Affiliate marketing can produce income for you through ads and links you provide to other companies. Use the tips below to make sure you think about ways that laws support or hinder your affiliate marketing efforts to better establish your business approach to affiliate marketing.
- Most affiliate marketing agreements provide broad language for circumstances under which your agreement can be terminated by either party. This freedom provided by the language of the affiliate agreement means that it’s crucial for you to do research about a company’s payment record before agreeing to carry their advertisements or promote their business in some other way.
- Because there is a lag time in between the time you earn money from carrying affiliate marketing on your site and when you get paid, you must also pay attention to the financial health of the company whose ads you’re carrying. If a company goes out of business, or faces other financial issues, you could possibly end up having advertised that company for free.
- Make sure that you’re aware of whether your state has an affiliate nexus law which provides for collecting sales tax from advertisers even though their business headquarters aren’t in your state in order to avoid wasting time on investigating affiliate opportunities with companies that won’t do business in your state.
- These laws are frequently called Amazon laws because they stem from efforts of various states to collect sales tax from Amazon for the business it gets from different states even though Amazon’s business headquarters are not in their state.
- If your state is considering an affiliate nexus law, you can anticipate a sudden termination of your existing affiliate agreement by companies that do not want to do business with states charging them sales tax. Determine whether the companies you advertise have chosen to pay sales taxes in states with such laws or have chosen to withdraw their affiliate marketing arrangements from those states.
- Look for adjustments and adaptations made in the affiliate marketing industry to accommodate new laws and incorporate them into your practices. For instance, in states where the affiliate nexus law resulted in certain companies pulling out from the affiliate marketing industry in the state, new opportunities arose for accessing commissions by advertising another company that has a legally acceptable arrangement with the first company.
- This arrangement is based on your agreement with the second company that they will pay you a portion of the commission they receive from the original company for leads that come through you to them and then to the original company. In this instance, paying attention to your agreement with the second company is crucial to protect your financial interests.
- You are responsible for paying taxes on income you earn from your affiliate advertising so that it’s important to keep good records. Whether or not the company sends you a 1099, if you meet certain other criteria that your accountant will inform you of, you’ll have to pay taxes on that income.
Affiliate marketing is a business and is therefore subject to many different laws. Use the tips above to include a consideration of relevant laws that will impact your efforts at affiliate marketing.