HR & Payroll Compliance: What Influencers Need to Know

In the fast-paced world of social media, influencers have become a powerful force. Being an influencer has become an increasingly popular way to make a living, both for influencers themselves and others who provide support services to influencers. 

Becoming an influencer can lead to myriad opportunities to build a solid brand and business, but that kind of growth also comes with related responsibilities. Failing to comply with applicable regulations can result in hefty fines, legal issues, and even damage to your reputation. 

Why HR & Payroll Compliance Matters for Influencers

Whether you are an influencer yourself, manage team members, or schedule contractors to work on behalf of influencers, it’s important to understand key aspects of HR and payroll compliance. In this ever-evolving industry, staying informed and proactive about HR and payroll compliance is not just a legal obligation, but a cornerstone of sustainable success.

With money coming in from advertisers, brands, and product sales and funds going out to pay employees and/or independent contractors, it’s critical for influencers to be aware of and comply with key HR and payroll regulations. It’s crucial to be educated about HR and payroll regulations to help avoid potential compliance problems in the future. Important factors to consider include: 

• Legal Requirements: Compliance with labor laws and payroll regulations is mandatory. Whether you are self-employed or have formed an official business entity, it’s your responsibility to know and follow the requirements that apply to you. Failing to do so can lead to significant financial penalties that could undermine the success and profitability of your work.

• Financial Stability: Proper payroll management and vendor management help to ensure that all payments are made accurately and on time, which is crucial for meeting financial obligations to people who work or provide services on your behalf. 

• Reputation Management: Failing to comply with HR and payroll regulations that apply to your enterprise can harm your reputation, which can undermine your ability to continue to be viewed by others as an influencer. Negative publicity associated with compliance problems can make it difficult to attract new opportunities and partnerships and could potentially cause you to lose existing deals.  

Key Aspects of HR for Influencers

Employment Contracts

One of the first steps in HR compliance is understanding employment contracts, whether you are hiring employees to work for you or if you represent an organization as an employee, as you will be required to honor all terms specified within this type of agreement. An employment contract should outline the terms of employment, including job responsibilities, payment terms, and whether the relationship between the employer and employee is At-Will or for a specific duration. 

Worker Classification

Correctly classifying workers is another critical aspect of compliance for influencers. Signing an independent contractor agreement doesn’t mean that a person meets the criteria for being an independent contractor rather than an employee, and there are important compliance-related differences for employees and contractors or vendors. 

Misclassing those who should be employees as independent contractors will create compliance problems with both Department of Labor (DOL) and Internal Revenue Service (IRS) regulations and can also have workers' compensation implications. Influencers and the team members who support them often work as freelance independent contractors but must be classified (and paid!) as employees if they meet specific criteria. 

Payroll Compliance Essentials for Influencers

As an influencer, if you hire employees to help your business, it is critical to know the basics of federal payroll law and state-specific payroll laws for the states where you have employees working on your behalf. 

• Minimum Wage: Federal and state laws require that you pay employees at least the minimum wage for all their time worked unless they are in an exempt position, as defined in the Fair Labor Standards Act (FLSA).  

• Overtime Pay: Nonexempt employees who work more than 40 hours a week must be paid overtime at a rate of one and a half times their regular pay unless they work in a state with a more stringent requirement.

• Recordkeeping: Payroll compliance also requires maintaining accurate records of hours worked, payments made, and any deductions. This is essential for both compliance and financial management.

• Payroll taxes: Payroll also involves calculating and filing federal and state income tax; Federal Insurance Contributions Act (FICA) tax that goes to Social Security and Medicare, and unemployment taxes. Depending on where your employees live, you may even have to withhold city or county payroll tax or premiums for state disability insurance programs. 

In addition to the standards above, payroll can get even more complicated. For example, payroll compliance for employees also involves things like meeting state requirements for submitting when employees are hired or terminated, complying with any garnishments against employees’ wages, benefits deductions, and more. 

Do Influencers Have to Pay Taxes?

Yes, influencers must pay taxes on their earnings. This includes income from sponsorships, affiliate marketing, and any other revenue streams. The manner in which you need to file taxes will vary based on whether you have a business entity and, if so, if you are an employee of the company or if you solely pay yourself via owner’s distributions. Key points to consider include: 

• Self-Employment Tax: As an influencer, you will usually be required to pay self-employment tax on your earnings or profit, which includes income tax and FICA in addition to income tax. 

• Estimated Taxes: Unlike traditional employees, self-employed people must pay estimated taxes quarterly. Failure to do so can result in significant IRS penalties.

• Deductions: Influencers can deduct business-related expenses from their income, such as work-related equipment, travel, and marketing costs, from their revenue. This can help to lower taxable income.

HR and Payroll Tools and Resources for Influencers

Payroll Software

Using payroll software or a payroll service, such as Justworks Payroll, can help you manage employee paychecks, tax filings, recordkeeping, and more. 

Compliance Consultants

Consulting with an HR consultant or legal advisor can provide personalized guidance tailored to your specific situation. They can help you navigate complex HR and payroll laws and help ensure that you remain compliant.

Common Challenges and How to Overcome Them

Keeping Up with Changing Laws

Labor and payroll laws are constantly changing, and you’re responsible for complying with all that apply to your business. To stay compliant, it’s a good idea to subscribe to industry newsletters, join related professional organizations, and consult with HR consultants or legal advisors regularly.

Managing Remote Teams

Many influencers work with remote teams, which can complicate compliance due to the high likelihood of having employees and payroll in multiple states. Ensure that you're aware of the labor laws in each team member's location. 

Integrating Compliance with Multiple Revenue Streams

Influencers often have multiple income sources, which can increase the complexity of financial recordkeeping. Using accounting software that integrates with your payroll and HR software is an ideal way for influencers to track all earnings and expenses and maintain accurate financial records. It’s also important to consult with a tax advisor to understand your tax obligations.

Justworks Provides the Support Influencers Need

HR and payroll compliance is essential for influencers who are concerned with maintaining their professional reputation and avoiding legal issues caused by compliance missteps. Justworks can help you do just that. We offer a variety of small business owners designed with the compliance, payroll, and recordkeeping needs of influencers and other entrepreneurs in mind.  As a Justworks customer, you can count on us to help you navigate payroll and HR compliance so you can focus on what you do best — creating engaging content and growing your brand. Ready to simplify payroll and HR compliance so you can direct your influence and energy elsewhere? Contact us today to find out how to get started with Justworks.