Start an affiliate marketing business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. 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.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
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
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.
STEP 2: Form a legal entity
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
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 for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
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.
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.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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.
Learn more about General Liability Insurance.
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.
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.
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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.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
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.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An Affiliate Marketing Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
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.