Can anything be more confusing than taxes for online business owners? When you have a brick and mortar business, you know your employees. You know their names and you know where they live. Most importantly, you get their signed tax forms within two weeks of their employment.
When you work online, you are good if you know the name of your affiliates much less anything else. So what is an owner to do?
Tax Laws Require a Signed W9
By law, you are required to have a W9 on any affiliate you pay $600 or more in a given year. But how do you get this information? Do you trust the affiliate network to get it for you? Do you wait until the end of the year to track the information down? What is the best method?
With tax laws reading the way they do, smart businesses collect the information before they ever pay a dime. You can do this easily if you run your mass pay file through affiliate payment software like Pay People Online. It will verify every affiliate that has signed a W9. For those that haven't, it will let them know pay is being held until they fill out the appropriate forms. This way you never pay someone who has not filled out their tax info.
Incentive to Fill Out the W9
The problem with waiting until the end of the year is affiliates have all the power. They have already been paid. Therefore, they have no incentive to fill out tax forms. In fact, filling them out will cost them time which, as we all know, equals money.
When you withhold payment until you receive the proper tax forms, you give your affiliates the ultimate incentive. They receive a notice that they have pay waiting for them and it will be released as soon as they fill out the forms.
Now your affiliate has all the reason in the world to fill out the forms. It is a win/win situation. You get the signed W9 and they get the pay they deserve.
Learn more about how free affiliate software can help with taxes for online business owners.
