affiliate marketer

Disclosure: If I'm not making money through affiliate links on the post you're currently reading, it's an oversight on my part and will be corrected soon.

Question: When first starting out as an affiliate marketer, is it preferable to set up a business as a DBA/Sole Proprietorship or an LLC? What are the advantages/disadvantages to each?

Starting a new business as an affiliate marketer is an exciting adventure, but it's important that you decide the best structure for your business.  Will you be a DBA/Sole Proprietor or an LLC?

(Please note I am NOT a legal or tax expert, but here are some basics to get you started.)

What’s the Difference?

DBA stands for “Doing Business As.” By filing a DBA, you can use a trade name for your business transactions. Naming your business provides your customers with information about what you do, and it makes you memorable in the community. For example, I could name my internet business “Awesome Internet Marketing” rather than “Missy Ward.”

A Sole Proprietorship indicates that an individual owns and operates the business. Any civil or financial liability faced by your business becomes your sole responsibility. If a merchant visiting your in-home office trips going up your stairs or you make a typo on a your website that causes damages; your home, vehicle and other assets could be seized in order to satisfy a lawsuit that is filed against your company.

LLC means “Limited Liability Corporation.” It structures your business as a separate entity from you, the business owner. With an LLC, your assets remain protected if a client files a civil or financial lawsuit against your business. As an LLC, you remain responsible for paying taxes on the business’s income.

When DBA is Best

If you own limited assets, a DBA/Sole Proprietorship may be the path for you. Likewise, if your business is unlikely to face civil or financial liability then DBA makes a wise choice. You can always change your business’s structure in the future if your company changes directions or your assets grow.

As a Sole Proprietor, you must file a DBA. During the filing process, you’ll find out if another business already uses your name. You then have the choice to change your trade name in order to prevent customer confusion and protect the reputation of both businesses. Filing a DBA also protects consumers by preventing a bogus company from operating under an assumed name.

When LLC is Best

An LLC provides you with liability protection. It separates your personal assets from your business assets. While the initial paperwork is more complicated than a simple DBA, this business structure works best if you have assets you don’t want to risk losing.

An LLC also protects your name. DBA registers your business’s trade name but does not prevent other companies from using it. If you anticipate building a brand and creating an empire, an LLC ensures your name remains legally protected.

Because the Federal government does not tax an LLC, you will owe income tax on your business’ profits. If you start your business with a partner, you both share the tax liabilities.

How to File and How Much to Pay

After you determine which type of business structure works best for you, contact your state’s Small Business Administration office. You can also gain more information from your attorney or accountant.

When considering the cost, an LLC normally costs more to file than a DBA. With limited funds, starting as a Sole Proprietor is an affordable option. If you own assets, the extra start up cost of an LLC is worthwhile.

Starting a business requires many decisions that can be overwhelming for an entrepreneur. Whether you choose to be a DBA/Sole Proprietor or form an LLC, this decision starts you on the road to success as as an affiliate marketer.

Back in February, TubeMogul moved its video syndication and analytics service to its own site, OneLoad.com

If you're not familiar with OneLoad, its a tool that gives folks the opportunity to upload their videos to multiple sites (like YouTube, Vimeo, MetaCafe, Facebook, Twitter, Blip.tv and more) at one time and track the results from all of the sites, in one place. I've been using the service since 2007 and found it to be a great time saver. It's free (for non-commercial use) and offers different pricing tiers for its commercial use customers.

After receiving notification of the name change, I didn't think much of it (other than having to remember the new website address) until I read a blog post on Daniel Clark's QAQN blog, where he discussed his dissatisfaction regarding OneLoad's policy as it related to affiliate marketers.

At the time, their sign up page indicated:

Old OneLoad Terms of Service

and Section 4e of their Terms of Service stated:

“…upload, post or transmit unsolicited commercial email or “spam”. This includes unethical marketing, advertising, or any other practice that is in any way connected with “spam”, such as (a) sending mass email to recipients who haven't requested email from you or with a fake return address, (b) promoting a site with inappropriate links, titles, descriptions, or (c) promoting your Content by posting multiple submissions in public forums that are identical. Also defined as “spam” are any videos involving affiliate marketing, network marketing, cash gifting, multi-level marketing, phishing, or any videos that a reasonable person would consider to be a scam or misleading. Further, “spam” can include any content that TubeMogul deems not entertaining or informative;”

After reading that post, I reached out to the folks at OneLoad, and although sympathetic, they were not ready to change the language in their Terms of Service. That was a problem for me, because many of the presentations that I've done in the past as well as one scheduled for an upcoming conference in June, promoted the service as an efficient way for affiliate marketers to upload their quality videos to top video and social networking sites and track their effectiveness.

But, what was most upsetting to me was the fact that OneLoad was still wary of the affiliate marketing industry overall, despite its dramatic growth and positive forecast. I knew I had to reach out to Brett Wilson, their CEO to get a better understanding of their past issues, to see if there was a way that his company and affiliate marketers could work together in the future.

Oddly enough, TubeMogul had a booth down the same aisle as Affiliate Summit during SXSW in March. This afforded me the opportunity to talk with Brett quickly and follow up after the show. To sum it up, some of the issues that they were experiencing with a portion of the affiliate marketing videos, directly related to policies the video sites had themselves — they just don't want overtly commercial content.

I get that. I don't want to watch overly commercial content either.

Brett mentioned that OneLoad would be happy if affiliate marketers used the service with well-produced videos that have some entertainment value. (More commercial use customers means more $$ for OneLoad.)

I explained that in order for that to happen, they'd have to modify the language in their Terms of Service so that legitimate marketers could feel confident that their accounts were not going to get shut down just because they tagged a video as “affiliate” or “affiliate marketing”.

And so, they did. Here's the new, re-worded section, which offers protection to affiliate marketers who are producing quality videos that are not scammy or misleading.

“…upload, post or transmit unsolicited commercial email or “spam”. This includes unethical marketing, advertising, or any other practice that is in any way connected with “spam”, such as (a) sending mass email to recipients who haven't requested email from you or with a fake return address, (b) promoting a site with inappropriate links, titles, descriptions, or (c) promoting your Content by posting multiple submissions in public forums that are identical. Also defined as “spam” are any videos involving network marketing, cash gifting, multi-level marketing, phishing, affiliate marketing with low quality content or any videos that a reasonable person would consider to be a scam or misleading. Further, “spam” can include any content that TubeMogul deems not entertaining or informative;”

I'm glad that OneLoad.com was open to changing their policy because their service really saves marketers a lot of time and definitely helps with getting a better idea of what their customer base wants.

If you're new to OneLoad or need some help getting started, they offer a New User Webinar every Friday, which you should check out.

Let me know your thoughts.