Affiliates of affilliates/commission on commission

does it work? pros cons

[rfung]

I have a website i just built that does price comparison of widgets (a la Shopping.com, but a niche market). The way the market for this widget works that advertising it on google doesn't really make sense, because its localized by geographical distribution. People in CA would be hard pressed to buy from a location in NY.

Now, given that, I need to market the site one location at a time, and with thousands of locations (the whole US, really) it can be very time consuming. What I am planning on doing is set up some market areas and then get some local person to be sort of the sales rep, strickly on a percentage of the commission I get from the referrals(say, 30% of the referral fees I'd get).

Work is only a 2-3 hours a week ,maybe even less and the pay in the long run could amount to $1k or more as traffic builds up. Do you guys think this is a good idea and motivator enough to get sales guys to basically work for 'free' pending some potential income down the line?

heh, anyway that's what I'm shooting for, so I just wanted to get some third party comments, that may not be so closely related to the project as I am.

One question that I have, and I may have to post it elsewhere is, does anyone have any idea how I could handle taxes related issues with this? The reps would be considered contractors, but then it seems like I'd be double taxed?(i.e. when I submit my earnings, and then when the reps submit their earnings..- might be a question best answered by a qualified CPA, but anyway,I'm asking it here too..)

[lukasz]

I am not a CPA and I dont know much about US taxes, but normally the money you pay to contractors would be treated as your cost. So no worry about double taxation.

[anthonyl]

Sorry, can't help you out on the taxes but another approach you might take is rather than focusing on the people hitting the pavement initially, is put some keyword phrases by locality.

HTH.

[rfung]

Lukas: thanks, I totally forgot about treating it as an expense. However, that probably means I'd have to file 1099's (im in the US btw) to the contractors, or something similar? I was hoping to keep it in a way where the affiliates would split the pay , send me my part and then send the reps their parts, but that may be asking too much of them. Anyways, all this just means I have to talk to a CPA and figure things out.

Taxes portion aside, anyone has anything to say about my reps idea? is it good, bad, will it work, not? anything that can be improved?

TIA