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Social media is now deeply entrenched in daily life, including in the employment world. Many people have created very successful careers through social media. If you have a passion for social media, you may want to start a career as a social media influencer, where you can be paid to advertise products on your social media accounts. If this sounds like the career for you, this article will outline:

  • what an influencer does;
  • how to become an influencer; and
  • some legal considerations when conducting business as an influencer. 

What Does an Influencer Do?

An influencer creates a strong social media presence based on their personal brand by sharing parts of their lives with their social media followers. Influencers, also known as content creators, often use platforms like Instagram, Facebook and Youtube. As a result, their followers admire, relate to and trust the influencer, and, therefore, will take their advice when the influencer advertises and promotes services.

How Do I Become an Influencer?

Influencer marketing is becoming increasingly popular as an advertising medium. If someone is successful on social media, they will often build up a following simply by making posts as a casual hobby. Eventually, if they reach a certain level of followers and develop high-quality content, they may begin to be noticed by brands who share a target audience with the influencer, and transition to becoming professional influencers.

Brands will often contact and pay influencers to review or promote their products to their group of followers. Sometimes, this is as a one-off promotion, but other times brands will create a long-standing relationship. This can be through sponsored posts, writing a blog post or creating other visual content to share on their social media platforms. These promotions can increase the brand’s visibility and attract new customer bases by sharing their products with large audiences.

The cost of asking an influencer to promote a product depends on the influencer’s follower count. When influencers have millions of followers, they can earn tens of thousands of dollars for one post. 

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What Do I Need to Consider?

Business Structure

If you want to start a business, you could consider becoming a sole trader

This means starting a business on your own without registering as a company. You will have total control of your business and receive all the profits. However, if your influencer business earns more than $60,000 a year, you must register for GST. Even though working as a sole trader does not require any formal registration, you could look into getting a New Zealand Business Number (NZBN) to help with your business.

Next, you could also create a company for your influencer business. While you can create both a sole trader business and a company as an individual, a company is a separate legal entity. This differs from a sole trader where you effectively are the business.

Finally, you can create a company by registering with the Companies Office. There is quite an extensive process of registration that is required to create and maintain a company, including different tax obligations. However, there are some benefits to creating a company.

For example, if your company faces financial troubles, you will not be personally liable for any losses the company faces. Additionally, individuals will be able to hold shares in your company. 

Tax Obligations

When you start working professionally as an influencer, you will likely be earning income, which means you will need to pay income tax and possibly GST. The way you pay your taxes depends on what business structure you choose.

Advertising Rules

You must ensure that any advertising you do as an influencer is legal.

When making claims about a product, you cannot make misleading or false statements, unsubstantiated claims or use unfair sales tactics. The rules of the Fair Trading Act still apply even when you are advertising products online through social media.

Additionally, you must make it clear that your post has been sponsored or paid for by another business. Payment does not just have to be monetary but can also be providing complimentary products, event tickets, or free travel. Therefore, if you get sent a product to try and use in a post, even if the brand has not told you to promote it, you need to disclose that you did not purchase the product yourself. This label needs to be upfront, prominent, and easily understood by consumers.

Ensure you understand any disclosures you have to make to your followers when advertising products. 

Key Takeaways 

If you want to make the leap from social media as a hobby to an income source, there are a few factors that you may need to consider. First, you will need to pick a business structure that works best for you and ensure that you comply with your tax obligations based on this business type. Additionally, you will need to make sure that you comply with all advertising laws and regulations. 

If you need help with starting your business or understanding your other legal obligations, our experienced startup lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Is it legal for me to be paid to advertise products on my Instagram?

Yes, so long as you pay your taxes and declare you have been paid to advertise the product. You also cannot make any false statements, or you will be in breach of the Fair Trading Act. 

Does payment mean monetary compensation?

No, payment for advertising a product does not just have to be financial compensation. It can also be providing complimentary products, event tickets, or free travel. Therefore, if you use a product you have been sent for free in a social media picture or video, you need to disclose that it was sent to you. 

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