Affiliate vs paid promo, the core distinction.
Affiliate is performance-based. The influencer gets a percentage of sales attributed to their code. No sale, no commission. The expense is variable and tied 1:1 to revenue. From an accounting view, affiliate commission is a Sales expense, often called Affiliate commissions or Selling commissions.
Paid promo is fixed-fee. The influencer creates content for an agreed amount, payable on delivery of the content. It does not depend on sales generated. From an accounting view, paid promo is a Marketing expense, more comparable to advertising spend. Mixing these two into one Influencer marketing line obscures whether your influencer spend is performance-positive.
The journal at affiliate sale.
A customer uses code SARA10 (10% off, plus 15% commission to Sara) on a $100 order. Customer pays $90 (after the 10% discount). Commission to Sara is 15% of pre-discount sale ($15) or 15% of post-discount ($13.50) depending on your policy. Standard practice: commission on net revenue (post-discount), so $13.50.
Journal at sale: debit Shopify clearing $90, credit Sales $90. Debit Affiliate commissions $13.50, credit Affiliate payable $13.50. COGS posts as normal at WAC. Affiliate payable accrues until you settle with Sara (typically monthly or after a holding period).
Settlement and US 1099 reporting.
When you pay Sara her $54 monthly affiliate balance (4 sales × $13.50), if she is a US-based individual or sole proprietor, you must issue a Form 1099-NEC if her annual payments cross $600. The brand becomes the payer responsible for the reporting.
Journal at payment: debit Affiliate payable $54, credit Bank $54. The 1099-NEC is filed at year-end. Forgetting to issue a 1099 is a common mistake; the IRS can assess penalties of $310 per form for late filing, and Sara cannot deduct what you didn’t report. Collect a W-9 from every US affiliate before the first payment.
- US affiliates: collect W-9, issue 1099-NEC if annual payments ≥ $600
- UK affiliates: pay gross; CIS applies only for construction services, not affiliates
- EU/AU affiliates: pay gross; affiliate handles their own VAT/GST
- File 1099s by January 31 of the following year
The journal for paid promo.
Paid promo is a service contract. You pay an influencer $500 to post a Reel. Journal: debit Marketing expense $500, credit Bank $500. If the influencer is a US person and annual paid promo exceeds $600, the 1099-NEC obligation applies the same way.
Some brands accrue paid promo at content delivery, not at payment. Journal at delivery: debit Marketing expense $500, credit Marketing payable $500. Then at payment: debit Marketing payable $500, credit Bank $500. The accrual approach matches expense to the period the campaign ran, which matters for monthly P&L.
Influencer-paid in product (gifting).
Many brands pay influencers in product instead of cash, especially for smaller deals. A skincare brand sends $80 worth of products to a creator in exchange for posts. This is still a marketing expense and may still create a 1099-NEC obligation in the US if the fair market value of in-kind compensation exceeds $600 annually.
Journal: debit Marketing expense $80, credit Inventory $80 (the WAC of the gifted goods). For US influencers receiving substantial gifted product, the IRS treats the fair market value as taxable income to the recipient, and the brand must report it on the 1099-NEC. Most brands set internal thresholds (under $50 per send, no 1099) but track annual aggregates to catch the cumulative trigger.
Cross-border influencers.
A Dubai-based influencer paid in USD is a non-US person from a US brand’s perspective. The 1099-NEC obligation does not apply; instead, the brand collects a W-8BEN (or W-8BEN-E for entities) to document foreign status and exempt the payment from 1099 reporting.
For UK brands paying influencers in the US or EU, the analog is the place-of-supply rule for VAT and any local withholding. The UK does not generally withhold on advertising services. Australia GST applies if the influencer is GST-registered and provides services to an Australian business. EU OSS rules govern intra-EU influencer services. The paperwork (residency certificates, tax forms) matters; many brands either over-withhold or under-document, and both create year-end pain.
Tracking ROAS by influencer.
For affiliates, ROAS is mechanical: revenue from their code divided by commissions paid. For paid promo, ROAS requires attribution: how much revenue came from people who saw the post. UTM links, discount codes, and post-survey questions ("how did you hear about us?") are the typical sources.
Track each influencer as a vendor with a tag. Affiliate commissions filtered by vendor show direct contribution. Paid promo expense filtered by vendor shows fixed cost. Combined with attributed revenue, you can rank influencers by net contribution. Nonari supports vendor tagging on payables and surfaces the cohort views from the same data.
Where Nonari fits.
Nonari treats affiliate commissions and paid promo as distinct expense categories with vendor-level tracking. Affiliate accruals fire on Shopify orders that include attribution codes. Paid promo accruals fire on influencer agreement events. Annual 1099-NEC aggregates are tracked per influencer with auto-generated forms at year-end. W-9 and W-8BEN collection is built into the vendor onboarding flow.
For brands managing both affiliate codes and paid promo across US and international influencers, the system handles US 1099 reporting, foreign-person W-8 documentation, and cross-border VAT/GST in the same flow. The result is that every payment is correctly classified, correctly reported, and correctly attributed.