Back in the days of usenet, Brandy Alexandre (a porn star) would post a lot to a.s.m.e = alt.sex.movies.erotica. She mentioned that her father (back in the state where she grew up) was a CPA and that he knew what she did and that he did her taxes for her ... all on the up and up with everything disclosed and as much as possible claimed. For instance, some of her income came from selling her panties to adoring fans; that's income. But her father made sure that she claimed a deduction for cases and cases of panties, the inventory she needed to wear and autograph to sell!
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And maybe a question for Regency: Some on TER have also mentioned registering as a "DBA" = "Doing Business As" for tax purposes. I think you just register at your local city hall, not even requiring to be an LLC or s-corp or state tax ID numbers and so on. What's your opinion on that? I assume that would be for small operators, maybe doing ~$1000 per month but wanting to avoid tax trouble. It would NOT be "Real Name" DBA "Susie Suxalot." It would be "Real Name" DBA "Made Up Name Consulting" or "Clever Name House Cleaning Services."
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DBA is a low-cost and easy way to get started and learn about some aspects of running a business. Here's the MA state page:
http://www.mass.gov/guides/starting-a-new-business#-7.-file-for-a-'doing-business-as'-(dba)-certificate-
File for a 'Doing Business As' (DBA) Certificate
A "Doing-Business-As" Certificate (DBA) is a quick and simple way to set up your business through your town or city clerk's office. See if it's right for you and get simple instructions on how to file. [It's $65 for Boston, MA. Cost varies by town or city.]
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Regency: Your thoughts on DBA? And as a way to start?
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Thanks!
The smart high income providers will set up a corporation or LLC, pay all of their expenses (clothing, cosmetics, hair care, mani/pedi, hotel, travel etc) through the entity, pay themselves a reasonable monthly salary, and distribute the excess income quarterly as profit or dividends. The expenses reduce the net income, the salary is taxed as ordinary income, and the dividends/income are taxed at capital gains rate. Doesn’t work for everyone, but if a provider is grossing 250k per year or more it can result in substantial tax savings.
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This is the same business model used by successful lawyers, doctors, accountants, realtors, etc.
I am just curious how providers report and pay taxes. If you are a provider full-time and get most of your income as cash, you'll probably be eligible for welfare 
I assume you have juicy stories.
PS: I have no affiliation with the IRS or any other state agencies!
This is a very invasive question … Do you really think any provider is going to answer this?
If you make the kind of money most full-time providers make, it would be fraud to apply for welfare. Hooking is usually a misdemeanor, welfare fraud is usually a felony. Are you just assuming that a woman who is willing to risk a misdemeanor conviction to earn a good living should also be willing to risk a felony for another 20% that potentially comes with multiple years in prison? Do you know any providers this stupid? It can be argued that prostitution is a victimless crime, like a traffic infraction, unless she's really bad at it, but in fraud there is always a victim, even if it's just the taxpayers.
They can list their occupation in any number of ways: entertainer, consultant, therapist, personal trainer, actress, model, etc.
There are even accounting firms that cater to providers:
http://www.companiontax.com/
http://twitter.com/companiontax?lang=en
Just a couple of previous threads:
http://www.theeroticreview.com/discussion-boards/ter-general-board-12/providers-should-set-up-a-business-entity-for-tax-purposes-989974
http://www.theeroticreview.com/discussion-boards/ter-general-board-12/re-the-problem-is-that-----965029
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Because of the increasing laws and regulations to prevent money laundering and the funding of terrorists, Providers are well advised to file their taxes each year.
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A typical example / warning: If you save up Big Bucks as cash over several years and then try to buy a house or make some other big purchase, you will have to explain how you got all that money. If it had been UNDECLARED income, you will have to pay past taxes due and penalties. Pay your taxes NOW so you can enjoy your money later.
I am just curious how providers report and pay taxes. If you are a provider full-time and get most of your income as cash, you'll probably be eligible for welfare
I assume you have juicy stories.
PS: I have no affiliation with the IRS or any other state agencies!
I’m curious Queen, are providers who file returns and pay taxes able to depreciate their most valuable hard asset as they get older to minimize their tax liability? I mean, other businesses depreciate their buildings, vehicles, business equipment, etc. to reduce their taxes. Why shouldn’t an escort be able to depreciate her body over the course of its useful business life?
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Kinda joking, kinda not. Interesting issue to me.
If they can depreciate and still deduct the maintenance costs to keep their bodies in tip-top shape, they might not owe any tax at all. Would you depreciate it long term, like a structure, or shorter term, like equipment? Would it have any salvage value at the end? When you look at it like this, it's hard to be serious. Lol
Given that we have plenty of ladies providing into their 50s (or longer) I’d guess one would have to apply the long-term schedule for depreciation. Now if you really want to mind-fuck yourself think about the recapture analysis. 🧐
I stand corrected. Sports teams can depreciate players on their roster (Roster Depreciate Act) but I wouldn't want to pique the IRS's interest for a non-sports depreciation.
Does your body deprecate when you enhance it? I workout, I’m Healthy, active & seem to get better the older I get. I think of a home you own does it add value when you provide upgrades? Yes. Why is anyone’s body different?
Just like athletes, models, porn starts and main-stream actors and actresses currently do. With the large budget increase the IRS will be receiving as part of the Inflation Reduction Act, you might as well send an invitation to the IRS to audit your return.
Wow. Thats such an insult to EVERY provider.
Since my 2nd year as a provider I've cleared 6 figures consistently. Does that qualify for welfare?
And yes...I pay taxes.
I don't think he meant it as an insult more of a cheating the system since if they're not reporting this income they could qualify for welfare
Yeah, I think that was obvious too. But that might suggest the offense is to suggest the providers have no qualms about stealing in such a manner - or stealing/taking what they didn't earn.
What I think he meant was that: you don't have to provide the info since it is not in a W-2 or some form, and that providing the info and paying taxes on it is actually harder (and may raise other questions about the source of your income) that not providing it. So, why provide the income info, pay taxes on it, and then get questioned for it?
If I were a provider (ha ha) - particularly a small time provider - I can see why I'd skip reporting the income.
but I have enough businesses that I've become very familiar with bookkeeping and tax prep. I've helped a few girls set up their LLC-1 or S-corps depending on what they were doing. Taught them how to keep their own books, run payroll if they chose to W-2 themselves so they can get tax free insurance and retirement contributions etc etc. And set them up with a CPA who deals with high cash businesses.
The main issue I've had is convincing girls to run sufficient income through the companies. Like anyone else they don't wanna pay a lot in taxes but it ends up biting them in the ass when they try to access credit and don't have sufficient verifiable income.
It honestly is no different than any other self employed person....at least from a tax standpoint.
The trouble with the feds is that if they target someone who is in a cash biz and there is no history of tax payments, they can just make up an income (usually based on typical earnings in that line) and demand back payment.
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Unlike others here, I don't care if someone escapes the clutches of the government, but there are good reasons to try to stay marginally in legal status (such as mentioned above, income history to qualify for credit.)
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In that case at least reporting enough to make a reasonable case. Not necessarily reporting every cash dollar earned.
The smart high income providers will set up a corporation or LLC, pay all of their expenses (clothing, cosmetics, hair care, mani/pedi, hotel, travel etc) through the entity, pay themselves a reasonable monthly salary, and distribute the excess income quarterly as profit or dividends. The expenses reduce the net income, the salary is taxed as ordinary income, and the dividends/income are taxed at capital gains rate. Doesn’t work for everyone, but if a provider is grossing 250k per year or more it can result in substantial tax savings.
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This is the same business model used by successful lawyers, doctors, accountants, realtors, etc.
as a Christmas Club savings account. LOL
Back in the days of usenet, Brandy Alexandre (a porn star) would post a lot to a.s.m.e = alt.sex.movies.erotica. She mentioned that her father (back in the state where she grew up) was a CPA and that he knew what she did and that he did her taxes for her ... all on the up and up with everything disclosed and as much as possible claimed. For instance, some of her income came from selling her panties to adoring fans; that's income. But her father made sure that she claimed a deduction for cases and cases of panties, the inventory she needed to wear and autograph to sell!
.
And maybe a question for Regency: Some on TER have also mentioned registering as a "DBA" = "Doing Business As" for tax purposes. I think you just register at your local city hall, not even requiring to be an LLC or s-corp or state tax ID numbers and so on. What's your opinion on that? I assume that would be for small operators, maybe doing ~$1000 per month but wanting to avoid tax trouble. It would NOT be "Real Name" DBA "Susie Suxalot." It would be "Real Name" DBA "Made Up Name Consulting" or "Clever Name House Cleaning Services."
.
DBA is a low-cost and easy way to get started and learn about some aspects of running a business. Here's the MA state page:
http://www.mass.gov/guides/starting-a-new-business#-7.-file-for-a-'doing-business-as'-(dba)-certificate-
File for a 'Doing Business As' (DBA) Certificate
A "Doing-Business-As" Certificate (DBA) is a quick and simple way to set up your business through your town or city clerk's office. See if it's right for you and get simple instructions on how to file. [It's $65 for Boston, MA. Cost varies by town or city.]
.
Regency: Your thoughts on DBA? And as a way to start?
.
Thanks!
The smart high income providers will set up a corporation or LLC, pay all of their expenses (clothing, cosmetics, hair care, mani/pedi, hotel, travel etc) through the entity, pay themselves a reasonable monthly salary, and distribute the excess income quarterly as profit or dividends. The expenses reduce the net income, the salary is taxed as ordinary income, and the dividends/income are taxed at capital gains rate. Doesn’t work for everyone, but if a provider is grossing 250k per year or more it can result in substantial tax savings.
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This is the same business model used by successful lawyers, doctors, accountants, realtors, etc.
I vaguely recall that her posting handle was "outtahere" or "Outtahear" or near equivalent. She signed each of her posts with
I’m not an accountant, but I’m pretty sure that a d/b/a doesn’t help from an income tax perspective. You’re basically an individual taxpayer and your expenses are Schedule C, which is frequently audited and more closely scrutinized. Also, you don’t get the dividends/profit treatment on excess earnings.
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By contrast, a corporation or LLC files a separate return, and both the expenses and provider salary are deductions for the entity. Generally, entity returns are less frequently audited which makes the expenses less likely to be scrutinized. And in the end the net profit after expenses and salary gets the more favorable capital gains treatment when distributed at year end (or quarterly if the entity elects).
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Doesn’t work for all escorts, but those grossing >$250k will likely see a substantial tax savings.
In some localities simply filing the tax return creates your business status and no need to even worry about a DBA. The best think is to talk with a tax attorney or CPA about what the best form is. Probably a bit of a difficult topic to broach but checking to see if one form might carry more negative consequences for you if the facts about the nature of the income source comes out should be considered. As mentioned once already in this thread, the last thing you want to do is turn a misdemeanor vice charge into something more, or adding other complication to that charge that may have been avoidable.
That said, providers should want to pay taxes and have the standard financial trails, accounts and the like so they can do things like get loans, open investment accounts and put their money to work for them so they can actually retire with some comfortable nest egg to support them when working really is not going to cut it any longer.
Does this mean I'm gonna have to start requesting a Form W-9 be completed prior to a session? And then send out 1099's in January? FUCK!
Don't forget to request a COI naming you as Additionally Insured
Ricky21,
That was not an smart question. What a Provider does is not legal (The sexual part that is). So, why would a Provider pay taxes on that and lie about her TITLE in this line of work as well as what she does (Regardless if she's doing this full-time or Part-time).
So she can show a source for her income and get SS credits which she can use when she reaches retirement age, just like anyone else.
I know a number of ladies who use sex work to supplement their income from regular jobs, and that's great and obviates the need to worry about the above. But plenty of ladies have no other source of income.
Based on the intellect of your question, i can only assume you know a lot about collecting Welfare.
Lmfao perfect response.
Sheesh,I'm blown away figuratively and hopefully literally in the near future by this conversation. When corporations that have sales of billions of dollars pay little if any tax,why would anyone be concerned about an individual that generates an income of maybe six figures from providing a service of paying their fair share of taxes. I'm hoping,and I'm sure that there will be many who disagree,that the new funding for the IRS will insure that there is equity in how revenue is collected. Don't give me that bs that Joe Schmoo who makes less than 400 grand will suddenly become a target of an audit. Even with the new funding the agency will still be understaffed and overworked .And while I'm at it,the Social Security withholding income maximum should be eliminated. Everyone continues to pay into the fund throughout the fiscal year no matter what they make .That is all,over.