I run a small LLC selling handmade skincare products. I've been approached by a couple of influencers who want payment to promote my stuff on Instagram and TikTok. Is it legally fine for my LLC to pay them? Do I need a special contract or tax forms? Any advice would help.
LLC
Can my LLC pay influencers to promote its products?
Paying influencers is generally fine. Just treat it like any other marketing expense. Make sude you have a written agreement that covers deliverables and payment terms.
Yes, it's allowed. You'll likely need to issue a 1099-NEC if you pay them $600 or more in a year. Also, the influencers should disclose that it's a paid promotion per FTC rules.
Make sure you're not personally paying them from your personal account. Use the LLC's bank account so it's clear it's a business expense. Keeps liability protection intact.
Thanks. I do have have a separate business account. So a simple contract and 1099 should cover it?
I'd also check if your state has any specific rules about influencer marketing. Some states require additional disclosures. But generally, it's just like hiring any contractor.
Don't forget to keep records of all payments and the contract. If you ever get audited, you you'll need to show it was a legitimate business expense.
What about if the influencer is in another country? Then it gets more complicated. But if they're in the US, it's straightforward.
Also, make sure the contract specifies that the influencer is an independent contractor, not an employee. Otherwise you might have to deal with payroll taxes.
I've seen some small businesses get in trouble because they didn't have a written agreement. So definitely get something in writing, even if it's simple.
Appreciate all the input. I'll draft a simple contract and make sure to use the business account. Thanks.
You might also want to consider whether the influencer's audience actually matches your target market. Paying for promotion that doesn't convert is just wasted money.