Anyone starting an affiliate marketing business should protect themselves by keeping informed of the latest developments in the legal aspects of Internet commerce.
Q: Will my income be taxed?
A.: Yes. Money made from your affiliate marketing business is taxed as income. You are responsible for recording and paying taxes on all of your affiliate marketing earnings. Customers of your websites may be liable for sales tax.
Q: Must I disclose my affiliations in blogs, podcasts, etc?
A: The law is changing in respect to mandated transparency. In blogs the trend has been for disclosure of affiliation. In some areas mandatory disclosure has been legalized. Check your local laws for clarification.
Q: What is click fraud?
A: Click fraud is when an online advertisement is repeatedly clicked with no intention of purchasing the goods or services offered by the advertisement. This is done to either benefit the affiliate or sabotage the merchant. Click fraud is a federal felony, punishable by significant fines and jail time.
Q: How can I protect myself?
A: Since click fraud can be a problem, some affiliate marketers form a limited liability corporation (LLC). The LLC is a legal business whose primary purpose is to offer liability protection to its shareholders. If someone attempts to sabotage the affiliate business by perpetrating click fraud and directing the blame to the affiliate, the owners will not be personally liable for damages.
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