"We were just about to post it, and my team was like, 'This is the caption,' with '#ad.' I just couldn't do it.
"I had been looking at a car I was ready to buy, but I ended up turning it down. It was painful for me and my husband to reject it, because it was a lot of money."
She said she made the tough decision after thinking about talk show queen Oprah Winfrey.
"I know you have to identify it as an ad, but I just didn't feel comfortable with it," she said.
"I thought about Oprah. I was like, would Oprah do that? No, she wouldn't.
"Luckily, my husband was able to support our family financially, so we didn't have to."
The US-born make-up artist also explained how she had used Instagram to take the beauty world by storm.
"When Instagram came around, it became a constant way to share, multiple times a day, through pictures," she said.
"I thought that was really genius, because you could get so much, so much faster. You could see things so quickly and get a glimpse of a person's aesthetic and opinions.
"It started to change as Instagram became more popular in the beauty community, and it became more informational. People had to learn or gain something by coming to you."
The 34-year-old now employs around 150 people across her blog and beauty brand.
Her Huda Beauty products are sold through global make-up chain Sephora, with her fake eyelashes having famously been worn by celebrities including Kim Kardashian.
She previously worked as a make-up artist to the stars, including Eva Longoria and Nicole Richie, but the goal of her cosmetic brand, blog and Instagram account is to bring beauty techniques and tips to the masses.
"People [don't] really realise how much they could transform with make-up," she told Entrepreneur.
"Celebrities have beautiful skin — a lot of them do — but some put foundation on their legs, and you can do that too, as a consumer."