How to Start an Affiliate Marketing Business
Affiliate marketing is the art of turning fame into a business. People who have managed to attract an audience are paid to endorse related products or services on their public platform. For example, if a popular nutritionist blogger endorses a new line of supplements.
You may also be interested in additional online business ideas.
Learn how to start your own Affiliate Marketing Business and whether it is the right fit for you.
Ready to form your LLC? Check out the Top LLC Formation Services.
Start an affiliate marketing business by following these 10 steps:
- Plan your Affiliate Marketing Business
- Form your Affiliate Marketing Business into a Legal Entity
- Register your Affiliate Marketing Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Affiliate Marketing Business
- Get the Necessary Permits & Licenses for your Affiliate Marketing Business
- Get Affiliate Marketing Business Insurance
- Define your Affiliate Marketing Business Brand
- Create your Affiliate Marketing Business Website
- Set up your Business Phone System
We have put together this simple guide to starting your affiliate marketing business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Affiliate Marketing Business Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
What are the costs involved in opening an affiliate marketing business?
Costs are relatively low to get started in affiliate marketing, depending on what a person hopes to do. A blog or social media platform are excellent places to get started, and they don’t cost a thing.
What are the ongoing expenses for an affiliate marketing business?
Most affiliates won’t increase their expenses much as they start to take off in popularity. You may choose to invest in more professional equipment, or to hire people to help manage your business affairs.
Who is the target market?
Companies with a primarily consumer audience are the biggest market for affiliates, but they're certainly not the only option. Political candidates or other celebrity figures may turn to affiliates for endorsement, as will commercial or private entities that may want to boost their reputation to the public.
How does an affiliate marketing business make money?
The most traditional way an affiliate makes money is by receiving a certain commission or fee each time their partner receives a click or sale. For example, if a blogger mentions Product X’s company in a post, and Product X receives 1,000 click-throughs from the blogger's site to theirs, then the blogger will make a certain amount of money off each click. The amount the blogger will make is based on their following and perceived credibility in their niche. However, some affiliate marketers will choose to be paid a flat rate for dropping the name into the post.
How much can you charge customers?
Kim Kardashian can charge brands $250,000 or more for a single post on Instagram, so it’s clear that companies are willing to pay for affiliate marketing. When you’re first getting started, you can negotiate either a flat fee, a cost-per-click arrangement, or a commission fee. For example, you’ll receive 10% on every sale generated from your posts.
How much profit can an affiliate marketing business make?
There are some affiliate marketers pulling in $2 million a year, so it’s clear that affiliates can turn their popularity into a business. However, realistically speaking, most affiliates will make a modest supplementary income until they can fully build up their client base. The biggest income bracket for affiliate marketers in $20,000 or less a year.
How can you make your business more profitable?
Affiliate marketers need to be in the public eye as much as possible. You may want to consider public engagements, speeches, or a larger website presence to accomplish this goal. You can also consider developing your own line of products to generate additional profits for yourself.
STEP 2: Form a legal entity
The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your affiliate marketing business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an affiliate marketing business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Affiliate Marketing Business needs and how much it will cost you by reading our guide Business Insurance for Affiliate Marketing Business.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market an affiliate marketing business
Most brands will find you as opposed to the other way around. The best way to market this business is by increasing your followers whenever and wherever possible. The more word-of-mouth you generate, the more likely it is that affiliates will start contacting you to sign-off on their products.
You may also want to include a ‘Contact Me’ section of your website that specifically states you’re open to potential endorsements. However, this may send a message to your fans that you’re more interested in making money than you are about them.
How to keep customers coming back
Business partners are looking to generate either positive interest or sales. Affiliate marketers will need to develop a style of when and how to mention certain brands in order to maximize their audience's response.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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Is this Business Right For You?
Affiliate marketing is excellent for a passionate person who enjoys being in the public spotlight. They should be good at promoting brands without coming across as a salesperson. They’ll need to be good at handling questions and potential criticisms from both their fans and the media.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at an affiliate marketing business?
Affiliate marketers make their name based on a specific talent or niche, so the majority of their time will be spent concentrating on the skills that have initially attracted their audience (e.g., blogging, YouTube videos, etc.). However affiliate marketing may also include the following:
- Blending product names into their content
- Updating social media for affiliate purposes
- Negotiating payment with business partners
- Finding new affiliate companies to work with
- Ensuring legal compliance of all posts
What are some skills and experiences that will help you build a successful affiliate marketing business?
People become successful in affiliate marketing by approaching the problem from a number of different angles. For example, some are great writers while others are comedians or pundits. Some give relatively uncontroversial advice to people via video or blog. Others take a hard stance against a hot button issue in the media to build up their audience.
No matter what, you have to establish trust with their audience before becoming successful at affiliate marketing. The key is to be consistent about your point of view, and to speak to your following without trying to control them.
What is the growth potential for an affiliate marketing business?
It may be difficult at first to work your name or cause into the public eye. There are a lot of people (both online and off), who are trying to become public personalities in practically every given industry. However, there are also a number of people who eventually drop out of the public eye or move onto more straightforward endorsement deals. This leaves a vacuum for up-and-comers to edge their way in.
Not sure if an affiliate marketing business is right for you? Try our free Business Idea Generator and find your perfect idea.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting an affiliate marketing business?
Hopeful affiliates may want to try paid advertising if they’re hoping to speed up their influence. While organic content is always better — because you’re building up an audience based purely on your words and talent alone — it will take longer to do. Facebook and Google ads can be expensive, but they’re typically the fastest way to get a new venture off the ground.
Affiliates should utilize cross-channels as a way to build up their audience. For example, having a website following as well as an active email list. People who choose this career path must be relentless about creating content that is unique and eye-catching. But they'll have to do it such a way that doesn't overwhelm or frustrate their audience.
Affiliates should also be careful about who they endorse and why. This is especially true at the beginning when it will seem like the right move to say ‘yes’ to any potential partner. But selling or endorsing a problem just for money will may cause your audience to lose respect for you. The same could be said for selling too many products, or for endorsing a product that has a tarnished reputation.
There are also strict federal rules affiliates must follow regarding disclosure, so you will need to understand the most current FTC regulations to avoid repercussions.
How and when to build a team
Affiliate marketers typically won’t need a team unless they’re extremely popular and juggling several major endorsement deals. In this case, you’ll need to hire assistants who can ensure all legal and business obligations are being met.