9 {{ upvoteCount | shortNum }}
9 {{ upvoteCount | shortNum }}

1099's for all affiliates?

by Justin Sardi
7 replies
I did a bit of searching on here but couldn't find much about the subject so I figured I would ask here...

Do all of you collect 1099's from you affiliates? I run an offline business but am just now moving into product creation and affiliate marketing and want to cover my ass when it comes to this...

If all my transactions are processed through paypal and paypal requires you to put a SSN or Tax Id number in to open an account can I just get the info from paypal? Or do I need to collect 1099's from my affiliates?

I just don't want to get stiffed with a huge tax bill when it comes time to pay up and they see that my total revenue coming into paypal is a lot larger than what I actually made...

Thanks,
Justin
#1099 #affiliates
  • Profile picture of the author Josh Anderson
    Hi Justin,

    You have your terminology mixed up... you collect a W-9 and you issue a 1099. I encourage you to seek the advice of a qualified CPA to advise you on your accounting and tax reporting practices.

    Yes, collect a W-9 from EVERY affiliate before you ever pay them a dime EVEN if you are not required to issue them a 1099 (affiliates who earn less than $600 and corporations for example). If you do not do this, and keep detailed records, you run the risk of loosing those expense deductions if you are audited. Make sure you issue a 1099 to all you are required to.

    One big IM guru paid 7 figures in back taxes and penalties because he did not follow this simple practice. Now he does.

    Again seek the advice of a qualified tax professional.
    Signature
    Nanacast Review
    {{ DiscussionBoard.errors[7284875].message }}
    • Profile picture of the author kindsvater
      Definitely talk to your tax person. But my opinion is acquiring the tax information for a 1099 is only necessary once the $600 in commission payments is met, and if the affiliate owes US taxes.

      I have not heard of a business expense being rejected solely because a contractor did not provide their tax information. Contractors may refuse to provide information, or they may provide false information. If you can document the expense and what it is for that should be sufficient.

      .
      Signature
      {{ DiscussionBoard.errors[7284899].message }}
      • Profile picture of the author Andy Fletcher
        Originally Posted by kindsvater View Post

        Definitely talk to your tax person. But my opinion is acquiring the tax information for a 1099 is only necessary once the $600 in commission payments is met, and if the affiliate owes US taxes.

        I have not heard of a business expense being rejected solely because a contractor did not provide their tax information. Contractors may refuse to provide information, or they may provide false information. If you can document the expense and what it is for that should be sufficient.

        .
        One quick addition. Make sure whatever software/network you use collects and publishes this info regardless of the amount. You only have to care if the amount paid is > $600 but we've seen a number of people have issues because they've paid < $600 on multiple networks but > $600 in aggregate.
        Signature
        {{ DiscussionBoard.errors[7284918].message }}
      • Profile picture of the author Josh Anderson
        Watch the video of Mike Filsaime telling his story of the IRS telling him that his affiliate payments were not valid expenses:

        Videos | PayPeopleOnline

        If you want to avoid that issue... Always collect a w-9 BEFORE you pay any affiliate.The primary reasons are:

        1. Official IRS accepted documentation of WHO you paid so you can avoid what happened to Mike because he did not keep those records.

        2. You won't have to chase anyone down for their tax info at the end of the year when you have to issue 1099 to anyone who earned more than $600.

        Its proper accounting and tax law compliance practices. Its smart business.

        Originally Posted by kindsvater View Post

        Definitely talk to your tax person. But my opinion is acquiring the tax information for a 1099 is only necessary once the $600 in commission payments is met, and if the affiliate owes US taxes.

        I have not heard of a business expense being rejected solely because a contractor did not provide their tax information. Contractors may refuse to provide information, or they may provide false information. If you can document the expense and what it is for that should be sufficient.

        .
        Signature
        Nanacast Review
        {{ DiscussionBoard.errors[7285350].message }}
  • Profile picture of the author Justin Sardi
    Thanks for clearing that up for me Josh... I was planning on contacting a tax professional this week...
    Signature
    http://clymbmarketing.com
    {{ DiscussionBoard.errors[7284894].message }}
  • Profile picture of the author Justin Sardi
    Good point Andy... I use W+ and JVZoo so I will need to make sure to cross check both of those when I am totaling things up...
    Signature
    http://clymbmarketing.com
    {{ DiscussionBoard.errors[7284929].message }}
  • Profile picture of the author kindsvater
    If you use ClickBank this shouldn't be an issue. ClickBank is the retailer and the affiliates are ClickBank's affiliates - not yours. You are not paying them.

    .
    Signature
    {{ DiscussionBoard.errors[7285122].message }}

Trending Topics