How hard is it to run an affiliate program where you're paying?

The flip side of the affiliate biz...

[HughMungus]

I have a business idea in mind that would involve paying webmasters to use a certain service, etc. and I'm wondering how much work it is to manage such a program. I know that because you're dealing with payments and taxes and all that that all your ducks have to be in a row, but aside from problems, how hard is it to set this up? What are the legal requirements? Do I have to have some kind of special tax status?

Thanks!

[plumsauce]

I am familiar with the software side.

It's a #@)!$ to get the registration, tracking, reporting and multi-level payouts just right so that you can be confident that everything is being done accurately *and* fairly. Especially if you are offering realtime stats.

Currently, my partner/client downloads the payout data to Quicken and then cuts the checks or posts the paypal credits depending on the particular affiliate. The programmes currently offer initial & recurring income on a direct and override basis.

In the US there is a tax form that the recipients have to fill out depending on the reason for the payment. I have my doubts as to whether this is actually necessary since payments can occur for any number of reasons that are outside of reporting requirements. Forgot what it is because I have nothing to do with that side.

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