Dancers who file as an S Corp?
I've recently been advised to incorporate from a sole prop to an s corp for the purpose of saving taxes. I was just wondering if any other dancers have experience doing this and whether the clubs themselves will contract you as an s corp. Do I even need to tell the club?
Thanks!
Re: Dancers who file as an S Corp?
I utilize an S-Corp ... based in a different state than the one I live in ( for better 'isolation' of the paper trail ). Yes if you are going to be paid directly by a club or webcam host, the payments need to use the name and tax ID number of your S-Corp in order to have any 'tax savings' value.
Forming an S-Corp is now of greater value due to the recent 2% increase in Social Security = self-employment payroll tax rates that was part of the 'fiscal cliff' settlement deal. Essentially, an S-Corp allows a single person owner to split their total earnings into two components ... part is salary subject to Social Security tax and 'regular' income tax, but another part is dividends which are not subject to Social Security tax and are taxed as passive dividend income at a lower rate than would apply to 'regular' income.
Re: Dancers who file as an S Corp?
Quote:
Originally Posted by
Melonie
I utilize an S-Corp ... based in a different state than the one I live in ( for better 'isolation' of the paper trail ). Yes if you are going to be paid directly by a club or webcam host, the payments need to use the name and tax ID number of your S-Corp in order to have any 'tax savings' value.
Forming an S-Corp is now of greater value due to the recent 2% increase in Social Security = self-employment payroll tax rates that was part of the 'fiscal cliff' settlement deal. Essentially, an S-Corp allows a single person owner to split their total earnings into two components ... part is salary subject to Social Security tax and 'regular' income tax, but another part is dividends which are not subject to Social Security tax and are taxed as passive dividend income at a lower rate than would apply to 'regular' income.
That's exactly why I'm looking into it.
What I want to know are how this is handled at the club level. I work in Vegas so the club takes a photocopy of your Nevada business license (sole prop). I'm wondering if they will take an S-Corp business license and allow me to work there. Legally, it should be fine but I don't know any dancers with this type of experience.
Re: Dancers who file as an S Corp?
In my own case, I named my S-Corp using my 'stage name' ... which makes interactions with clubs and websites much easier as well as obscuring the paper trail where checks are concerned. Or put another way, if a club or webcam host cuts a check in the name of 'Melonie Charm' I can easily deposit that check directly to my S-Corp bank account.
In regard to dancer's 'adult entertainer' licenses, these will still require personal ID and a personal background check. In regard to isolated situations like Nevada clubs wanting to verify business licenses, once your S-Corp is established your S-Corp must apply for the state business license. Technically speaking, if you want to form your S-Corp in Nevada ( which isn't a bad choice given the state's laws about business taxes, about information disclosure re business owners etc. ) then you already have this covered !
At the moment, due to state business tax laws, state information disclosure laws etc., the most popular states for S-Corp registration are Nevada, Maryland and Wyoming. Obviously you don't need to actually be a resident of these states in order to register an S-Corp in these states ... which is also an additional 'plus' in terms of legally obscuring the paper trail.
In terms of the US Fiscal Cliff settlement, for dancers earning say $100k per year an S-Corp just became more 'valuable'. The reason of course is that Social Security taxes = self-employment taxes just increased by 2% ( last year's 13.3% self-employment tax rate increased to 15.3%). Thus in 2013 for a sole proprietor dancer, self-employment taxes on $100k would be $15, 300. But by forming an S-Corp, which can effectlvely split that $100k into $60k worth of 'salary' plus $40k worth of 'dividends', 15.3% self-employment taxes only apply to the $60k salary portion, with the ObamaCare tax rate on the dividend income only being 3.8%. Also, in 2013 for a single sole proprietor dancer who has no children, effective federal income tax rates on $100k would be something on the order of 21% ... with potential exposure to the AMT for income over $50,300. With an S-Corp achieving a $60k salary $40k dividend 'split', the effective federal income tax rate on the $60k salary would be more like 16%, while the federal dividend tax rate would be 15%.
Please understand that effective income tax rates are subject to a huge number of variables i.e. single, children, deductions, tax credits etc. so these numbers are very rough. But the overall point is that for a dancer or camgirl earning $50k per year, the tax advantages of an S-Corp are marginal or non-existant ... and forming and maintaining an S-Corp does involve additional costs. However, for a dancer or camgirl earning $100k+ per year, forming an S-Corp can potentially legally save several thousand dollars in various US taxes, which more than 'covers' the additional costs involved, while providing the additional advantages of a legally obscured paper trail re having worked in the 'adult entertainment' industry, a verifiable personal income ( the regular salary payments made by the S-Corp to the individual owner ) to help secure loans / build credit, etc.
Also, for the benefit of other DD readers, in past years certain states allowed LLC's to elect S-Corp tax treatment i.e. 'splitting' overall earnings into x% salary + y% dividends. It is unclear at best whether the Fiscal Cliff settlement will allow this to continue in 2013, due to the major federal distinction / tax treatment between ordinary income and dividend income.
Re: Dancers who file as an S Corp?
I have one question about the S-corp. I do online domination, nitefilrt, cam, as well as dancing. Can I do all of that under one S-corp?
Re: Dancers who file as an S Corp?
You can operate a corporation under an "assumed name", instead of your corporate name. For example, "Taco Bell", "Sonic", "McDonalds", etc., are not corporate names. Each one of them is a "dba" (doing business as) also referred to as an "assumed name". So, your corporate name could be ABC, Inc., but you could do business as "Candy Jane" (as an example) if you file for a dba.
What you have to do is file an assumed name or dba certificate with the proper city or state office. If you do business in one county, then usually, you will file the dba paperwork in the county clerk's office. But, if you want a state-wide dba, you may have to file with the Secretary of State or other state agency. By filing a dba, this will allow you to do business under that name, including opening up a bank account with that name (but make sure the bank account reflects that it is a dba for the corporation) and accepting payment under that name.
When you are signing a contract, you are technically supposed to disclose both the corporate name and the assumed name, but most of the time, this is only important to maintain the protection of the corporate "shield". For example, if you sign a contract as "ABC, Inc. dba Candy Jane" you will not be individually liable under the contract. As a general rule, only the corporation itself is liable under the contract (emphasis on "under the contract," which means under the terms and conditions of the contract. If you kick someone in the eye, that is "tort" liability, not contractual liability). But, if you only sign Candy Jane, you could be individually liable under the contract (even if Candy Jane is not your real name).
Re: Dancers who file as an S Corp?
Quote:
I have one question about the S-corp. I do online domination, nitefilrt, cam, as well as dancing. Can I do all of that under one S-corp?
You sure can, as long as your S-Corp is originally registered as doing business 'for any lawful purpose'.
Re: Dancers who file as an S Corp?
I'm looking into filing for an S-corp in Wyoming due to the benefits. An LLC won't cut it for 1099ing people who work on projects with you.
Re: Dancers who file as an S Corp?
Quote:
Originally Posted by
GlamourRouge
I'm looking into filing for an S-corp in Wyoming due to the benefits. An LLC won't cut it for 1099ing people who work on projects with you.
An LLC is a state law entity. You can be an LLC for state law purposes and S-corp for federal tax purposes. Most state LLCs choose to be taxed as partnerships for federal tax purposes, but they can just as well choose to be taxed as an S-corporation.
Re: Dancers who file as an S Corp?
Quote:
Originally Posted by
djezcheeze
I have one question about the S-corp. I do online domination, nitefilrt, cam, as well as dancing. Can I do all of that under one S-corp?
Yes, and you can have several different dbas (assumed names) under one corporation, just make sure you register all your dbas.
Re: Dancers who file as an S Corp?
Quote:
Originally Posted by
jack0177057
An LLC is a state law entity. You can be an LLC for state law purposes and S-corp for federal tax purposes. Most state LLCs choose to be taxed as partnerships for federal tax purposes, but they can just as well choose to be taxed as an S-corporation.
so if you are just doing it for saving on taxes there is no point to form an s-corp?
Re: Dancers who file as an S Corp?
^^^ to some degree this depends on individual state business and tax laws regarding LLC's formed in those states. Where Wyoming LLC's are concerned, S-Corp tax treatment can be freely elected. However, the ACA SHOP public health insurance exchanges for small businesses aren't yet developed to the point where IRS eligibility rules have been made clear. The IRS is already on record that public health insurance purchased via public health insurance exchanges for 'individuals' are NOT eligible for a business expense tax deduction ( since by implication it is the individual not the business who is signing up and paying the premiums ). Since LLC's are 'pass through' entities, whereas S-Corps are not, it's possible ( but not known yet for a fact ) that single owner LLC's could also be treated as 'individuals' ( thus no business expense tax deduction for health insurance premiums ) whereas S-Corps would more likely be treated as businesses. Unfortunately, we won't know for sure about these IRS interpretations for several more months, since the Obamacare mandates for businesses have been postponed for another year.
Given the fact that dancers or camgirls are going to elect S-Corp tax treatment in any case, and also given that costs and compliance requirement of ( Wyoming & certain other state ) S-Corps are only marginally higher / more involved than LLC's, forming an actual S-Corp could remove some of the 'doubt' in regard to uncertain future tax issues. Thus I would recommend that any dancers and camgirls whose annual income is likely to be significantly higher than 400% of the Federal Poverty Level ( i.e >$47,000 per year for a single girl with no children ) to consider forming an S-Corp from the 'git-go'.
On the flip side, any dancers or camgirls whose annual income is less than 400% of the Federal Poverty Level ( i.e. <$46,000 per year for a single girl with no children ) probably do NOT want to think about forming an S-Corp or an LLC at all. The reason is that purchasing public health exchange insurance as an 'individual' will make her eligible for taxpayer funded subsidies on health insurance premium costs, as well as annual 'out of pocket' caps on total health care costs, which are potentially 'worth' far more than claiming a business expense tax deduction for unsubsidized health insurance premiums and uncapped out-of-pocket total health care costs under the SHOP small business health insurance program.
Re: Dancers who file as an S Corp?
Quote:
Originally Posted by
h0ttie
so if you are just doing it for saving on taxes there is no point to form an s-corp?
The difference between state and federal characterization of an entity can get confusing, but here is a summary:
First, you form your entity in your state (or another state of your choice, but you may be require to set up an "office" in that other state, which could be a P.O. box, a registered agent, etc.). There are many different STATE entity choices: corporation, partnership, limited partnership, limited liability partnership, limited liability company, etc. The 3 factors to consider for picking the right STATE entity are: (1) asset protection/protection from liability (probably does not apply much to a dancer), (2) STATE taxes (for example, a few years ago, partnerships escaped the Texas Franchise Taxes, so small businesses in Texas would set up limited partnerships instead of corporations), and (3) ease of use and maintenance. LLC's are usually the easiest to maintain, but, in some states, you cannot have a single member LLC. However, you could have a relative or friend own a .1% interest in the LLC to get around this limitation. (Or you could even set up a corporation to be the .1% owner of the LLC, but, that gets a little complicated.)
Then, after you have set up your entity in the state, you apply for an EIN on Form SS-4 and you have to complete Form 8832 to select how you want your entity to be taxed for FEDERAL TAX purposes. There are basically only 3 choices for FEDERAL TAX PURPOSES: sole proprietorship, partnership (at least 2 partners required) or corporation. To be taxed as an S-corporation, you have to select "corporation" on this Form 8832, and then, make the election to be an S-corporation on another form, Form 2553.
So, if your state allows a single-member LLC, you could be an LLC for STATE law purposes, and either a sole proprietorship or a corporation for FEDERAL tax purposes. If you choose to be a corporation, you can then elect to be treated as an S-corporation.