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How To Record Affiliate Payments

Today I want to talk to you about how to record affiliate payments. 

What I’m talking about here is you being an affiliate for businesses and companies where you’ve used their products, you’ve used their services, you’ve used their programs yourself and they’re important to you. 

They’ve made a difference to you, and you want to recommend them to your tribe because you know they’ll make a difference to you too. 

You need to record affiliate payments for your accounts and tax return and today I’m sharing how to do it.

How To Record Affiliate Payments

Hi.  I’m Rosie Slosek.  I’m a tax return coach for cake-loving freelancers in the U.K.  I’m at OneManBandAccounting.co.uk, and I offer retreats, courses, and coaching (even my How To Do Your Tax Return course has retreats).

Today I want to talk to you about how to record affiliate payments. 

What Are Affiliate Payments?

What I’m talking about here is you being an affiliate for businesses and companies where you’ve used their products, you’ve used their services, you’ve used their programs yourself and they’re important to you. 

They’ve made a difference to you, and you want to recommend them to your tribe because you know they’ll make a difference to you too. 

I want to extend this into actually being an affiliate–for example Amazon, Skimlinks–that kind of thing as part of it as well. 

This is about affiliate payments, that kind of affiliate payment rather than the aggressive affiliate marketing, although the income is treated in the same way. 

What You Need To Do First

The first thing you need to decide when you record, how to record your affiliate income is, well, first of all, you need to have records of it. 

It sounds very, very simple, but actually I need to say that upfront. 

Business Or Personal Income?

The first thing you decide is whether or not it’s actually business income or personal income.

Now, if your business is a limited company, then obviously everything will be going through on your limited company account, so that’s very simple. 

It’s obviously going to be business income.  Again, if you’re a sole trader, if it’s going through your sole trader business, then it is business income. 

The reason I’m breaking it up into business and personal is because I know a lot of you will actually be receiving income through a personal blog, so you may have a business blog.  Some of you, I know, have actually got a sole trader business, a limited company, a job, and income you’re receiving through your personal blog.  If you’re not sure if your blog is personal or a business one, then I’ll include the link in the transcript (here). You can go and have a look in Is My Blog a Business and decide.

The first thing is if the affiliate income is coming through promotion through your business.  For example, for me, I’m an affiliate for Denise Duffield-Thomas’s Lucky Bitch Money Bootcamp because I’m a member of it, it’s absolutely brilliant, and it’s made a big difference in my life.  Clearly I’m going to include an affiliate link to it in the transcript 😉

I signed up for that course, that program on my personal email because it’s me personally.  However, the promotion of it is through my business, so I allocate any affiliate payments to that into my business.  That’s one way of deciding.  However, if I was getting most of the money from the Denise Duffield-Thomas program from, for example, recommending it to family and friends, then that would be personal income, and it goes in the casual earnings.  That’s the first thing.

Secondly, if it’s personal income.  If you have a personal blog, you’ve got advertisements on there, and you’ve got the affiliate payments through that, then that is personal income.  Again, it needs to go on your self assessment tax return as personal income.  Generally speaking, you just need to put in sort of the casual income category.  Again, if you’re not sure, go and look at Is My Blog a Business.  That’s the main thing.  Is it personal or is it business income?

Now if it’s business income, it’s very simple.  It goes in your business income.  It needs to go in all the records.  You need to keep all these records of where it’s from and how much it is.  It’s perfectly okay for you to just keep the records that are sent to you. 

If it’s a sole trader business, you just add it to the income in your spreadsheet or in your software, if that’s what you use.  Then you just add it into your income on the self-employment pages.  If you’re a limited company it’s the same thing.  You basically just need to give all the information to your accountant and they’ll sort it out for you. 

If it’s personal income then it needs to go in the casual earning section of your self assessment tax return.  It doesn’t go in the business section.  You won’t necessarily get taxed any differently on it, but obviously it does need to go in there.  That’s the next thing.

You Need To Keep Records


Then finally it’s just the record keeping part of it.  You do need to keep records because it is income. 

This doesn’t necessarily need to be complicated.  It just means that you need to keep the emails coming because usually you get a record through your email of here’s your affiliate payment.  If it just goes straight into your bank account, then again obviously keep a record of all of that. 

But that’s it, really.  It doesn’t involve any more work.  Just be aware that you do need to keep the records of that.

Affiliate Payments Expenses

Also, I just want to flag out the fact that occasionally there are actually expenses relating to affiliate income. 

If this is personal affiliate income then, sorry, ignore this part because you can’t claim any expenses.

But if it’s business affiliate income, occasionally you, for example, will get charged for a currency conversion because quite often they will come in in a currency that isn’t yours or isn’t the currency you use in your PayPal account or depending on how it’s paid to you.  If you have non-sterling transaction fees, currency conversion fees, sometimes even bank charges or any of those, sometimes it can be something like through Etsy or one of those type of third party platforms, they are actually tax deductible expenses. 

Again, don’t forget to go and look at those and make sure that you include those as well.  Obviously they will go in the tax deductible expenses.  If you are a limited company, then make sure you mark them so that your accountant understands what they are.  Some accounts, this is all a bit new to them, and they do not necessarily know what all these are, so just flag it up.

None of this is actually a big deal.  This is actually all very simple.  Generally speaking, you need to know if it’s business income, if it’s personal income.  You need to put it in the business income if it is.  You need to go into your casual earnings on your personal tax return if it’s not.  You need to keep the records.  Check if you’ve got any related expenses to it if it’s business income.  Then that’s it.  Enjoy. 

I’m Rosie Slosek of One Man Band Accounting.  If you also want a free expenses spreadsheet and free income spreadsheet, then you can go into my website and you can download that.  I’ll put the link in the transcript, again, so thanks. 

What’s your experience with recording affiliate payments?

Share with me on FacebookInstagram or leave a comment. I’d love to hear from you.

 

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