Protecting Your Online Assets - Affiliate Programs

If you have an online business, or even a "bricks and mortar" business with an online presence, then there"s a good chance that you either currently have, or have thought about starting, an affiliate marketing program. There are many different types of affiliate marketingThe way a business organization or an individual identifies its customers, defines and develops the products or services that its customers want, and sells and distributes those products or services to customers. The process of researching, promoting, selling and distributing a product or service. Marketing includes advertising, publicity, promotion, pricing, sales and distribution of the goods or services. programs, ranging from simple link or banner exchanges to programsE.g.affiliate program, a program that allows other companies, or individuals, to market a company’s products or services for a commission fee per item sold. that pay the referring website a portion of salesAn exchange of goods or services for currency or credit. A sales letter is a form of direct mail in which an advertiser sends a letter to a potential customer. made to customersA customer is someone who makes use of the paid products of an individual or organization. This is typically through purchasing or renting goods or services. that come from that referring website. In addition, a well-conceived affiliate programE.g.affiliate program, a program that allows other companies, or individuals, to market a company’s products or services for a commission fee per item sold. can be a great source of networking, income, publicity, etc.
But as with most other areas of running an onlineE.g online business, a home business (or "home-based business" or "HBB") that operates from the business owner's home office exclusively via internet network. business, there are risks.
Affiliate partners can and sometimes do sue. It"s often hard to imagine this type of scenario, as the relationship between you and your affiliateAn individual or company that markets a merchant’s products or services and it paid only a sales commission fee.Typical term for a web site that drives traffic to another web site in exchange for a percent of sales from users driven to the site. partners will usually start off with the best of intentions, and nothing but good will.
But if expectations are not met, or opinions or business plans change, and your partnersBusiness partner is a term used to denote a commercial entity with which another commercial entity has some form of alliance. may feel slighted. And regardless of whether or not they have a well-founded claim, they can still file a lawsuit and present a significant distraction to you, and force you to incur a great deal of expense in defending against the lawsuit.
So what can you do to protect your hard earned business?
First of all, if you haven"t done so already, you should organize your business in a way that provides a certain degree of protection for your personal or non-business assets. It"s generally thought that the best time to organize your business - either as a corporation or a limited liability company ("LLC") is when it begins (or even just before it begins) operations. Many business owners believe that the liability protections of a corporation or LLC are valuable only after the business begins to make a certain amount of money. But consider this - without the protection of a corporation or LLC your personal assets (which can include your house, your savings, and your cars) are at risk when someone sues you. A corporation or LLC is considered to be a separate legal entity under the law, an entity that it separate and distinct from you personally.
Whether you choose a corporation or LLC will depend on your tax situation, the size and type of your business, whether you have any co-owners, and what are your future plans for growth. In some situations, a might be better to have a corporation, in which case you"ll have to determine whether a "C" corporation or an "S" corporation is a better fit. Again, this will largely be driven by tax considerations.
Almost without exception, you should not be operating your business as a sole proprietorship or limited partnership. Those entities provide very little (if any) legal protection for your personal assets, and in fact, might actually expose your businessThe production/distribution of goods or services for profit. Such activity can be carried out by an individual, a family, a partnership, or an incorporated company. to a higher degree of risk.
The cost of forming and maintaining these legal entities is not as high as you might think. The costs are especially reasonable when you consider how much they could ultimately save you if legal problems ever do arise. All it takes is a single lawsuit, with a proper corporate entity protecting your homeA home business (or "home-based business" or "HBB") is a small business that operates from the business owner's home office. and life savings, and you"ll be glad that you took the time to form your corporation or LLC.

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