Affiliate Marketing Business – Have you ever thought about making money with affiliate marketing, but the legal aspects – like business registration – have scared you away?
I know that sometimes the legalese and rules and regulations can be confusing and off-putting. That’s exactly why I want to unravel the mystery today and shed some light on it. So that you can finally overcome your fear of bureaucracy and finally start earning your commissions.
In this article we will dive into the world of affiliate marketing together and clarify which legal aspects you need to consider and whether you need a business or how to register the business at all.
We will fight our way through the jungle of paragraphs and at the end you will hopefully have more clarity.
What is Affiliate Marketing?
Affiliate marketing is an online marketing strategy where product manufacturers (vendors) have their products or services promoted by a “distribution partner” (affiliates).
So as an affiliate, you take care of the traffic and when someone buys something through your link, you get a commission for it.
The best part is, you don’t even have to stock the product yourself!
Here’s a practical example:
- You have a blog about fitness and health (of course set up with WordPress, the ultimate CMS, we’ll get to that later).
- Now you come across a great nutritional supplement that you think is a perfect fit for your content.
- You connect with the seller and a link to that product appears on your blog.
- Your readers click on that link, get redirected to the seller, and buy the product.
- Voila. You get a commission for each referred purchase.
The importance of affiliate marketing for online businesses cannot be overstated.
It brings in a lot of traffic, leads to more sales, and is a cost-effective way to promote products. Moreover, it can serve as a passive income if done right.
Here is a detailed step-by-step guide on how you can make money with affiliate marketing.
Legal aspects of affiliate marketing in Germany: data protection, imprint, advertising labeling
Before you get started with your affiliate marketing business and go for the gold rush, you have to keep one thing in mind: the letter of the law has to be followed here as well. Which doesn’t mean you should back out now, though. It’s all much easier than you imagine.
Remember: we are only afraid of things we don’t know. As soon as you have read up on the subject, you will realize that it is actually quite easy. After all, I managed to register my business and so did thousands of others before me who had no idea about business.
So here are 3 essential points you have to pay attention to when you do affiliate marketing – no matter on which platform:
Imprint
Every website, even if it was created only for the purpose of affiliate marketing, must have an imprint. The imprint must include information about the identity of the person responsible. This includes your name, address, contact information such as email and phone number, and VAT ID if available. If you prefer to remain anonymous, a lawyer can serve as a proxy. But let’s face it, if you’re going to make money while you sleep, you should at least have the courage to put your name under it.
Privacy policy
Now to data protection: since the GDPR, the topic of data protection on the Internet is as hot as a cup of coffee straight from the vending machine – and just as hard to handle. You must have a privacy policy that explains exactly what data is collected and what happens to it. Yes, even if you “only” have affiliate links on your site. And no, “I have no idea what happens to the data” is not a valid privacy policy.
Advertising label
Lastly, the advertising label: your readers must be able to tell at first glance that your links are advertisements. That means you need to make it clear that you receive a commission for purchases made through your links. And by “make it clear,” I don’t mean hide it somewhere in the fine print. It belongs in a place that immediately catches your eye.
Step by step guide: Register affiliate marketing business
Now that we’ve cleared up the legal aspects, it’s time to officially register the affiliate marketing business.
Yes, there’s no way around it… unfortunately.
But don’t worry, I’m here to help you through the jungle of bureaucracy.
And believe me, if I can do it, so can you! So let’s get started.
- Register your business: First of all, you have to register your business. You do that at the trade office of your city or district. In larger cities, it is advisable to make an appointment to avoid waiting times.
- Define your business activity: When you arrive at the trade office, you will be asked what activity you want to carry out. Here you specify “online marketing” or “trade with digital goods”. For me, “Online marketing and web design” is entered, since I also have a web design agency.
- Pay fee: Registering a business usually costs between 20 and 60 euros. After payment you will receive your business registration certificate. This certificate is very important, so file it well!
- Registration at the tax office: Now you have to register your business at the tax office. You will receive a (green) form from the trade office, which you fill out and send to the tax office. There you will be assigned your tax number. This was done by my tax advisor. And I recommend that you look for a tax advisor right from the start, because that way you’re always on the safe side.
Important notes
Income tax return: As a trader, you are required to file an annual income tax return. You have to document your income and expenses exactly.
Value-added tax: If your annual turnover exceeds 22,000 euros, you must pay value-added tax in addition to income tax. Below the income limit, you are still subject to the small business rule.
Tax advisor: As already mentioned, I recommend a tax advisor in any case, because he can advise you and support you in the tax returns and the exchange with the tax office.
So, that’s it! As you can see, registering an affiliate marketing business is not as complicated as it seems at first glance.
Of course, there are a few more intricacies to consider, but with this step-by-step guide, you’re already off to a good start in your self-employment.
Don’t forget to always stay up to date with legal changes, because the legislator never sleeps!
Necessary documents for business registration in affiliate marketing
When registering your affiliate marketing business, your mind will probably already be on your first successful affiliate deal, but before that happens, you’ll need to do a bit of paperwork.
You know, government agencies love paper!
First, take your valid ID card or passport with you.
Then you should also have proof of your residential address with you. A current utility bill or your rental contract will suffice.
It may also be that you need a certificate about the legality of the management. This is the case if you have already registered another type of business. Here it is a matter of proving that you are not overburdened and that you can manage the business properly. As a rule, it is sufficient for this certificate to prove that you are successfully managing the other business. To be on the safe side, it is best to ask at the trade office.
And now comes the most important part – the business registration form. You can get it either at the local trade office or you can download it from the website of your city or municipality. You must fill out the form conscientiously and completely. You can also do this on the spot, it is very easy.
When everything is ready, you pay the fee and you are done.
With your business registration you can then in the next step, for example, open your business account.
As you can see, the registration of an affiliate marketing business is no witchcraft, but a task that can be easily mastered with good preparation and the right documents.
The costs of a business registration in affiliate marketing
The actual registration of the business at the trade office usually costs between 20 and 60 euros. However, the costs can vary depending on the municipality or city.
Another potential source of costs is membership in the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts, if this is mandatory. Here, too, the contributions vary greatly – they can range from 70 euros to several hundred euros per year.
Even as a small business owner, you don’t necessarily have to be surprised by high costs. If you generate less than 22,000 euros in sales per year, you are not subject to sales tax. However, if you exceed this limit, you will be subject to sales tax, which is of course also a cost issue.
But besides these concrete figures, there are also hidden costs that can easily be underestimated. These include, for example, the time you invest in filling out all the forms, and the cost of your general business equipment, such as a laptop and an internet connection.
Despite these costs, I can assure you that signing up for an affiliate marketing business can be worthwhile. The costs are comparatively low and the potential income can be very attractive.
It’s just important that you prepare well and have a plan for how to account for these costs in your business plan.
Tax aspects after business registration in affiliate marketing
No sooner have you registered your affiliate marketing business than taxes start knocking on your door. Don’t worry, this is normal and part of growing up your business. Nevertheless, there are a few points you need to keep in mind to avoid falling into tax traps.
Small business regulation: If your turnover is expected to be below 22,000 euros in the first year and below 50,000 euros in the second year, you can make use of the small business regulation. This means that you do not have to pay sales tax to the tax office.
But be careful: If you choose this regulation, you are not allowed to show sales tax on your invoices.
VAT ID: Do you actually need a VAT ID as an affiliate marketer? The answer is: It depends. If you plan to work with companies abroad, then yes. If you only want to operate within Germany, your normal tax number is sufficient.
Tip: Since you will most likely use many tools from foreign companies, I advise you to have a Ust-ID.
Income tax / trade tax: Yes, even as an owner of an affiliate marketing business you are liable to income tax. Your income is made up of your affiliate marketing income minus your business expenses. By the way, you are exempt from trade tax up to a tax-free amount of 24,500 euros per year.
Quarterly advance sales tax return: Depending on how much revenue you generated in the previous year, you may have to submit an advance sales tax return. If you made more than 7,500 euros in sales in the previous year, you must do this quarterly.
Bookkeeping: You should carefully keep every receipt, every invoice and every bank statement. They serve as proof of your business expenses, which you can deduct from your income. Good accounting software can help you keep track of everything.
I know this all sounds like a lot of work and maybe a little scary. But don’t worry: there are many great tools and even accountants who specialize in the needs of online entrepreneurs.
With a little organization and discipline, you’ll see that the tax aspect of your affiliate marketing trade isn’t as terrible as it seems at first glance. And after all, we’re not here to gamble, we’re here to make money.
Common affiliate marketing business registration mistakes to avoid.
I can already see you jumping up and down with excitement and can’t wait to register your affiliate marketing business. But before you get started, let’s talk briefly about what mistakes you should avoid at all costs.
Because believe me, a small mistake can sometimes have big consequences.
Simply ignoring the small business rule: Many newbies in affiliate marketing are not even aware that they can claim the small business rule. They think they automatically have to pay sales tax and thus give money out of hand unnecessarily. So be sure to inform yourself about this possibility!
Incorrect information in the registration form: In the excitement, it can happen that you make mistakes in the registration form for your business registration or forget important information. But be careful! Incorrect information can not only cause significant delays, but can even be punishable by law.
Not opening a proper business account: As an affiliate marketer, you should separate your personal finances from your business finances. Therefore, I recommend you to open a separate business account. It will help you keep track of everything and simplify your bookkeeping.
Not preparing enough for the tax aspects: Taxes are an aspect that many underestimate when registering their affiliate marketing business. But believe me, the tax office doesn’t mess around! So make sure you familiarize yourself with the tax aspects of your business.
Neglecting the imprint: Yes, even an affiliate marketing business must have an imprint! This may be annoying, but it is required by law and extremely important. A missing or incorrect imprint can result in warnings.
Take these points to heart and try to avoid these mistakes. I know you can’t wait to get started with your affiliate marketing business. But trust me, good preparation is half the battle! So, take a deep breath, prepare well and then get started!
Consequences of not registering your affiliate marketing business or registering it incorrectly.
Yes, it’s tempting. You want to start your affiliate marketing business and preferably get started right away. But the word here is: slow down, cowboy! Rushing can lead you into the Wild West of legal gray area faster than you can say “SEO.”
Missing or incorrect business registration in your affiliate marketing business is no trivial offense and can have serious consequences. If you are caught without a valid business registration, you are liable to prosecution. And that in turn can lead to hefty fines. Believe me, they are much higher than the fees you would have to pay for a correct registration.
But not only that: If you get caught, you will be forced to make up your business registration. And again, of course, you will have to pay fees. Just in addition to the penalty. It can even happen that the tax office demands taxes and social security contributions retroactively.
A false business registration, for example with inaccurate or even false information, is also risky. Something like this is quickly considered an attempt at deception and can also lead to penalties.
Let me tell you: You should not be sloppy when registering your affiliate marketing business. The possible consequences are simply too serious.
So my advice is to take the time you need to carefully complete all the necessary steps.
It is better to invest a little more time in a correct registration than to be confronted with unnecessary problems later on. It is hard to deny that an affiliate marketing trade presents itself as a tempting way to make money online.
Conclusion
With proper planning, diligence and the right tools, you can build an effective presence online and earn money passively by recommending exciting products or services. However, as with any business, there are some pitfalls to avoid.
Registering your affiliate marketing business is an important step to being on legal ground. From choosing the small business rule to properly exporting tax obligations, it can seem a bit complicated at first.
However, always remember that the benefits of a well-run affiliate marketing business are definitely worth the efforts.
So, grab your creative ideas, your entrepreneurial spirit and let’s dive into the exciting world of affiliate marketing together!
FAQ: Questions and Answers
Do I need to register a business to make money with affiliate marketing?
Yes, in most cases you will need to register a business if you plan to make money with affiliate marketing. However, it ultimately depends on where you live and the nature of your business. In many countries, any activity conducted with the intention of making a profit is considered commercial.
What are the advantages of business registration for affiliate marketers?
A big advantage of business registration is that you can claim your expenses as operating costs. This includes, for example, the cost of your website, marketing tools and also training or courses you attend to expand your knowledge.
What should I consider when registering?
It’s important to be honest and accurate in your application. If you are working online, you should indicate that as well. Also, you must be aware that when you register a business, you also have certain obligations, such as filing tax returns.
