Starting a product review website won’t have people clamoring for you to review their products, at least at first, but once you have a popular site believe it or not companies will want to give you their products and services free. That might sound wonderful, and it can be pretty awesome, but there is a price to pay for that “free” item.
High Expectations — The company or person who gives you their product or service to review, might expect to receive a good product review regardless how you really felt about the product or service. This puts you in a bad position from the start if you’re not upfront with the person giving you the product.
Poor Appearance — It can also make you look bad to your readers if they know you’re taking freebies from companies and individuals for whom you review products. Due to laws and regulations you have to disclose if you received any product or service free or at a discount before they read the product review, so yes, they will know. This might leave a bad taste in the mouth of those reading the reviews.
Tax issues — While everyone knows that every dollar you earn via your online endeavors is taxable, many people don’t realize that the value of the freebies they receive is also taxable. This can add up to quite a punch of out of pocket money at the end of the year if you’re not careful. Therefore, many of the free items, sometimes called swag, aren’t really free. You can thank the congress for removing this luxury from stars in 2006 when swag became taxable at fair market value. Much of the time you must pay taxes on these items especially if you receive a lot. The best course of action is to talk to your CPA about this situation. These items are not free and if you run a profitable review website where you receive a lot of freebies you will be found out.
Knowing these three issues involved with having a product review site what can you do? Well, knowing what you’re getting into helps. For the issue regarding expectations of companies and individuals when giving you a product to review you can require them to sign a statement that clarifies that you will give a true account of the product or service to the best of your ability that that no assumption of a good review is expected.
Posting a picture of the short statement before each product or service review where you were given the product or service free of charge will go a long way to not only create a sense of trust between you and your readers but also between the readers and the company. If the company is willing to sign a statement such as that, they must truly believe their product is great enough that they are not worried about a poor review.
Regarding taxes, be sure to consult with a tax professional because they will know best how to deal with these issues. Realizing that you also need to earn cash in addition to free items will help you determine what type of compensation you really deserve from companies and individuals who are expecting you to promote their products and services. Don’t under value your time and commitment to a product or service.