The Definitive Guide to Negotiating Brand Partnerships for Creators: Part V — Minding Your Business
This is part five of a nine part series for creators who want to improve their hand when negotiating brand partnerships. If you tuned in for part one, Exclusivity & Monetizing Opportunity Cost, part two, Demystifying Content Boosting, Licensing (Whitelisting), & more, part three, Content Licensing & Usage, or part four, Monetizing your Production Process, free to skip the intro and dive right in.
Introduction for the unacquainted
The saying knowledge is power holds true for every profession and industry. Any power disparity in professional partnerships can and will be exploited to the detriment of the party with lesser knowledge.
Having worked with social content creators for the past 5 years, I have seen this dynamic on full display. Influencers who negotiate for themselves unknowingly make concessions and leave huge amounts of revenue on the table.
On the other hand, creators who put this knowledge into practice thrive. The secret to their success isn’t working harder. It doesn’t require more followers or producing more content.
It’s quite simple: as a creator, if you want to earn more income from brand partnerships, you need to negotiate from a position of strength, with a full understanding of the meaning, implications, and value of specific conditions of your contracts.
You do not need a lawyer or a talent agent to utilize the knowledge any of these terms. However, if you are not aware of them, you are likely earning less than half of what you could be as a creator.
After reviewing thousands of brand partnership contracts for creators and spent time on both sides of the negotiation table, I’d like to share a guide to the secrets that have enabled creators to double their brand partnership earnings almost overnight.
In part V of this guide, you will learn how to utilize the most common and business tactics to boost your creator earnings up to 50%, or more.
Fair warning, these tactics are more advanced than what we’ve covered in previous sections, so mind the disclaimer.
Disclaimer: the following is not legal advice, nor should it be used to replace the guidance of certified legal, tax, or accounting professionals.
Billing Client for Expenses
Estimated increase to contract value: +10–20%
What it means:
Most content you create will incur expenses. Whether it’s purchasing the client’s product for a shoot, arranging a photographer/videographer, traveling to an event, or renting equipment — these purchases can be eligible for reimbursement.
Here are examples of potentially expensable costs:
- Transportation costs (uber, public transit, rental car, even gasoline if you drive)
- Product costs like packaged goods, and apparel (if not provided by the client)
- Studio equipment (camera, lighting, audio/video)
- Props (ex: new glassware to highlight a new protein smoothy brand)
- Space (professional studio, editing studio, podcast booth)
Why it’s important:
Depending on the requirements of your client’s content, expenses can grow to be quite high. Multiplying these costs by the number of clients you work with within a given month, will quickly give you an idea of how much money you are potentially missing out on.
How to negotiate it:
When learning the requirements for your client’s content, keep tabs on the potential expenses you may incur for travel, production, or anything else that’s relevant to the shoot. After landing on a rate with your client, provide a run-down of your anticipated expenses and offer them the option to either include this in the rate or reimburse you when invoicing them. If they choose the latter (most likely), expect to place a cap on the expense amount that is eligible for reimbursement.
When submitting your invoice at the end of the campaign, include your expenses as a separate line item and attach all receipts. You should also keep track of client-related expenses separately since they can be deducted from your tax owing.
Exclude Applicable Sales Tax from Your Rates
Estimated increase to contract value: +5–15%
What it means:
Whether you are working as an individual or as a company, you will likely need to pay taxes on your sales/income. Depending on where you live, these taxes can be as high as 15%. Rather than giving a chunk of your earnings to the tax authorities, you can negotiate for your agreed-upon rate to exclude applicable sales tax.
Why it’s important:
Regardless of whether or not you charge sales tax to your clients, the tax authorities will likely charge you. To alleviate the impact of sales tax on your net earnings, you need to factor this into partner negotiations.
How to negotiate it:
Since many regions do not require sales tax to be applied to services provided to out-of-state and/or foreign customers, it’s important to familiarize yourself with local tax regulations. You must first have this information in hand before using it to negotiate.
Once you have arrived at a mutually agreeable rate with your client, explicitly call out the fact that the negotiated rate does NOT include applicable sales taxes. Before this conversation, identify what sales tax is applicable. Explain this to your contact by providing the estimated sales tax amount and the total invoice amount they should expect to receive. Make sure that when your contact receives the invoice for your services, sales tax is broken out into a separate (non-taxable) line item.
If you get pushback, explain to your partner that you are responsible for reporting and paying applicable taxes to the proper authorities, whether or not they are included in your invoice.
Incorporate Your Business
Estimated increase to contract value: +10–30%
What it means:
Though not a negotiation tactic, incorporating your business is a big step towards professionalizing your career as a creator. Incorporating effectively separates you and your business as two entities for legal purposes. With this distinction comes several additional responsibilities ranging from additional financial reporting to taxation and insurance, but also several benefits.
Before taking the steps towards incorporating as a business, make sure to consult with an accounting and tax professional to understand all of the implications. In many, but not all, cases you will find the benefits outweigh the costs.
Why it’s important:
Creating a distinct commercial entity from your business allows you to do things like write off business-related expenses to lower your tax burden. As a creator, there are many expenses related to making content that is incurred outside of any individual brand partnership and therefore cannot be expense back to your client. Whether you are traveling to an exotic destination for holiday or grabbing a coffee from your local Starbucks — if you are capturing and posting content foryour creator business, these expenses should be reported, and therefore deducted from your tax obligations.
Incorporating also separates you from your business and can offer a shield from the potential legal risk and liability you may encounter when working with clients.
How to do it:
If based in the United States, the easiest way to incorporate is by using Stripe Atlas. This process takes roughly 10 minutes to complete and costs just a one-time fee of $500 for end-to-end incorporation, then $100 per year for ongoing maintenance thereafter.
For influencers based in Canada, we recommend using a solution like Ownr (owned by RBC), which provides comparable services at a similar rate.
Once incorporated, make sure to include relevant tax identification on all invoices to ensure your clients can account properly within their financial reporting as well.
If you use any accounting software or services like Quickbooks, Freshbooks, or Wave make sure you have added your corporate information to your account before submitting financial statements or submitting taxes to the proper authorities.
In closing:
Do you have experience negotiating expenses and tax inclusion on your brand partnership agreements? Have you incorporated as a creator? If you are a brand, do you see many creators negotiating for these inclusions?
Whether or not you enjoyed this post, I’d love to hear about it. Share your thoughts in the comments below.
In part VI, we will explore the less tangible, but critically important strategies that will help you close more brand partnerships and earn longer-term deals from your clients.
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