first on the list, so why would challenge rank higher? Ask yourself this – wouldn’t the more challenging internships offer you better experience by default? Wouldn’t a future employer be more interested in your history of taking on challenges? The fact is, dealing with challenge is synonymous with meaningful experience. The bigger the challenges the better the experience. Don’t be fooled by that “internship in the fashion industry” where the day-to-day responsibility is to fold t-shirts at the mall, or the glamorous experience interning in Manhattan on Wall Street where the day-to-day responsibility is to pour coffee and staple papers.

Leadership

Networking” has become a tired cliche. It causes too many students to think that the execs at the firm will be inviting them to happy hour and to sit in the boardroom. Anything’s possible, but is it probable? Here’s the reality: Executives invest time in executives, not interns. Ask any potential program to show you its leadership capacity – specifically how they help their interns grow professionally. If you’re not learning and growing, ask yourself – is it really an internship or is it just a job?

Money

Yes, money – that thing you need to get through life. If you consider yourself to be a person that adds value, find an opportunity that pays you based on the value that you add. If your heart is in volunteer work, fantastic! However, bills still exist. Spend your college summers earning and saving as much as possible, not accumulating debt.

What can you do to become a great job candidate?

In addition to all the experienced professionals interviewing, 1.8 million college grads will enter the job market this year. This is why employers will spend an average of 6 seconds reviewing your resume to determine if they want to interview you or not. Their primary interest is your track record.
 
A smart high school student does what it takes between 9th-12th grade to prove they should be admitted to a great university. A smart university student does what it takes as an undergrad to prove they’re ready for a great career. Picture yourself as an employer in a competitive industry. Who would you rather spend time interviewing – college graduates with the type of work experience that high schoolers are known to have or graduates that have results-oriented experience?

Don’t rush your unemployment

What’s the most opportune time of year that a university student has to gain work experience for a future career search?
Summer, of course. Again, picture yourself as an employer. Would you seek out candidates that graduated “on-time” or “early” or would you seek out candidates with a track record of skills and expertise? How does an early or on-time graduate with little to no experience expect to compete with a 28 year old that has 5 years of experience? Employers do not care if it takes you 6 years to graduate; they want the best candidates. Use your summers wisely, and do the hard things that other undergrads are not willing to do.
Your degree will serve as fantastic theory and foundational knowledge, but when other job candidates have a bachelors or masters degree too, it takes more to stand out. The fact is, each employer will have their own way of training on-the-job technical skills. It’s the communication and interpersonal (soft) skills that are always in low supply and high demand. It’s these sales skills that help teams, organizations, or businesses grow the fastest. The engineer, the doctor, the accountant, or the environmentalist that advances in their career is the one with sales skills. After all, sales skills are simply communication skills.
Hard Skills vs Soft Skills

What are communication skills specifically?

A good employer can quickly spot a resume filled with fluff. During an interview process, top employers with the most sought-after jobs will ask candidates to give specific, detailed, results-oriented examples of how they have demonstrated their soft skills (sales skills) in these areas. It’s great to have charisma, but if you can’t catch the ball, you won’t make the team.
 
At Southwestern Advantage, part of our mission is to help every single one of our participants have not just theoretical but also experience-based answers to every single scenario below. Whether a university student participates in our program or not, having experience-based answers to each of these potential employer’s interview questions will make them a great candidate. Find an internship that will enable you to give impressive answers for these communication skills:
 
  • Verbal – share a time you effectively expressed new ideas to a potential partner
  • Active Listening – share a time you asked questions to determine a specific situation or need
  • Idea Expression – share a time you explained intangible benefits
  • Facilitating Group Discussion – share a time you led a meaningful group discussion
  • Dealing With Doubt – share a time you helped someone past a hesitation, concern, or fear
  • Negotiating – share a time you came to mutually beneficial terms in a professional setting
  • Perceiving Nonverbal Signals – share a time you interpreted body language in a helpful way
  • Persuading – share a time you convinced someone to make a short term sacrifice for a longer term reward
  • Verbalizing Feelings – share a time you discussed the way you felt in a helpful way
  • Interviewing – share a time you asked questions that got to the core of an issue
  • Extracting Details – share a time you collected data that helped you achieve a goal
  • Problem Solving – share a time you had to independently think on your feet
  • Setting & Achieving Goals – share a time you set a big goal and how you were able to achieve it
  • Defining Needs – share a time you discovered a need and how you improved the situation
  • Developing Rapport – share a time you quickly built professional trust with a stranger
  • Providing Emotional Support – share a time you positively influenced a teammate’s mental state
  • Cooperation – share a time you achieved something significant with people of different backgrounds or personalities
  • Professionalism – share a time you provided a favorable interaction with someone on behalf of your organization
  • Assertiveness – share a time you demonstrated confidence under pressure
  • Teaching – share a time you helped a teammate understand a new concept
  • Delegation – share a time you empowered a teammate with new responsibility
  • Motivating – share a time you motivated yourself and others through a challenge
  • Leadership – share a time you led by example and completed a difficult task because you said you would
  • Coaching – share a time your technical advice helped a teammate improve their performance
  • Counseling – share a time you went beyond the technical and helped a teammate mentally and emotionally
  • Collaboration – share a time you were part of a decision that positively impacted the organization
  • Conflict Management – share a time you diffused a potentially damaging situation
  • Reporting Data – share a time you explained what the numbers were saying
  • Planning and Research – share a time you conceptualized future needs and offered solutions
  • Initiating New Practices – share a time you used sequential knowledge to grow professionally
  • Organizational Leadership – share a time you led a group through a challenging situation
With first-hand experience and a skill set in each of these areas, chances are you’ll find yourself picking from job offers while your peers are hoping to be picked for an interview. Remember, the job candidate you will someday be, you are now becoming.
 
The above content was made possible by the Career Services division of Thinking Ahead – which specializes in the professional placement of recent graduates and entry-level talent.
 
Thinking Ahead is the executive search & placement firm within the Southwestern Family of Companies.
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