If you’re getting into affiliate marketing, you might wonder about taxes, licenses, and legal stuff.
Turns out, if you’re in the US or Europe, you’ve gotta make sure you’re following the tax rules.
But do you need a tax ID number for affiliate marketing?
No you don’t! You can just submit your SSN instead of the tax ID for all affiliate programs.
In this post, I’ll go over if and when you need a tax ID number for affiliate marketing. Plus, I’ll give you some general affiliate marketing tax tips.
Do Affiliates Need a Tax ID Number?
No, you do not need a Tax ID number for affiliate marketing if you are a sole proprietor and have no employees working for you.
Your SSN number is going to be your Tax ID in this case.
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However if you have employees working for you (freelancers don’t count) or if you are a partnership, LLC etc.. You need an EIN (Employer Identification Number) which is the Tax ID.
A lot of affiliate programs including Amazon Associates will ask your tax ID when signing up or before releasing payments.
Some programs might ask for a tax ID only if you earn over $600 a month on their platform.
A good example of this is Clickbank.
When these ask for the Tax ID, you can give them the SSN if you are a sole proprietor.
If you are from Asia, you can just give them your government ID no.
Should I Get An EIN For Affiliate Marketing?
Even though a Tax ID is not required, a lot of marketers get and use it for affiliate marketing.
And I recommend you get one too. Because you don’t want to share your social security number on these random affiliate platforms.
You are going to sign up for a lot of them in your affiliate marketing journey and who knows if these companies sell your info!
And they can get breached anytime and hackers could dump the stolen info.
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Just search for “buy ssn” or “fullz” on Google and you’ll see the danger.
Tax Tips For Affiliate Marketers
Here are some quick and valuable tax tips if you plan on getting in affiliate marketing:
But I highly recommend talking to an accountant if you are going all in.
1. Document All Income And Expenses
This is absolutely a must. Apart from tax stuff, this will also help you track your performance and understand where you are at and how to improve.
When you are first starting out, you don’t need special software or anything. A simple Google Sheets spreadsheet will do.
Just make sub sheets for earning and expenses.
Keep these records for at least 3 – 4 years just in case you get audited and they ask for proof of earnings. Asking for proof is very common for internet marketers and entrepreneurs, especially in Asian or African countries.
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2. Get A Business Bank Account
If you can, get a business or even a separate bank account for everything affiliate marketing.
Mixing your personal banking with business stuff will give you a lot of headaches in the long term. Plus, accounting will be harder.
3. Deduct Expenses From Earnings
You can deduct all the expenses for running the website. This includes content creations, link building, editors and VA payments.
Plus, you can count your hourly wage as an expense too.
You can also deduct the costs of hosting, plugin, themes, SEO tools and any other software you use for running and scaling the affiliate site.
4. Read The Affiliate Nexus Law
If you are from the US, make sure you go through and fully understand the affiliate nexus law
This was enforced in 2008 and it states how affiliates are taxed.
Frequently Asked Questions
Do Affiliate Marketers Need A Business License?
No, affiliate marketers do not need a business license. You only need a business license if you buy products from a supplier and resell them.
Do Affiliate Marketers Need To Pay Taxes?
Yes, affiliate marketers must pay taxes. However you only have to pay income taxes and self employment taxes. You don’t need to pay sales taxes or local taxes because you are not selling anything.