How do Affiliate Marketers Get Paid and Do Taxes?
Affiliate marketing is a fantastic way to make money online to supplement your normal income. You add your special links to your blog or other content, and when people make a purchase through that link you get a cut of the profits.
But how do affiliate marketers get paid in the first place? How can you confirm that companies are going to actually pay you for the value you provide?
How Do I Avoid Affiliate Marketing Scams?
Well, the first step is making sure you utilize reliable affiliate programs so you don’t get scammed. The programs on Grivio are hand-picked to avoid anything that seems like a scam or has negative reliability ratings.
How Do My Affiliate Payments Get Delivered?
In terms of actual payment, each affiliate program will vary on exactly when they send payments. Payments can take some time to process, since orders and payment must be confirmed first. Most affiliate programs and networks pay out at the end of each month, but some pay out twice a month or on a specific day of the month. In every case, you need to first reach a minimum amount, usually $50 or $100.
Some will mail you a check, some will send via PayPal, and others may operate through a direct deposit.
Do I Have to Pay Taxes on Affiliate Income?
You bet you need to pay taxes.
This can be a big surprise to first-time affiliate marketers, as they realize that they didn’t actually make as much money as they thought they did! You can file affiliate marketing income as self-employment income via a Form 1099. In this case, you’re telling the government that taxes were not withheld from this income. This differs from a W-2 you would find with traditional employment, which does have taxes withheld. As a W-2 employee, you will often get a tax return, but with a 1099 you will owe taxes on your affiliate income.
If affiliate marketing is your side hustle, then you will file your 1099 on your personal taxes, as you will be considered a “sole proprietorship”. However, if you’ve made your business more official with an LLC, then you may have to file taxes a bit differently. If your LLC is a sole proprietorship then your taxes are done the same as above. If there are multiple owners, you’ll file a Form 1065.
What Tax Deductions Can I Take for Affiliate Marketing?
Luckily, you won’t take as much of a hit from your taxes if you have some deductions. Even as an individual filing a personal tax return, you can write off business expenses such as website hosting fees, software purchases, and any other equipment you use. These expenses will reduce your taxable income and make tax season a bit less painful.
Hopefully that answers all of your questions about getting paid for affiliate marketing! Each affiliate program is different, so make sure you carefully read the terms of each program before signing up, to make sure it fits your ideal methods of getting paid.