No More Mistakes with Affiliate Marketing Expenses

You know that favorite restaurant you’re always raving about?! The one you tell everyone they have to try!

Or maybe a favorite sweater or purse… kitchen appliance that makes your life easier… makeup you can’t live without…

When you talk about what you love as a business owner on social media there is a chance you also have an opportunity to earn a commission on referring your friends, family & followers to the product or service you love. That is affiliate marketing or network marketing.

And when done right, it can be one of the best ways to add a stream of revenue to your business without having to come up with another service or product to sell.

It’s also very tricky when it comes to what is and what is not considered a business expense when you are an affiliate.

Buying the Product to Give It Reviews

Buying the product to give it accurate reviews or use it for content does not make it a business expense unless it is a product or service you use only for your business. For example, a course to expand your business skills.

Your cost of taking the course to add to your business skill set is considered a business development expense. It is used 100% for the benefit of your business. Therefore, it is viewed as a business expense.

However, if the item is something like makeup, clothes, food, haircare, skincare, fitness - you get personal benefit out of those items. They are considered personal items, not business items. So those types of items are not business expenses.

What If I Have a Quota?

Question: What if you are required to make a certain level of sales as an affiliate and you make some purchases yourself to meet the quota. Is that a business expense?

Answer: Unfortunately, no. The items you are purchasing still have personal benefit. Even if it’s to maintain your ability to earn money, the IRS does not view them as business expenses.

It Helps Me Sell It

Question: But it helps me sell it. How is that not a business expense?

Answer: That is an excellent question! By using the product/service or having the product/service in your content, you will be more credible and therefore more likely to encourage people to actually try out the product or service.

Even though buying will most likely help you be a better affiliate, if it is an item where personal benefit is gained (which is pretty much most of affiliate or network marketing), the IRS does not view it as a business expense.

Now What?

All in all, being an affiliate or network marketer for something you love can have huge benefits to your business in bringing in an extra stream of revenue.

However, there is a lot of misinformation out there regarding what is a related small business expense.

Do NOT be the business owner who buys a new vacuum for your office and claims it as a business expense because you used it in your content to help sell the product.

DO be the business owner who buys the same vacuum, raves about what it does in your office (and rest of the house), and has an affiliate link where you earn money as people go and buy it because you referred them to it. WITHOUT claiming it as a business expense. Just record and claim the income. 

Just because there is a lack of being able to claim it as business expenses does not mean it’s a bad move for your business. Being an affiliate for the things you love and use can be a very lucrative stream of revenue for your small business!

Was This Helpful?

If you found this post helpful I would be forever grateful if you would take a moment to pass it along to a business friend right now!

Are your sales good but your bank account seems to be lacking? Profit Margin can be the problem.

In the Profit Plan Blueprint I walk you through not only how to calculate your overall profit margin, but also the profit margin for each service you provide. Helping you clearly see what may be causing a cash flow issue in your small business. Grab it below if you haven’t already!