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MenuFrom the accounting/legal point of a view, do I need to separate affiliate earnings from sales earnings for people on online marketplace?
Let's take for an example oDesk and pretend that they have affiliate program for their constructors.
If a constructor gets someone to sign up, he gets $10.
Does company(in this case oDesk) need to pay out those $10 separately from his earnings, or can it just be added to his balance and paid out altogether?
Answers
The actual process of this is based on the company policy. I deal with some companies that will not mix the two types of income at all, while other companies treat all of it as earnings.
As far as the legality of it when you receive the funds, it is totally up to the applicable tax laws for your particular case. The best way to clear this up would be to talk to an accountant specializing in affiliates.
Let me first preface that: I am not a Lawyer or an Accountant nor am I offering direct legal advice based on your situation. I can only interpret from the details you have provided based on similar scenario's I have experienced. Please seek legal counsel or professional accounting help before taking action on any advice below.
In the scenario you listed above, it's best to separate out earnings generated by affiliates vs. the revenue they might receive from work as it has a two-fold benefit: 1)The contractor receiving commissions can properly denote what is referral monies and what is money from SOW's (and if needed, can separate those out when submitting his business taxes). 2) if they are US affiliates (from the marketplace/oDesk side) -- you should be collecting W9's from all people you pay commissions (i.e. affiliates) so that you can report that to the IRS at the end of the year.
If you lump the two together - you won't be accurately reporting what money went to whom.
If you are doing that already from the act of being the billing authority (and processing payments and requesting W9's) than what I mentioned above is null.
Hope this helps! Good luck.
Related Questions
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How do you approach an influencer, a "guru" or a podcaster /blogger in your niche offering a commission without being too direct?
Do the opposite. Think about it from their point of view. They get requests like these all the time and most of the time the request comes from random people they don't know. That would be kind of annoying right? You get an email from someone you don't know but they want you to do something for them? You'd delete that email too. Best way to get their attention...get a referral from someone they know and trust. Get someone else they know and trust to introduce you (this is the whole reason I built my business www.reverralriver.com). Referrals work the best. Second best way...develop a relationship with them before asking for anything. Don't email and ask for something right away. You wouldn't ask someone to marry you on a first date would you? Develop the relationship slowly. Give them value before ever asking for anything in return. Over just a few short weeks you could easily establish a relationship to the point where you could actually mention an "ask" which should be very open-ended and create absolutely zero work/friction for the person you are asking. One of my favorite techniques to warm-up a relationship...just email and tell them you appreciated (insert an article they wrote or service they provide, whatever, just stroke their ego). Tell them you're a fan and often point people their way. Then go way above and beyond and find their physical mailing address (it's not that hard to do) and send them a small gift or hand-written postcard in the mail just to say thanks. Then email them once you know they got it and just say thanks again. Then start emailing them various articles or things they might think are valuable, I'd say no more than once every 4 days. Connect on LinkedIN and message them funny pictures or GIF's. Show them you're human. Make them laugh and smile and just say "Hey I appreciate all you've done so just wanted to return the favor and make you smile (insert funny GIF here)". Then, once they know who you are, don't ask them directly to partner...ask them if they know anyone who would be interested in partnering. Below is a template I've used with great success...and the beauty is that they will often ask for more info and get interested themselves, but usually only if you have offered them some sort of value to stand out amongst the crowd. --- Hey (prospect first name), Hope you laughed at the last GIF I sent. I was just wondering if you knew anyone that would be interested in a partnership/affiliate opportunity… Real quick summary… I’m building a SaaS that automates the process of asking for referrals…it uses artificial intelligence to find potential leads in your existing customers network and makes it super simple for your customers to make the referral (one click of a button). If you know anyone that has an audience of people that would benefit from something like this I'd be grateful for an intro. I won't let you down I promise if you can make an intro. I’ll draft up all the marketing material and do all of the work, so all they would have to do is say “ok”, hit copy, paste, and send and I’d be happy to pay them 25% commission for life (or if there is another payment structure in mind I’m happy to talk about it) So what do you think? Can you help me out? Thanks, Parker ---- If you found this useful please upvote. Book a call with me if you want to know more or if I can help further.PW
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What Wordpress Plugins is the best for creating a Multi-Level Affiliate Marketing program?
There is a lot of points in your question which unless someone has the exact same setup as you - I don't think you will get the answers you are looking for. I believe you should limit it by asking yourself: What is the ONE thing the MLM plugin I am looking for can do so that it achieves the maximum amount of result to my business by using it? IMHO - it would be the ability to set commissions for the products you sell and award commissions to those affiliates that actually earn you sales. All other features, while nice, are ancillary features that from the perspective of the affiliate - don't really need in order to be successful. In that regard - I would suggest https://affiliatewp.com/. When it comes to running affiliate programs on WP sites, it wins out as the best in my experience. Hope this helps! Glad to assist any further if you need help.TB
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Can you really make a full time income from Adsense or affiliate marketing?
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