Do Affiliate Marketers Need a Business License?

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Hello, I'm Hannah & I'm part of the editorial team here at Commission Academy. I launched my first successful affiliate business in 2014 & now I enjoy sharing the information I've learned to help others do the same. I hope you enjoy my posts! :)

Quick Answer: Local laws differ greatly & whilst in some places a business license is not required, there are other towns/cities/states which may require a business license for affiliate marketing depending on how you operate. Our article below will help you to determine if you need a license.

Affiliate marketing is one of the most legitimate and lucrative ways to earn money online.

Companies use this strategy to invite individuals who will perform marketing efforts for them in exchange for commissions.

It is an effective marketing strategy for new or unknown brands because it provides more exposure and sales.

Popular manufacturers and retailers also offer affiliate programs for the same reasons as lesser-known companies.

Because it involves money, you may ask: Do affiliate marketers need a business license?

Let’s discuss if an aspiring affiliate requires to submit some paperwork before starting in this industry.

Do Affiliate Marketers Need a Business License?

Affiliate marketing is a business concept offered to everyone capable of promoting products and services.

Many consider this marketing strategy a business, implying that those practising it need to get a business license.

Since affiliate marketing is offered to everyone, it would be irresponsible to answer it with a simple yes or no.

Local laws and regulations vary from place to place, so it’s best to consult with someone who has the authority to discuss this matter. According to SBA, you won’t have to register anywhere if you are using your legal name.

However, opting not to register will cause you to be ineligible for benefits like tax incentives, legal help, and personal liability protection.

In affiliate marketing, there is a set rule that most marketers follow when it comes to business licenses.

If you are producing articles, reviews, and blogs to promote products, it’s unnecessary to obtain one.

On the other hand, getting a license is needed if you are reselling items because your business model is retailing instead of marketing.

Legal Obligations for Affiliate Marketers

When you become an affiliate marketer, you are not required to establish a corporate organization.

Starting by yourself is permitted, which is the option that most affiliates choose.

You only need to register as a self-employed individual, and you are good to go.

If you are in the US, filing for a DBA (Doing Business As) is recommended for a sole proprietorship.

Once your affiliate gig becomes a significant and consistent source of revenue, forming an LLC becomes reasonable.

Establishing a company based on affiliate marketing allows you to experience some benefits.

You can have more chances of succeeding when negotiating the commission rates because of your reputation for bringing sales.

Another advantage of operating under a company name is that it can shield your assets and exclude you from personal liability.

This benefit becomes especially relevant if a legal dispute happens.

Do Affiliates Have To Pay Taxes?

Asking do affiliate marketers need a business license is one thing; after that, government obligation comes into play.

Ensuring that your taxes check out is an unavoidable part when you earn money.

When working solo as an affiliate marketer, filling out a W9 form if you live in the US is necessary.

This form is for the company or person paying you the commissions on affiliate market purchases.

If you are selling affiliate items via Amazon Associates or other similar programs, they will task affiliates to fill out forms.

These companies will then handle the legal aspects of this partnership, while you only have to worry about how to market their products.

Tracking the amount of money you make annually is also the responsibility of the company that owns the program.

Companies provide the necessary documents to verify how much you earned in affiliate commissions, which will appear on your taxes.

Affiliate Disclaimers

Unfortunately, some affiliates are not objective when reviewing products or services to push more sales and commissions.

This practice is not tolerated because it affects not only the credibility of the marketer but also the manufacturer and seller.

This is where a disclaimer comes into play.

Reputable affiliate marketers use a disclaimer or disclosure statement, which informs the readers about the connection between them and the seller.

It usually goes something like, “We may receive a small commission if you use retail links on our website.”

The disclosure statement must be near the affiliate links and visible on all devices and platforms.

This rule is mandated by the FTC, the government body that protects consumers in the US.

Among its primary duties is protecting buyers from dishonest marketing strategies.

The FTC mandates affiliate marketers and others who promote brands and products to declare their connection with a program.

This way, consumers are aware of a potential incentive rewarded to marketers if they choose to purchase something from the affiliate links provided.

The Differences Between Affiliates & Employees

Being a company’s affiliate marketer does not mean that you are considered an employee.

When you are an affiliate, you are similar to an independent contractor.

You’re not bound to the rules and regulations of standard employees unless stated on the TOS you agreed to.

Since the setup of affiliate programs is mainly performance-based, you are not eligible to receive any salary besides the cut you get from successful conversions.

Affiliate programs don’t include health insurance for their marketers.

If you are unable to earn commissions, companies are under no obligation to pay social security, unemployment insurance, and other benefits.

It may appear that this setup only favours the owners of the programs.

However, affiliates have the freedom to conduct their marketing efforts in any way possible.

They can also quit anytime without incurring any penalties.

Rules and Regulations of Popular Affiliate Programs

After covering the legal aspects of affiliate marketing, it’s relevant to discuss some of the most popular programs’ regulations to be more familiar with them.

Amazon Associates

Many aspiring affiliates choose Amazon because it is the largest eCommerce store globally, offering countless products to promote.

Its affiliate program, Amazon Associates, does not require you to have a Privacy Policy and Terms & Conditions agreement.

While it appears to be lenient, a section of the agreement instructs you to identify the platform you are using as an Amazon associate.

You have to put in the exact words written on the operating agreement.

Content originality is also one of the program’s emphases, so you can’t just copy and paste other people’s work to your website.

eBay Partner Network

eBay is one of the most prominent and enduring e-commerce corporations in the world.

Like other affiliate programs, eBay has a set of rules that govern how marketers should promote their listings.

Its terms are relatively the same as others. Still, the company stresses that when using its logo, affiliates should only use the current one.

Marketers must not use questionable methods to convince the readers to click the links that will redirect them to eBay.

No mystery deals or misleading statements are allowed because they will tarnish the company’s reputation.

Etsy Affiliate Program

When it comes to online retailers, only a handful of companies in the US are more popular than Etsy.

Its affiliate program features some interesting terms for sharing affiliate links.

Affiliates are welcome to post links on social media sites like Facebook or Instagram, but sharing them on Tumblr and Pinterest is prohibited.

Etsy requires its affiliates to be at least 18 years old and already have a functioning website.

The program also requires abiding by Etsy’s Supplier Code of Conduct.

Rakuten Advertising

Rakuten is the Japanese equivalent of Amazon.

Over the years, the company has offered a multitude of products like life insurance and apps in addition to its online store. Rakuten Advertising requires a website and how much traffic it gets as part of the sign-up process.

Also, this program enforces strict compliance with state, federal, local, and foreign laws like other legitimate affiliate networks.

Business License For Affiliate Marketing

At this point, everything should hopefully be clear about affiliate marketers and business licenses.

Not everyone is fond of following government regulations, but it will save you a lot of headaches if you choose to comply.

That said, you only have to worry about obtaining one if your affiliate program brings a lot of revenue.

Until then, you can focus on producing interesting content to increase traffic and sales.

And to help you get started, we’ve put a free step-by-step course that’ll teach you everything you need to know.

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