Whether you outsource or keep your affiliate marketing management in-house, you have to know some basic tax laws. After all, it is in the tax arena that many businesses seem to struggle. They are experts in their chosen niche; however, they know little to nothing about the required tax documents.

Every Online Marketer Needs to be Familiar with the W9 and 1099
The most paperwork for your taxes will come in the form of the W9 and the 1099. According to the IRS, you will need to keep copies of each of these for every affiliate for at least four years. It is during those four years, the IRS may come and ask questions. Therefore, you need to keep them safe and properly filed.

What is the W9?
If you are not familiar with the W9, then you need to learn fast. The W9 is what every affiliate must fill out, sign and turn in before you ever pay them. This is how you will track the affiliate's pay and what will keep you from having to pay taxes on their income later on.

What is the 1099?
The 1099 has two parts. First, once an independent contractor or affiliate receives more than $600 in pay over the course of a year, you are required to send a 1099 to the IRS reporting such pay. If you do not, you will be held liable for the earning of the affiliate. In order to send the IRS a 1099, you must have a signed W9 on hand. Without the signed W9, a 1099 is not valid.

Second, you must send a copy of the 1099 to the affiliate. The affiliate needs the 1099 to file their taxes. Again this is a reason your affiliate must fill out the W9. Without the W9, you have no idea who to send it to, where to send it, or under what tax identification number the 1099 should be filed.

Tracking Affiliate Tax Info Just Got Easier
In the past, tracking all this information meant having stacks of W9s and1099s neatly (hopefully) filed away in numerous filing cabinets. If you were very cautious, you would have a second set offsite in case of flood, fire or natural disaster. However, computers have changed all this. Fortunately, keeping those records straight is a lot easier.

Now businesses have the opportunity to use free tracking software. The software assures the company no affiliate receives pay without a signed W9. The software keeps the information and the digital signature secure waiting for tax season. Then when tax season hits, companies can press a button and have all the W9s and 1099s ready for the accountant.

Since the entire process is computerized, there is no need to haul files around  or store extra copies. Just back up your computer like you always do.

Computer software makes tracking affiliate's tax records a breeze. Since the software is free, you can start today and not worry about the IRS again.

About the Author:
Would you like have a service for your online business that tracks all W9 and 1099 information for your tax records on file? Try this free software for affiliate marketing management that requires payees to fill out a tax profile. Visit PayPeopleOnline.com to keep your business away from tax nightmares and raising flags with the IRS.