What are the Tax Implications of Working with Affiliates?

Question from Carl Hampton, Jr. Addresses a Common Concern

What do you need to know about the tax implications of working with affiliates? At first, the idea of bringing on hundreds or even thousands of people that you have to pay and file paperwork on can be intimidating. But, it’s actually a lot simpler than it appears.

STUFF MY ATTORNEY MADE ME WRITE: The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice. It is also 100% based on my own knowledge, which is United States-based.

What do you need to know about taxes before you begin to work with affiliates?

Carl Hampton, Jr. wrote me the following:

My worries have to do with tax reporting and recording. I have absolutely no clue how to handle the collection and filing of affiliate’s for tax purposes whether they be affiliate’s for my programs, or affiliate’s for a company I’ve contracted with.

This video addresses Carl’s concerns and shares the simplicity of working with affiliates.

Question: Have you let financial concerns hold you back from working with affiliates? You can leave a comment by clicking here.

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  • Sarah

    Hey Matt -Thanks for the info. and breaking it down so easily. Appreciate your work and teaching.

  • Carl Jr

    Wow, thanks Matt.

  • Excellent video – thanks, Matt!

    If you’re not in the U.S., definitely check out the gift thing. I found up this year from my accountant that business gifts cannot be over 35 Euro.

    At least … that’s what I understood from this particular accountant. I wish I had asked sooner!

  • My question is – when is the commission earned? If a company runs a program (the people selling the program) and gains the revenue in 2016, but the commissions are not paid until 2017, does the affiliate (the person sending the traffic and earning the commission) report that as 2016 earnings or 2017 earnings? Does the company report that as a 2017 expense or a 2016 expense?

    • Depends on how you do your accounting…cash based or accrual, for both sides of the question.

      For us we ar cash based, so it’s when it hits or leaves our account.

      But you’ll definitely want to ask your CPA on that to be 100% sure.