How to start an affiliate program for your small business

An affiliate program is a deal where other people send buyers to your shop and you pay them a share of each sale. Our short explainer on what affiliate marketing is covers the basics. This guide is about the other side of that deal: you, the business that pays.

Most advice on how to start an affiliate program is written for the people who earn the commissions. Much of the rest comes from companies that sell the software to run one.

So we'll go in the order a small shop actually needs it: the money, the rules, the tracking, the people, then the legal and tax duties.

Is an affiliate program worth it for your shop?

Yes, if other people already write, film or talk about the kind of thing you sell, and your margin can pay them a cut. It's a poor fit when the margin is thin, or when you sell a one-time local service nobody reviews online.

Here's the appeal. You pay only when a sale happens, so a quiet month costs you almost nothing. A blogger who reviews home fragrance, a creator who films cozy room makeovers, or a gift newsletter can each reach buyers you'd never find with ads.

The catch? It's time.

Someone has to approve affiliates, answer their questions, check what they're posting and send payouts. If nobody can give it a few hours a month, start smaller, with a referral code for your best customers.

Software and B2B sellers work differently, with recurring commissions and long sales cycles. If that's you, see how SaaS companies run affiliate programs next.

Do the math on one order before you pick a rate

That money question comes first, because the commission comes out of what you keep from an order, not out of the sticker price. Picking the rate itself is a separate job; our page on how much to pay affiliates compares percent, flat fees and tiers.

Example (a made-up shop with made-up 2026 numbers): Juniper and Pine Candles in Brattleboro, Vermont sells candles online. An average order is $48. After wax, jars, packing and shipping, the shop keeps $22. A 15% commission is $7.20 a sale, which leaves $14.80. At 30%, it's $14.40, and only $7.60 is left before returns and software fees.

That $22 is the ceiling. You'll never pay all of it, but now you know where the line is.

Two more questions shape the rate. Do customers come back? A shop with strong repeat orders can afford more on the first sale, because the second and third don't cost anything to win. And how many orders get refunded? Each refund is a commission you shouldn't pay, which is why payout timing matters as much as the percentage.

Write terms that decide who gets paid

Those numbers turn into your terms, and the terms are the program. The software only carries out what they say, and an affiliate who loses a commission will read every line. Keep them to a page or two. Here's what they should cover:

• The commission: percent or flat fee, and which orders don't count (gift cards, sale items, orders with another discount).
• Cookie length: how many days after a click a sale still counts.
• Attribution: who's paid when two affiliates touch one sale, or when a coupon points to someone else.
• Returns and payout dates: approve commissions after the return window, then pay on a set day.
• Paid search: whether affiliates may bid on your brand name.
• Email and claims: no spam, no health or income promises, and a clear disclosure on every post.

The paid search line isn't paranoia.

Google's ads policy says it won't restrict "Using trademarks as keywords". So an affiliate can bid on your shop's name and earn a commission on buyers who were already looking for you.

If you don't want that, your terms have to say so.

Email needs the same care.

In its CAN-SPAM compliance guide, the FTC says "you can’t contract away your legal responsibility" when someone emails for you. The guide puts the fine for each bad email as high as $53,088, which is still the FTC's inflation-adjusted maximum as of October 2026. The simplest fix? Ban affiliate email outright.

Weeks between the sale and the payout are normal. Good affiliates won't mind. Just put it in the terms up front.

We tested it: same two clicks, two different winners

That attribution line sounds like a detail until you watch it move money. On October 27, 2026 we built a tiny made-up shop on a laptop and set up two pretend affiliates, Trail Notes and Cozy Corner. Each affiliate's link set a 30-day cookie from the server. Then a real browser (headless Chrome 156) made the same visit twice: a click from Trail Notes, a click from Cozy Corner, then a purchase.

With a last-click rule, Cozy Corner got the commission.

With a first-click rule, Trail Notes got it. Same visitor, same order, different person paid.

Coupons did the same thing. A visitor clicked Trail Notes' link but typed Cozy Corner's code at checkout. Under a cookie-only rule the sale went to Trail Notes; once coupons won, it went to Cozy Corner.

None of these rules is wrong; it's a business choice. Last click is easy to explain, first click rewards whoever introduced the buyer, and coupon-wins suits podcasts and video, where people type codes.

What matters is that your terms and your software say the same thing.

Set up tracking that Safari won't cut short

Once the rule is written, tracking has to carry it out. That takes three parts: a unique link per affiliate, a cookie that remembers the click, and an order record that names the affiliate. You can run it with an app for your store or join a network that pays affiliates for you. Our comparison of affiliate networks and software for merchants covers the choice.

Either way, ask how the cookie is set. WebKit, the engine behind Safari, says its tracking prevention "deletes all cookies created in JavaScript" after 7 days with no user interaction on the site. It also caps script cookies at 24 hours when a visitor arrives through a tagged link from a domain classified as a cross-site tracker.

So a 30-day cookie written only by JavaScript may last a week, or a day, for some Safari visitors.

A cookie your own server sets, like the one in our test, isn't covered by that script rule. Coupon codes give you a second way to credit a sale when a cookie is gone.

Then tag each affiliate's link so the visits show up in Google Analytics too. Google's help page says tagged "referral links" appear in the Traffic acquisition report. The free DigitalTreed UTM Builder makes each tagged link in a minute.

Getting the app, the cookie and the checkout to agree is the fiddly part. Our developers can set up and test affiliate tracking on your store; that's our own paid service, so weigh it as such.

Recruit affiliates who already reach your buyers

With tracking working, you can invite people. The best first affiliates are usually ones who already like you: repeat customers, local gift bloggers, creators who've mentioned you unasked. Email them a short note with the terms attached.

After that, look for people whose audience buys what you sell. Blogs, newsletters and video creators all work, and if you sell on YouTube, our guide to YouTube Shopping and video monetization shows how brands connect products there. Review each application by hand at first; it's quicker than undoing a bad fit later.

Give new affiliates a small kit: product photos, honest product facts, current offers and the disclosure line you expect. Don't hand out finished reviews to paste. Google's spam policy names pages where "product descriptions and reviews are copied directly from the original merchant" as thin affiliation.

A program that spreads one block of copy across many sites builds exactly that.

Ask affiliates to mark your links, too. Google asks sites to tag paid links with rel="sponsored" and still accepts nofollow. The affiliate's own checklist sits in our post on using affiliate links the right way, which you can send to every new partner.

You're responsible for what your affiliates say

That disclosure ask isn't just good manners.

As the business paying commissions, you're the "advertiser" in the FTC Endorsement Guides, and section 255.1(d) says advertisers "are subject to liability for misleading or unsubstantiated statements made through endorsements".

That's true even when the endorser isn't liable. The same section lists three things advertisers should do: give guidance, monitor compliance, and act to fix problems.

The FTC staff's Q&A applies this to programs like yours: "Advertisers need to have reasonable programs in place to train and monitor members of their network". It's also realistic about scale. It says "It's unrealistic to expect you to be aware of every single statement made by a member of your network." And handing the program to an outside company "doesn't relieve you of responsibility under the FTC Act."

For a small shop, that comes down to a short routine:

1. Put the disclosure rule in your terms and your welcome email.
2. Once a month, search your brand with "review" or "discount" and read what affiliates post.
3. Ask for any false claim or missing disclosure to be fixed, and pause the affiliate if it isn't.
4. Keep a log of what you checked and what you asked for.

For the wording, the Q&A says "'Paid link' right next to an affiliate link should be an adequate disclosure", while "affiliate link" alone may confuse people. The Guides' own affiliate case is Example 11 in section 255.5, a coffee blogger whose reviews "should clearly and conspicuously disclose the compensation."

Our take: a 20-minute monthly check and a written log beat any amount of fine print. It's the part small programs skip.

We've summarized the federal guidance as written, and we aren't your lawyers. If affiliates will promote health, money or kids' products, get your terms reviewed before launch.

Pay after the return window, and collect a W-9 first

Paying is where the earlier terms pay off.

Approve each commission only after the return window closes, then pay on one fixed day a month. In the candle shop example, an order on May 12 clears returns on June 11 and gets paid in the July 1 run. A small minimum balance saves you from sending $3 transfers.

Before the first payout, ask each US affiliate for a Form W-9. The IRS says it gives "your correct Taxpayer Identification Number (TIN)" to the business that files information returns. And the filing line moved. The IRS instructions revised for 2026 say to file Form 1099-NEC for each person you paid "at least $2,000" for non-employee services, and they list commissions in box 1a.

Card payments and "third-party network transactions" are different: those go on Form 1099-K from the payment company, not on your 1099-NEC.

So the payment method isn't a detail. If you pay through PayPal, the PayPal Fee Calculator shows what each payout costs you. Treat this as 2026 tax background, not tax advice, and let a CPA confirm it for your state.

How do you know your affiliate program is working?

After those first payouts, give it 90 days. Then check four numbers: sales per affiliate, the refund rate on those sales, commissions as a share of affiliate revenue, and how many buyers were new.

The last one shows whether you're paying for sales you'd have made anyway.

If a few affiliates bring most of the sales, look after them first: early access, a higher tier, a thank-you note. The UTM tags from earlier let you compare affiliate visitors with other channels; our GA4 guide shows where those reports live.

If the program pays, add affiliates slowly and keep the monthly check. This is work we sell, so take it as an offer, not advice: we can quote for planning and setting it up.

How we made this guide: The DigitalTreed team checked these rules on October 27, 2026. We read the Endorsement Guides on eCFR, the FTC staff Q&A and the CAN-SPAM guide. Next came the IRS 1099 instructions revised for 2026, Google's ads, spam and link pages, and WebKit's tracking notes. We ran the attribution test ourselves on a made-up shop, offline. Sources are linked where they're used.

First published August 2020. Rewritten October 27, 2026: turned a beginner's guide for affiliates into a guide for shops starting their own program. It adds the margin math, terms, our attribution test, tracking and Safari cookies, recruiting, FTC duties and 2026 tax forms.

Sources

• eCFR: 16 CFR 255.1, General considerations (FTC Endorsement Guides)
• eCFR: 16 CFR 255.5, Disclosure of material connections
• FTC: FTC's Endorsement Guides, What People Are Asking
• FTC: CAN-SPAM Act, A Compliance Guide for Business
• IRS: Instructions for Forms 1099-MISC and 1099-NEC (12/2026)
• IRS: About Form W-9
• Google Ads policy: Trademarks
• Google Search Central: Spam policies for Google web search
• Google Search Central: Qualify your outbound links to Google
• WebKit: Tracking Prevention in WebKit
• WebKit: Intelligent Tracking Prevention 2.2
• Analytics Help: Collect campaign data with custom URLs