Need Advice for Referral Service

Discussion in 'Growing and Managing a Business' started by f6Derek, Mar 26, 2010.

  1. f6Derek

    f6Derek
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    Hi all! New to BAF, so forgive me if my initial posts are in the wrong categories.

    Here's my idea. I have a growing web design business and would like to use Social Networking (online and offline) to act as a "sales team" by referring my company to potential customers.

    Question: What do I have to do or include in my proposal to these "referrers" that covers me legally when it comes to the financial side of paying people to refer my company new work?

    Obviously I know that I have to claim this expense at the end of the year, but how can I make this simple for people who sign up? Is there a "creative" way to achieve this particular setup? Has anyone done anything similar that has some insight on how to make this as simple on the referrers as possible?

    My fear is that by making this too complicated for referrers it will result in little to no sign up rendering my sales experiment useless.

    Thanks in advance for your advice and time!

    Derek.
     
  2. Fergal

    Fergal
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    Hi Derek, welcome again to our business forum and thanks for asking your business questions.

    This thread has some excellent suggestions on how to start an easy, simple affiliate programme - Using Affiliates & Promotional Codes. Maybe you could please have a read of it and reply back with your thoughts and any further questions you have.

    If you are starting out with a relatively small scale affiliate programme I don't feel that you have a lot to worry about when it comes to legalities. Once you put a system in place that allows new clients to tell you who referred them and you then pay your referrers you should be OK. The thread I linked to above goes through the details as to how you can do that. If you still feel uneasy about the legalities you could run your plans by a solicitor / lawyer.

    I look forward to your response.
     
  3. seanstevens

    seanstevens
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    Hi Derek, welcome to the forum. If you are using something like Twitter then you shouldn't need to pay people. Spend a little time to build up those you follow and who follow you and have people retweet for you, it can work well especially in the web business.

    A friend in the web design business now gets 50% of his business from social media as he spent time building up his network and he does not have to pay anyone to do it for him.

    Best of luck.
     
  4. f6Derek

    f6Derek
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    Both great ideas... I'm going to start my Twitter raid on Monday :) I do have an query with the Affiliate Marketing and keeping it "small":

    Again, I'd be claiming the expenses as wages paid or something similar, yes? I'd have to if I'm going to have information about this on facebook and my own website?

    Does a disclaimer stating that "affiliates SHOULD report their referral awards as income" absolve me of any legal or financial ramifications?

    Thanks in advance!
     
  5. eddane

    eddane
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    The most important thing is to always pay your affiliates on time - your reputation is very important!

    Ed
     
  6. Fergal

    Fergal
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    Derek, it would be a good idea to run some of those questions by an accountant in your area, because the answers will depend on the legal jurisdiction that applies to your business. Having a chat with an accountant is generally a good idea, when you are setting up a new business. A good accountant will give you advice, that will save you more money, than the fees they charge you.

    You could include a statement saying something like "affiliates are responsible for their own taxes". Again it would be a good idea to ask an accountant about the specific regulations that apply to your area.
     
  7. f6Derek

    f6Derek
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    Thanks a lot for your time and your help! I'll let you know how it goes over the next couple months.

    Derek.
     
  8. etradecash

    etradecash
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    Hi Derek,

    It is a good advice to speak with an accountant, as the initial setup of the company and the way you claim expenses do have taxation implications, I am an accountant, but based in New Zealand, so you need someone familiar with your area's accounting standards, I can however offer you the input, that affiliate marketing would be a good option for your marketing efforts as it requires no capital outlay, as long as you offer a decent incentive for their efforts, as there are a lot of people in that market, this incentive should be accounted for as a business expense, not wages, as wages incur a large amount of clerical efforts that cost.
    Taxation deductions, holiday pay etc...
    Hope this helps

    Regards

    Mark McKenzie
     

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