Creator Payments Compliance: Complete Guide

Understand everything about creator payments compliance and how to stay tax and legally compliant.

Freelancers comprise around 37% of the US workforce (59 million). That's a lot of workers looking to be paid compliantly, quickly, and efficiently to avoid potential issues. There's a lot of partnerships happening between brands/ agencies and creators, and if things go wrong with payments, your team may spend time addressing tax and compliance issues or managing fallout from damaged freelancer relationships.

If you've worked with creators, you may have struggled with vendor onboarding or payouts. That's because scalable and compliant payouts can be difficult to set up depending on your internal processes, systems (ERP or AP systems), or country and tax requirements.

Despite all of the benefits of hiring a creator or freelancer, like increased flexibility and lower overhead, compliance and regulations have become a major point of concern for HR, finance, and legal teams.

This guide examines the rising trend of hiring creators, legal requirements, insurance, data security, payment challenges, branding, and overall compliance to ensure your business is on track.

The Rise in Companies Hiring and Using Influencers

Influencer marketing has been growing in popularity for years. The market expanded from $1.7 billion in 2016 to $9.7 billion in 2020. It then grew to $13.8 billion in 2021 and $16.4 billion in 2022 and continues to grow in 2025. It still remains one of the leading marketing trends, year over year.

For example, fashion, e-commerce, health and wellness, and beauty websites partner with influencers at scale. They are reaching out to reputable fashion influencers across Tiktok, Instagram and Youtube; and are running gifting and paid campaigns to get more visibility. Influencers posting across channels drives exposure, traffic, and ultimately sales.

Mini Case Study Examples of Influencer Marketing

Golfer Michelle Wie West became the youngest to qualify for the LPGA Tour when she was just 15. This turned her into a mega-influencer, and Nike took notice.

Since 2005, she has maintained a partnership with the shoe brand and routinely shares content, like a major giveaway in December 2020. This not only boosted brand awareness for Nike but drove measurable sales and introduced them to an entirely new audience and generation of potential customers.

Absolut vodka partnered with eco-friendly influencers across various social platforms with an 8-month campaign using the hashtag #AbsolutPlanet. The message was about ways to showcase how we can all be friendlier to the planet. The campaign was eventually named the Gold Winner for the Best Food and Drink Campaign during the 2020 Influencer Marketing Awards. By its end, 95 influencers had shared a total of 612 posts, generating more than 8.6 million engagements across channels.

It may come to a point where most companies, including yours, will want to hire an influencer to promote their products and services.

The Rise in Companies Hiring and Using Independent Contractors

When it comes to projects, some of the best ways to accomplish them and get them done fast is by hiring an independent contractor (IC). This is because there are a variety of tasks a creator can handle, and you don't have to worry about hiring an employee.

Here are a few examples of jobs companies are hiring freelancers for:

Content Writing: This includes copywriting, SEO, translation, proofreading, editing, social media, email marketing, and tech writing (to name a few).

Consultants: These roles can support anything needed across Marketing, IT, HR, Finance, or Operations, when business teams bring on an expert for advice. This also includes specialty functions like: corporate planning, life and career coaching, business management, and strategy.

Graphic Design: This includes logo and brand designers, packaging developers, and digital illustrators.

Web and App Development: This growing category includes jobs like native app developers, web app developers, and mobile game and chatbot designers. It also includes user experience and interface design, back-end and front-end development, and full-stack development.

Photography and Video: This is one of the more traditional freelancing industries and can include jobs like wedding photography, photojournalism, real estate photography, video editing, producer, and product photography.

Other Freelance Jobs:

  • Virtual Assistant
  • Administrative Assistant
  • Bookkeeper
  • Publicist
  • Product Management

Hiring and Working with Creators: Legal Employment Compliance Risks

Legal risks are involved with hiring contractors and influencers, and you should know how to protect your company. One of the most significant issues is ensuring creators are correctly classified and contractors versus temporary W2 employees. The penalty (whether or not you intended to) is a hefty fine and even criminal charges. If the IRS suspects fraud or misconduct, an employer faces $10,000 per misclassified employee and up to five years in prison.

For example, The Illinois Department of Labor was awarded $328,500 in penalty fees from a home improvement company that misclassified 18 workers. Likewise, California Attorney General Jerry Brown won a judgment of $13 million against two businesses that misclassified 300 janitors.

Filing the Proper Paperwork

When hiring a freelancer, you must have them complete the correct paperwork to ensure proper classification. For US based companies, this is called a W9 form (or a W8/ W8BEN when working with non US contractors).

The purpose of this document is to collect all the necessary tax information directly from the creator to ensure your audit trail is accurate. If you pay someone considered a non-employee more than $600 per year, you must file a 1099 form. The W9 form verifies the accuracy of this information.

Hiring and Working with Creators: Data Security Risks

There are inherent data security risks involved in hiring and working with creators. For example, it's not unusual for an independent contractor to have access to a company's network and system, as well as sensitive and proprietary data. According to IBM's Security Intelligence report, almost 75% of security breaches are caused by insiders, whether that's due to error or malicious intent. Thus, it is imperative to have security policies in place concerning hiring contractors. This can include rules like:

  • Run identity and criminal background checks
  • Ask them to sign an NDA (Non-Disclosure Agreement)
  • Keep detailed records
  • Limit access to specific data and system permissions
  • Provide unique usernames and passwords

Hiring and Working with Creators: Insurance Risks

Just like any regular employee, insurance shouldn’t be ignored for independent contractors. While most people think only construction workers and electricians need liability insurance, the truth is every freelancer should have some type of coverage. It is wise to ask any new contractor for proof of insurance as a requirement to start.

Hiring and Working with Creators: Payment Challenges

When hiring and paying creators, there are a multitude of challenges a company faces. It's easy to make payment mistakes, especially when international payments are considered.

Here are some of the leading payment challenges you can anticipate when hiring global help:

Bulk Payments

How do you go from paying a few employees to paying multiple freelancers? Bulk payments are one of the only solutions to ensure everyone gets paid, all over the place, and on time. This is usually only accomplished with robust payment software.

Exchange Rates and International Payment Fees

There are associated costs with sending money overseas. Who in your organization will be responsible for monitoring exchange rates and international bank fees? This should be decided in the contractor agreement before starting work.

Methods of Payment

Freelancers typically request a preferred method of payment but ultimately companies payout per their processes which can differ based on where payment is being sent. These can include:

  • ACH (Automated Clearing House)
  • Bank wire
  • PayPal and other P2P payment systems
  • SEPA (Single Euro Payments Area)
  • FPS (Faster Payment Service)
  • SWIFT
  • Lumanu Global Payments

Hiring and Working with Creators: Brand Integrity

61% of US marketers agree that finding the right influencers for a campaign is tricky. More than 1 in 4 also cited brand safety and alignment as a challenge in influencer marketing.

This is why it's crucial for both the brand and influencer to make sure they share the same values. Therefore, you should strategize and devise a policy for what happens when an influencer posts something that is not in line with your brand.

Final Thoughts: Creator Payments Compliance

There are many compliance risks involved with hiring creators. First, they must be classified correctly and submit all payment data for tax purposes (W 9 form).

Lumanu takes on all compliance and tax responsibilities and offers risk mitigation for companies working with freelancers in the US and globally. This means you can effectively onboarding Lumanu once, receive consolidated invoices and skip all the typical steps required, from collecting and validating tax documents to paying out individual contractors. Lumanu not only ensures payment compliance but takes onboarding and support questions off your plate.