Social Media Influencer Independent Contractor
Once, they laughed off social media influencers as “made up” and “unrealistic.” Still, many social media influencers of today are laughing all the way to the bank. The idea of potentially earning the same as a full year’s salary from their influencer activities alone. It is possible for someone with as few as ten thousand social media followers :
According to Vox, a micro-influencer, defined as someone with 10,000 to 50,000 followers, can earn anywhere between $40,000 and $100,000 per year.
On the other hand, influencers with millions of followers can earn tens of thousands of dollars per post. Top influencers can make hundreds of thousands of dollars to millions per year.
Figures like that have drawn people’s attention from all walks of life. To check out what it’s like to be a social media influencer and if it’s something they should consider. It has created many opportunities for influencers and marketers. To team up to create marketing campaigns that benefit the influencer and the marketers alike. Before doing so, it is important to understand what it means to be a social media influencer independent contractor. And why you may need an influencer management contract attorney. Thus, we want to review some of the common stipulations in the contracts of social media influencers.
Scope of Work Considerations
Suppose potentially working as a social media influencer independent contractor or hiring one. One issue that comes into consideration is the precise definition of the scope of the work that an individual will perform. It is critical that the contract between the two details some of the following:
- The Type of Work to be Performed – The contract should have specifications about the kind of work that will be performed by the social media influencer. This should include some precise details about the kind of post that will be created.
- The Endorsement That the Influencer Must Make – Companies that hire influencers to work for them are looking for someone who can literally influence others to take a particular type of action. As such, the endorsement that the social media influencer needs to make on behalf of the company should be laid out in full detail. Influencers need to offer a convincing pitch that makes it seem as though they are true fans of the product (regardless of how they may really feel). This needs to be explained in the contract as well.
- The Length and Number of Posts – In some cases, the influencer is paid for a single post that they release at a strategic time. However, there are some companies that will bulk order a number of endorsements that they can spread out over a certain period of time. These considerations should be spelled out in detail in a contract between an independent contractor and their business partner.
Does a Social Media Influencer Qualify as an Employee or Independent Contractor?
Many people run into issues when working as social media influencers, whether they should be considered employees or independent contractors (IC). Most social media influencers would and should be under the classification of independent contractors. It is because they can use the flexibility of their status as an IC to do promotional pitches for several different companies via their social media activities.
Many companies want influencers to pitch their products to them via social media. However, those companies also generally want to spread their marketing budget across several influencers. Therefore, they will not necessarily hire influencers as full-time employees. Besides that, the influencers generally want to be left out of that and would prefer to field offers from various companies across the spectrum. Thus, most social media influencers will voluntarily qualify themselves as independent contractors in their work. It is an arrangement that seems to work best for them and the companies they work for.
Agreement to Release Data
Another thing that social media influencers frequently need to agree to is the release of certain performance data. That is to say that they may need to agree to the terms of their contract. Terms allow the marketing team they have signed on with to see key performance indicators (KPIs) related to their performance on social media.
The types of data that marketers may want to look into include:
- The number of followers that a particular account has
- The amount of time the average follower spends engaging with a particular creator’s account
- The demographics of the groups that are most likely to engage with a particular influencer
These, and many other types of data, are of value to marketers. They review this data and determine how much more or less they would like to spend on the services of any particular influencer. They can only really make these decisions if they have the data in front of them. That is why many contracts include information about gaining access to this information.
Why You Should Have an Attorney Look Over Your Contract
It is exciting to launch into the career of being a social media influencer. Still, taking a step back before signing a contract and having a social media influencer contract lawyer look it over is wise.
You need your attorney to examine your contract. That is to ensure that it conforms to the standard type of contract that a social media influencer might be expected to sign. It is the type of service that we can provide to you.
Suppose you contact us today and speak with one of our seasoned attorneys. Then, we can start to go over the offer presented to you. We are here to help you understand the deal presented to you. And if that deal makes sense for your future. We can also warn you of anything suspicious in your contract that you may want to review more closely. We firmly believe that these two services are among the most valuable things we provide to any of our clients. We hope that you will benefit from them as well!
Other Blogs of Interest
- Do Influencer Managers Have Contracts?: Need for Safe and Fair Influencer Management Agreements
- Is a Social Media Influencer an Employee? | Influencers as Employees
Do Influencers Get a 1099? | Influencer Independent Contractor
Does an influencer receive 1099? So, what is 1099? If you are classified as an independent contractor, which you likely are if you’re a social media influencer, you’ll receive 1099, which is a form at the end of the year. And then, the compensation received by the influencer from any of the sponsoring companies will have no taxes withheld. At the end of the year or quarterly, which would be preferable, the influencer would need to pay to the government whatever self-employment tax would go with whatever you had been compensated. In a normal professional environment, you would have either employees or independent contractors. Employees would receive a W2, and their compensation would have taxes taken out of it during the regularly scheduled payroll.
Can Social Media Influencers Receive 1099?
As an influencer, you’re not acting as an employee. You’re acting as an independent contractor. You’re just doing a specific amount of work for a sponsoring company for a specific amount of time. You don’t see most influencer agreements go beyond a year. Most of the time, they’ll be 12 months, and then they’ll be renewable by the agreement of both parties. Sometimes it’ll just be an event, so you must show up for a day or a few hours. And in that scenario, it’s a very short-term relationship, and being an independent contractor would be the only way to classify the influencer properly. I suggest it if you’re an influencer and haven’t done this before. Suppose you’re uncertain how to handle the tax implications of this. In that case, you need to reach out to an accountant, preferably close to you.
I guess it doesn’t matter nowadays, but someone familiar with social media influencers is taking tax deductions. What they’ll likely do is they’ll tell you that you need to create an LLC. You need to get a tax ID number from the IRS, called an EIN, and then you’ll also need to create a bank account under that LLC. And then, you’ll put all compensation and expenses through that bank account, so you can easily track the expenses. And then, at the end of the year, you can deduct many of the things you need to be an effective influencer. It could be travel costs, lodging, meals, or any cost associated with meetings, depending on what type of influencer you are. It could be clothing or different products.
There are just a ton of things that you can deduct. And so, you may come out ahead if you were just classified as an average employee.
The Evolving Arena for Influencers
There are certain tax benefits to being an influencer. It’s a different type of job, as you probably know. And I think the professional environment is evolving regarding how they see influencers and what the potential tax deductions for them can be. So, does an influencer receive 1099? Very likely, yes. They would. If you have any questions about your independent contractor agreement or influencer agreement, we certainly can help with that.
Are Social Media Influencers Independent Contractors? | Influencer Media
Are social media influencers independent contractors? Previous jobs that an influencer has had are very likely employee W2 opportunities. Let’s say you’re working in retail. You are an employee, meaning the employer has complete control over you. They tell you:
- Where to work
- When to work
- How much you work
- What are your duties?
You’ll receive a W2 at the end of the year, with taxes withheld in your paychecks throughout the year. In that scenario, you’re an employee.
Conditions that Makes an Influencer a 1099
Now, as an influencer, your job is different. You aren’t working full-time for any of these companies you sponsor. Depending upon the relationship, you’re doing a short-term burst of marketing.
And for the most part, it’s up to you, maybe the exact content you post. I mean, there’ll be some bare bones. We want you to post this many times a month. We want you to do 90-second spots on your YouTube videos once every two months, whatever it is. But you’re not going into a nine-to-five job every day. And when the sponsor does not exert complete control over the influencer, that’s more of an independent contractor relationship. And so, at the end of the year, the independent contractor receives 1099, and any compensation paid to the influencer has no taxes withheld. At the end of the year, the influencer pays the taxes on all their compensation.
Smart Way of Maximizing 1099 Tax Deduction Benefits
Is there an advantage to being an independent contractor versus an employee? Well, if you’re a smart, independent contractor, you’re going to create an LLC, and then you’re going to get a tax ID number, an EIN through the IRS, and then you’re going to create a bank account for that LLC. And then you’re going to run all compensation and expenses through that account. As an influencer, you can take many tax deductions as an independent contractor. Many of the things that go into being an influencer can be deducted:
- Maybe you’re in the fitness industry business and trying out new products. Well, you can deduct the products you bought, meals, gas, and cars sometimes.
- You can deduct many things when considering your own business as an independent contractor and self-employed.
I’m not an accountant or tax attorney, so I’m certainly not a complete expert on this, but I suggest you reach out to an accountant. They can assist you in setting up the LLC and then let you know exactly what you can and cannot deduct. And that way, you can maximize your compensation and tax deductions at the end of the year. If you’re not doing that, you’re leaving a lot of money on the table. There may be scenarios where you work so much for one sponsor. You may be classified as an employee by doing so much work for them over a week, month, year, or whatever. A scenario like that would rarely exist. There may be times when there’s so much activity between an influencer and a sponsor that they can be employees.
Independent Contractor Misclassification
Suppose you’re concerned that you’re being misclassified as an employer or independent contractor. In that case, I suggest you speak to the sponsor and let them know your concerns and talk through that. So, that’s a little about whether a social media influencer is an independent contractor. They likely are, and you will receive 1099 at the end of the year.
How Are Social Media Influencers Taxed? | Influencer Taxes
How are social media influencers taxed? First, suppose you are an influencer, likely. In that case, your employment relationship with whatever sponsoring company you’re working for or endorsing is via an independent contractor relationship. As an independent contractor, you’ll receive 1099 at the end of the year. No taxes from any compensation you would receive from the company you’re working with. As an employee, you would receive a W2, and taxes would be withheld from whatever the regularly scheduled payroll period is. And then, at the end of the year, when you file your taxes, it’s very likely that you won’t have to pay much to whatever state or federal government that you’re working in.
Influencer Taxes and Deductible Income
As an independent contractor, as I said, no taxes are withheld throughout the year. So, at the end of the year or quarterly, depending upon how you want to do it, you’re going to have to pay self-employment tax, once again, to the state or federal government. I would suggest a few things: one. It would help if you met with an accountant before doing any work as an independent contractor influencer. It would help if you created an LLC, got an EIN from the IRS, and got a bank account for that business, and ran all compensation and expenses through that. That way, you can take business expense deductions at the end of the year.
If you’re an influencer, you must consider yourself a business. All the things that go into being an influencer depend upon what type of industry you’re in. You can use, for the most part, as tax deductions at the end of the year, like travel or product, depending upon what you are.
If you’re in fitness, it could be weightlifting equipment. Collaborations with other sponsors, getting there, and expenses paid can be used as deductions at the end of the year. However, as I said before, you need to hook up with a good accountant to figure out how to structure the LLC you’ll create and then know what types of deductions you can take at the end of the year.
Distinguishing an Independent Contractor Over an Employee
What is the distinction between being an employee and an independent contractor? The IRS lists a 20-factor test describing what makes someone an independent contractor versus an employee.
Just a few of them have control over the influencer, meaning a full-time working relationship. Do they tell you where to go? How long to work, exactly what to do, and do they offer benefits? So, health, vision, dental, disability, life, insurance, and retirement are all those things. It’s very unlikely that you will have an employment relationship between you and the sponsor if you’re working as an influencer. Maybe it’s a very strong relationship, and you’re working for them daily. Once again, it depends upon the state that you’re in. But most employment relationships between the sponsor and the influencer will be through an independent contractor relationship.
Social Media Influencer Tax Deductions | Influencers Taxes
What are some of the tax deductions that an influencer can take as an independent contractor? As an influencer, your employment relationship with all the sponsors will likely be that of a 1099 independent contractor. And that means, at the end of the year, sponsors provide you with a 1099, and then they will withhold no taxes from your compensation throughout the year. So, you will be responsible for the self-employment tax at the end of the year. Now, a smart influencer is first going to talk with an accountant. Then, that accountant will have you set up an LLC in whatever state you live in.
Influencer Tax Deductible Self-Employed Expenses
You’ll create a bank account with that LLC, then have a tax ID number. And by doing that, you can deduct many expenses and things that go into being an influencer. For instance, you could do the:
- Travel expenses
- Home office deduction
- Advertising and marketing
- Legal fees
Whatever industry you’re in, fitness, fishing, or whatever. You can likely deduct a product that you buy to be an influencer in that arena as well. There are dozens of things that you can deduct as an influencer. Now, I’m not a tax attorney or an accountant. I’m just a contract attorney. As I said, I suggest reaching out to an accountant you feel comfortable with. They can walk you through exactly the things that you can and can’t deduct and then things that you can track throughout the year as well.
Someone New in the Business Needs to Know About 1099
One of the worst things to see is when you have someone new to the industry. They haven’t been an influencer before, they haven’t made money as an independent contractor before. They simply don’t realize that there is no tax deduction. And then they will be responsible for potentially a large amount of money paid to the government, either quarterly or at the end of the year. And it’s a shock to them; some spend more than they save. And then they have a problem at the end of the year. So, be aware that almost every relationship an influencer will have with a sponsor will be that as a 1099 independent contractor. There are certainly some great tax advantages that you can take advantage of as an independent contractor. I mean, the main downside to not having an employment relationship, an employee would get benefits:
- Paid time off.
They’ll pay for your licensure and continuing education. They will provide a lot of the things needed to do your job. As I said before, as an independent contractor, you can take all those things and then deduct them at the end of the year. But many people simply hate having to be the ones to initiate getting those things. So, most people I work with hate getting health insurance and disability and life. That stuff they don’t want to worry about, but something you must do when you’re self-employed. So, that’s a little about social media influencers’ tax deductions. If you have any questions or concerns about your management contract, feel free to call my law firm.
How Much Does an Influencer Manager Charge? | Cost of an Influencer Agent
How much does an influencer manager charge? What commission percentage will a manager take from any of the compensation received by an influencer? First, let’s discuss the distinction between an agent and a manager. An agent normally is thought of in the actor realm, and specific laws dictate how much an agent can charge an actor. They have to be a member of a licensed agency. And some specific guidelines dictate what they can and can’t do. The influencer market is, at this point, pretty much unregulated. I find that actors have dual roles of agents and managers who do separate things for them.
Cost of an Influencer Manager or Agent
Whereas I find most influencers think of an agent and manager as the same thing. And that would be somebody who facilitates business opportunities for the influencer and then assists in negotiating the price and dealing with the contract. Most influencers think of that in the same capacity simply because there’s no need to have both as an influencer. I mean, one of the biggest influencers could have a manager who handles the day-to-day issues for talent. Whereas the agent generally handles the nuts-and-bolts business stuff. But for most influencers, that’s unnecessary. One person can do the job, so that can be known as an agent and a manager. As far as a percentage goes, as I said before, agents for actors in California are capped at 10%. In contrast, the influencer market is essentially unregulated at this point.
Most social media influencer management agencies or managers charge around 20% commission. It can be less or a little bit more, but somewhere between 10 to 20% is a standard amount. Now, that certainly is negotiable. It is probably based on the manager’s experience, the client base, and the proven track record. Suppose you have a manager who doesn’t have much experience. In that case, you shouldn’t pay them as much, at least initially, until they prove themselves. How the compensation would work is the influencer is designated as an independent contractor, and then the sponsor will pay. Usually, the payment will go through the agency or manager. The manager will take their cut, and then the rest will go into whatever designated bank account the influencers want the money to go into.
The Commission Percentage After Termination
And then one consideration is after the contract terminates. There’s almost always going to be a clause that states the manager will continue to receive a percentage of any deal they bring to the influencer. That is even after the contract terminates. Let’s give an example. Let’s say it’s a fitness influencer. They have a sponsorship with an apparel company. The manager negotiated the deal. I got 20% from whatever it was, and the influencer, for whatever reason, terminated the contract with the manager. Well, that clause will then state, for normally, a year after the contract ends, the influencer still has to pay 20% if they decide to stay with the apparel company back to the manager.
The reason why managers do this is that what they don’t want to do is get a deal and bring it to the influencer. Maybe it’s an awesome opportunity. The influencer terminates the agreement, still takes the deal and then avoids having to pay the manager any commission.
Now, everything’s negotiable. You can certainly try to negotiate to reduce the time you have to pay the manager after the contract terminates. You can also reduce the percentage by a quarter if you go 20% in Q1, 15, 10, 5, or something like that. But you’re rarely going to get a management contract that doesn’t have some language like that. I mean, honestly, it’s a reasonable request by a manager. It would be unfair if they would bring a deal to someone and then have that person avoid having to pay them anything.
Restrictions in Exclusive Management Contract
Another thing to consider is whether the manager has an exclusive relationship with the talent. Normally, any management contract will be exclusive, meaning the influencer cannot use anyone else to facilitate/negotiate any of the sponsorship opportunities. It means, even if a friend or another influencer, suppose they were reached out to directly by a sponsor. Anything that comes to the influencer must go back to the manager. Then the manager would be the one who negotiates the deal and would get the percentage.
Once again, a manager doesn’t want an influencer from getting around having to pay them by having stuff funneled through either a friend or contacting the places directly. The manager’s role is to find opportunities that the influencer couldn’t do for themselves and then negotiate the price. And hopefully, they will bring in 20% more than they’re taking, so in the long run, it’s a win-win for both parties. So, that’s how much most influencer managers make.