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Is it possible to file your taxes under your own LLC somehow?
Hey guys! I am still very new to the site, this is one of my first posts.
I had a question about doing taxes, not just on the 1099 form as a self-employed person, but if it was possible to make my own LLC and somehow file my taxes as being an entertainer under the LLC instead?
I do a lot of music stuff and I am probably going to need my own LLC anyways soon for publishing my own music, etc.
Could I somehow lump my "small entertainment business" with my job as a dancer under one LLC? Or not, since I will still be working as an independent contractor for a club?
I know this may be a vague question, & I apologize if this was a silly question. I just randomly got this idea. Also, I have plans to get out of dancing eventually and transition into a vanilla job that may look up past employers, etc, so I am really just concerned about future employers digging up my past as a dancer and them having an issue with it. I just want to know if by making an LLC, if possible, that I could lump my "dancing" with my music & put it all under this one LLC, to potentially minimize the chances of someone digging deeply into what will be my past as a dancer.
I understand that by being a dancer & paying taxes that there will always be a chance that a future vanilla employer finds out about it/has an issue with it. If that happens, I will accept my losses. However, I am just wondering if this idea I have gotten could potentially help with the whole discretion thing!
Thanks so much!
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Re: Is it possible to file your taxes under your own LLC somehow?
To answer your question, one must start with what's different about an LLC, an S-Corp, and an unincorporated business where tax returns / 'paper trails' are concerned.
To begin with, it's possible to obtain a little bit of 'separation' between one's business activities and one's personal activities by obtaining a separate EIN and using that EIN for 'revenue payments' received by that business. This is true for all three situations above. Essentially, this eliminates the need to directly link your personal Social Security number to strip club / webcam host 1099 income reports, and eliminates the need to directly link your personal Social Security number to the ( business ) bank account receiving the strip club / webcam earnings.
However, with an unincorporated sole proprietor business, your personal name must be used for all business transactions. Thus your personal name will appear on 1099 reports, as well as on the business bank account. Forming an LLC or S-Corp provides the additional advantage of allowing a business name to be substituted for your personal name on those 1099 reports and on the business bank accounts.
Viewed from the 'outside', operating your business as an LLC or S-Corp makes it appear as if the business itself is receiving payments from strip clubs / webcam hosts, and also makes it appear that you as an individual are ( only ) being paid by the LLC or S-Corp. Put another way, a search or a simple IRS document check conducted on an unincorporated sole proprietor business will probably provide a direct 'paper trail' between one's name and social security number, and the receipt of payments from strip clubs / webcam hosts. Conducting the same level of search / IRS document check for an LLC ( using normal LLC tax treatment ) will partially break the 'paper trail'. Conducting the same level of search / IRS document check for an S-Corp ... or an LLC electing S-Corp tax treatment ( in states which will allow this ) ... will almost totally break the 'paper trail'.
The reason an S-Corp ... or for that matter an LLC which elects S-Corp tax treatment ( in states which will allow this ) ... provides a greater degree of 'separation' is that they report business income via a separate annual business tax return via IRS form 1120. Therefore, all 1099 income reports from strip clubs / webcam hosts are tied to the business tax return and business EIN, not to one's personal tax return or personal SS#. What then shows up on one's personal tax return are payments from the S-Corp to that person. Thus a first level search / IRS document check performed by a prospective future employer based on the job applicant's name and SS# will turn up the fact that the person 'worked for' and received payments from an S-Corp named XYZ, but will probably not turn up the fact that the S-Corp the person 'worked for' is in fact wholly owned by that person. And it is guaranteed that a first level search / IRS document check cannot turn up the existence of 1099s showing that prominent strip clubs / webcam hosts etc. made payments to the S-Corp.
However, sometimes searches will be more 'in depth'. In such cases, the extra step may be taken to try and link the person and the S-Corp they received payments from. One way to make this more difficult is to form the S-Corp ... or LLC electing S-Corp tax treatment ... in a different state from the one in which the individual resides. This makes the person's individual information, and the S-Corp's information, reside in two different state databases ... which also requires two separate 'permissions' for access. This in turn prevents any first level inquiry from turning up linked info for both the individual and their LLC or S-Corp, because the prospective employer does not know of the existence / location of the S-Corp thus will not request a second 'permission' form to be signed by the applicant. Additionally, individual state laws regulate the ease or difficulty of an 'outside' inquiry to access detailed information from LLC's and S-Corp's registered in that state ... with states like Nevada, Maryland, Wyoming etc. being famous for being 'tight lipped' about disclosing actual owners of those LLC's and S-Corps etc.
While it's not directly related to your specific question, an S-Corp does provide additional tax reduction advantages over an LLC ... providing that the total level of income involved is in the $60k+ annual range such that the extra tax prep costs will be less than the tax savings. Also, an LLC or S-Corp could definitely be used as a conduit for both strip club / webcam host payments, as well as for ( future ) music sales / royalties, as long as the original LLC or S-Corp business registration documents are set up to allow all 'entertainment' related activities or even 'any lawful purpose'.
The major tax advantage of an S-Corp is that it allows the payments to the individual owner to be split into two parts ... a 'salary' which is subject to all taxes, but also a 'dividend' which is only subject to investment taxes. This can provide a significant reduction in the total amount of Social Security taxes which must be paid on the same X dollars worth of total income.
Personally speaking, I have operated an S-Corp registered in Wyoming for several years now. It has a Wyoming street address and phone number ( which is actually a Wyoming agent's address and phone number ), and a dedicated 'business' bank account at a Wyoming branch of a big international bank. I originally set up this S-Corp in the aftermath of a state professional licensing agency turning up the 'paper trail' of my ( early ) adult entertainment related business activities where 1099's issued by a couple of well known adult businesses were linked to my personal name and SS# also appearing on those 1099's. Had I formed my S-Corp from 'day one' of my adult entertainment career, that 'paper trail' would probably never have been turned up.
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Re: Is it possible to file your taxes under your own LLC somehow?
I agree with the corporation or S-corp structure. I operate my company as an S-corp and pay myself a dividend for anything over the Social Security maximum wages. That saved me about $20,000 last year even though my top tax bracket remained at 33%.
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Re: Is it possible to file your taxes under your own LLC somehow?
Wow, thank you so much Melonie for your reply. You answered a lot of questions that I had. Thank you again!
If I were for some reason potentially audited under this S-Corp, would the IRS find a problem with me using these "loopholes" such as registering the S-Corp in a different state as well as even using it as a conduit in the first place for my stripping income? Would the IRS find a problem if they found out I owned an S-Corp in a different state but did not actually live there?
Also, what exactly is a dividend? I apologize in advance for the rudimentary question. If you could recommend some books or any material to read about investments or anything related to the matter, I would highly appreciate it.
If I did indeed have the separate business account, would I deposit my nightly cash tips into that account? How would I prove this income as it wouldn't be on the 1099? Would I as well have to go to this other state to even set up the S-Corp & bank account at the branch the bank account would be registered at? If you have any tips on what banks would be best in the state of Wyoming, I would highly appreciate it.
Lastly, when I apply at any club to be a dancer and they ask for my information, how do I ensure they will file my 1099/documents of any kind under my S-Corp?
Thanks again for all of your help & time, I am eternally grateful.
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Re: Is it possible to file your taxes under your own LLC somehow?
Honestly guys, do you think it would be easier for me to just file a 1099 but use "entertainer" as the job code? I have an associate's in sound technology, maybe I could pull off saying I was a dj at the club? :P
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Re: Is it possible to file your taxes under your own LLC somehow?
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do you think it would be easier for me to just file a 1099 but use "entertainer" as the job code?
Basically, the IRS provides a list of NAICS job codes from you must pick the 'closest' one. In our case it is 711510 'Independent Artists, Writers, and Performers'. So you can use that code and write in 'performer' on your tax return. However, what you can't do is change the information which will appear on IRS 1099 forms which are issued by strip clubs, webcam hosts etc. If you are unincorporated, those 1099s are going to list the name and ID# of the strip club or webcam host, and will also list your own real name, real address, and real SS#. If a prospective future employer's background check turns up these 1099's, this will probably either lead to questions being asked about why you didn't include 'stripping' or 'camming' on your resume / job application, or lead to your resume / job application 'accidentally' falling into the waste basket. Forming an S-Corp or LLC allows the name and ID# of your corporation to appear on those strip club and webcam host 1099's instead of your own name and SS#, thus eliminating the above possible situation.
But to answer your specific question ... yes it would absolutely be 'easier' not to form an S-Corp or LLC and not to file separate personal and business tax returns.
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would the IRS find a problem with me using these "loopholes" such as registering the S-Corp in a different state as well as even using it as a conduit in the first place for my stripping income? Would the IRS find a problem if they found out I owned an S-Corp in a different state but did not actually live there?
There's nothing illegal about doing this. Legal tax avoidance is one of the things which allows the 'rich to get richer'. There are literally millions of out-of-state LLC's and S-Corps. in fact, there is an entire 'cottage industry' in place to support out-of-state LLC and S-Corp registrations.
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Also, what exactly is a dividend? I apologize in advance for the rudimentary question. If you could recommend some books or any material to read about investments or anything related to the matter, I would highly appreciate it
Super-simplified version ... a 'dividend' is a share of business profits which you, as the owner of the business, are entitled to receive. Dividends are subject to capital gains taxes but not income taxes ( which can mean the difference between a 20% tax rate instead of a 36% tax rate, as Zofia pointed out ). Also, 'dividend' income is NOT subject to Social Security tax ... which in the case of a self-employed person can mean the difference between a 0% tax rate and a 15% tax rate for Social Security.
Let me put this another way. Say you average $2000 a week or $100k of earnings this year. As an unincorporated independent contractor business you would owe perhaps $25,000 in federal income taxes, plus $15,000 in Social Security taxes, plus another $5000 in state income taxes, on that $100k of 'ordinary' income. Less perhaps $15,000 in deductions, exemptions and tax credits, you would wind up paying say $30,000 in total taxes. But if you have formed an S-Corp, you can assign $60k of that money as 'ordinary' income and assign the remaining $40k as 'dividend' income. Thus you would owe perhaps $15k in federal income taxes, plus $9k in Social Security taxes, plus another $3k in state income taxes, on the $60k of 'ordinary' income. Additionally, you would owe $8,000 or so of capital gains tax ( and zero Social Security tax ) on the 'dividend' income. Less the same $15k in deductions, exemptions, and tax credits, you would wind up paying something like $20,000 in total taxes ( versus paying $30,000 as an unincorporated business ).
Obviously my numbers are highly simplified and make a ton of assumptions about filing status and other personal variables, but the point remains true that the potential legal tax savings provided by an S-Corp ( or LLC electing S-Corp tax treatment ) are substantial !!! Offsetting this tax savings are the costs associated with registering and maintaining the S-Corp or LLC, the extra costs of keeping corporate business records and filing a separate business tax return etc. So, generally speaking, if you are earning, or expect to earn, more than $60k per year you will absolutely save money on taxes via forming an S-Corp or LLC electing S-Corp tax treatment.
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If I did indeed have the separate business account, would I deposit my nightly cash tips into that account? How would I prove this income as it wouldn't be on the 1099? [
Actually you, as the owner of the business, can issue a 1099 or W2 to yourself which reports that company XYZ with ID#123 paid $ X thousand dollars to a person with your name, your personal address, and your SS# !!! With no way to check out-of-state records, any person you show that 1099 to will have no idea that you yourself actually own company XYZ thus you are actually 'working' for yourself and generating your own proof of income !!! Generally speaking, that's also far better proof of income than a strip club 1099 which does NOT report your tip income, does NOT report any moneys you were directly paid by club customers, etc.
Also, as the owner of the business, you can issue a 'proof of employment' letter to yourself as well ... which can come in handy when seeking to rent an apartment, to obtain a car loan etc.
Lastly, from the IRS viewpoint, they greatly prefer that both unincorporated and incorporated businesses utilize a separate business bank account. The IRS considers the 'co-mingling' of business and personal funds in a single personal account to be unprofessional ... which may hurt your 'credibility' with the IRS if you are ever audited.
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If you could recommend some books or any material to read about investments or anything related to the matter, I would highly appreciate it.
you might check out ...
and
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Re: Is it possible to file your taxes under your own LLC somehow?
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Originally Posted by
violetta
If I were for some reason potentially audited under this S-Corp, would the IRS find a problem with me using these "loopholes" such as registering the S-Corp in a different state as well as even using it as a conduit in the first place for my stripping income? Would the IRS find a problem if they found out I owned an S-Corp in a different state but did not actually live there?
The Service doesn't care where you incorporate. They only care to collect the minimum amount of tax owed. The tax law allows incorporation. So you can use the corporate form.
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If I did indeed have the separate business account, would I deposit my nightly cash tips into that account?
Yes. Businesses with cash receipts make daily deposits into the business account.
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How would I prove this income as it wouldn't be on the 1099?
The deposit proves the income and that it belongs to the business. You can pay yourself a dividend which is reported on a 1099div, You can pay yourself a salary, which is reported on a W-2.
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Would I as well have to go to this other state to even set up the S-Corp & bank account at the branch the bank account would be registered at? If you have any tips on what banks would be best in the state of Wyoming, I would highly appreciate it.
Depends on the state. Corporations are a creature of state law, so each state has the power to say what corporations can do business there. Generally states require that a "foreign" corporation have an authorization to do business in the state where the company opens its bank account. Essentially this means that a Delaware Corporation (or Wyoming, if you will) wanting to open a bank account even at Wells Fargo in North Carolina needs to register with the NC Secretary of State and appoint a NC registered agent. Usually the foreign corporation hires CT Services, Inc. in Raleigh to do this. CT Services has a branch in every state, so they are convenient for being registered agents for many "foreign" corporations.
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Lastly, when I apply at any club to be a dancer and they ask for my information, how do I ensure they will file my 1099/documents of any kind under my S-Corp?
Give them your corporation's Taxpayer Identification Number. Don't give them your Social Security Number. Don't fill out a W-4. Give them your company address, which can be your own home addy, or a P.O. Box, or your registered agent's address. Of course, if you use your registered agent's address, the agent will charge you for forwarding your 1099s.
HTH
Z
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Re: Is it possible to file your taxes under your own LLC somehow?
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Essentially this means that a Delaware Corporation (or Wyoming, if you will) wanting to open a bank account even at Wells Fargo in North Carolina needs to register with the NC Secretary of State and appoint a NC registered agent. Usually the foreign corporation hires CT Services, Inc. in Raleigh to do this. CT Services has a branch in every state, so they are convenient for being registered agents for many "foreign" corporations.
Indeed the states which are popular for formation of LLC's and S-Corps have developed a 'cottage industry' to take care of such issues on behalf of the out-of-state 'owners'. The Wyoming based service I used did the following.
One-Time stuff
- prepared legal paperwork and made legal filings to register my S-Corp with the state of Wyoming.
- opened a business bank account on my behalf at a Wyoming branch of a large multinational bank ( since you asked - Wells Fargo ).
- registered themselves as the 'registered agent' of my S-Corp in Wyoming
Ongoing stuff
- provides a Wyoming street address and phone number for my S-Corp ( which appears to be a 'suite' in the building owned by the service )
- continues to act as the 'registered agent' of my S-Corp
- forwards mail and phone messages received by my S-Corp
If I remember correctly, the initial setup costs were something like $500 ... and the ongoing costs are something like $350 per year for the service - plus perhaps another $150 for S-Corp accounting and tax return prep ( most of which I actually prepare myself, but I want an accountant's signature on the S-Corp's tax return to deflect IRS concerns and to also avoid my own name appearing on the S-Corp's tax return for 'anonymity' reasons ). I did not have to travel to Wyoming to set any of this up. All I had to do personally was to sign the paperwork and mail it, write the check to the service and mail it, and also appear in person at a local branch of the same multinational bank to officially 'identify myself' so that the Wyoming branch could open a new business account for me.
Also, because of differences in Wyoming LLC laws and the availability S-Corp tax treatment for LLC's in most states, if I were setting up a new corporation today I would definitely choose a 'Close LLC' based in Wyoming - in combination with election of S-Corp tax treatment. Wyoming's unique 'Close LLC' legal structure allows a single owner LLC to dispense with legal requirements for a board of directors, annual meetings and other official paperwork ... which saves on ongoing annual time and cost requirements to 'maintain' the LLC. See
Operationally, I gave the name, address, and Tax ID# of my Wyoming S-Corp to strip clubs, webcam hosts, video producers etc. ... and deposited any moneys earned into the S-Corp's Wyoming bank account. Since my Wyoming business bank account was part of a major multinational bank, I could do ATM deposits into this account from almost anywhere in the world. In cases such as webcam hosts or video producers, I could also utilize direct deposit into my Wyoming business bank account. Also, since my S-Corp's Wyoming bank account was part of a major multinational bank, I could also write 'company' checks or use a linked 'company' debit card to pay for any business related expense items ( like restaurant meals and hotel bills when dancing on the road, like S-Corp accountant's fees and annual S-Corp service fees, etc. )
Then once a month I would transfer an amount of money equal to my 'salary' out of the S-Corp's account and into my personal bank account ( at a local branch of a different multinational bank in my home state ). Using two different multinational banks in two different states pretty much constructed a 'brick wall' against any casual attempts to link my personal finances with the ownership or operation of my S-Corp. All that was 'visible' from the perspective of anyone in my home state were the regular incoming money transfers from a non-descript Business located in Wyoming to my personal bank account.
Once a quarter I would transfer money from the S-Corp's Wyoming bank account to make estimated tax payments. Once a quarter, I would also calculate estimates of total earnings, total business expenses, and total estimated tax payments, etc. - arrive at an appropriate amount - and then transfer additional funds from the S-Corp's Wyoming bank account into my personal account in the form of a quarterly 'dividend' payment. In almost all cases, the dollar amount of my quarterly 'dividend' payment was significantly more than the dollar amount of my regular monthly 'salary'.
However, as Zofia alluded to earlier, I would always try to 'retain' some minimum amount of business earnings in the S-Corp's Wyoming bank account as a 'buffer' against lost income or unexpected expenses, as opposed to paying out every dollar in the form of 'dividends'. This pretty much guaranteed that I could always make regular monthly 'salary' payments to myself even if I was unable to work very much that month due to sickness or injury, even if I were to incur major unexpected 'legal expenses', etc.
In terms of a multi-year average, I would guesstimate that ... even after paying for the annual 'maintenance' costs of my S-Corp, and even after paying for the additional accounting / separate tax return filing costs for my S-Corp ... I legally saved a net of at least $5,000 every year via the reduced Social Security and 'ordinary' income tax liabilities. For some high-earning years I saved much more than that !
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Re: Is it possible to file your taxes under your own LLC somehow?
Melonie and Zofia. You ladies are freakining AWESOME!! I honestly feel as if I need to ask for both of your business bank account numbers, in order to pay you for all of that information, as a consultant fee. I'm so appreciative of your time and willingness to answer this very question I had wanted to ask myself. Also, thanks Violetta for asking.
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Re: Is it possible to file your taxes under your own LLC somehow?
^^^ glad to help if I can !!!
As a side note, it's encouraging to see this level of interest in LLC's and S-Corps from dancers and camgirls. For whatever reason, most dancers and camgirls seem to think that forming an LLC or S-Corp is too 'complicated' ... or isn't worth their time and trouble. It seems to me that full time dancers and camgirls must actually go through far more time and trouble to earn an extra $5000+ per year which the LLC or S-Corp is likely to 'earn' for them via legally reducing their tax liability.
However, to be clear, if the dancer or camgirl is earning less than $1000 per week = $50k per year, the lower income tax brackets they will face on their 'ordinary' income, versus the extra costs involved to form and maintain an LLC or S-Corp, brings the cost effectiveness of an LLC or S-Corp into question. However, even in that situation, the LLC or S-Corp still provides a significant 'layer of separation' in terms of creating an adult industry paper trail which could potentially 'haunt' them in later life.
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Re: Is it possible to file your taxes under your own LLC somehow?
Wow thank you so much Melonie & Zofia. I am very grateful for your posts. I am indeed looking to buy a home in the future so your information is very helpful in my plans to save money the right way! Thanks a bunch.
Melonie, if you could recommend an agency in Wyoming that you've had good results with, I'd really appreciate it! I am still processing all of the information you have told me lol! I think I am going to indeed go with the Close LLC with s-corp tax structure as you have recommended.
Thank you x infinity!!
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Re: Is it possible to file your taxes under your own LLC somehow?
Since the forming of a corporation is a major financial step, and not being a financial 'professional', I'm forced to leave you to perform your own due diligence. Technically speaking, I mentioned the forming of a Wyoming based Close LLC as a personal 'layman's' opinion regarding what I would do myself if I was seeking to incorporate for the first time today ... with the goals of creating a 'layer of separation' for my adult entertainment related business activities, as well as legal tax minimization. However, this must not be construed as 'financial advice' ... which only duly accredited financial 'professionals' are allowed to provide.
With that said, I did not choose my example link at random !
I will also point out that a 'new wrinkle' is beginning to appear in regard to the 'anonymity' and tax liabilities of unincorporated independent contractor business operators living in certain cities / states. This involves those cities / states requiring all businesses located in those cities / states to register their business, and to pay annual business license fees ... but which also creates a 'public record' that person X address Y SS#Z operates said business. In some cases cities / states may also require that business to pay a business tax on the total sales or earnings of that business. See
Arguably, the formation of an LLC or S-Corp based in a different state 'converts' an unincorporated independent contractor business operator ( who is therefore subject to home city / state business licensing and potential business tax liability ) into an 'employee' of their out of state corporation ( who is therefore NOT subject to home city / state business licensing and potential business tax liability ). As Zofia pointed out earlier, the formation of an LLC or S-Corp avoids 1099-misc 'business' income reports issued by strip clubs, webcam hosts etc. in the name of, and at the home address of, the particular person ( which establishes operation of a business by that person from their home address ), and instead substitutes the issuance of a W2 'employee' income report + 1099-div 'individual' dividend payment report issued by the LLC or S-Corp in the name of that person ( which do NOT establish operation of a business by that person ). As long as the different city / state where the LLC or S-Corp is registered does not require business licensing and does not levee business taxes, this should result in significant additional savings on business license fees and potential business taxes ... as well as avoiding the creation of a 'public record' of that person's business activities in their home city / state.
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Re: Is it possible to file your taxes under your own LLC somehow?
Thanks Melonie for your willingness and patience to answer my curious questions. I am a newb when it comes to dancing, as well as anything to do with business. I had heard of Wyoming being a lower-cost state in the past to do business in, so based on what I have heard & what you have personally shared with me about your business in Wyoming, I thought it would be a great fit for me as well. I am definitely going to be speaking with someone who can professionally lead me into the right direction.
As far as the tidbit about California laws and taxes, I found that very helpful as well, as I am going to be moving there in about a year. I would hate to be taxed even more.
You are very talented and very knowledgable! Thank you once more! I am truly grateful.
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Re: Is it possible to file your taxes under your own LLC somehow?
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Originally Posted by
karijen
Melonie and Zofia. You ladies are freakining AWESOME!! I honestly feel as if I need to ask for both of your business bank account numbers, in order to pay you for all of that information, as a consultant fee. I'm so appreciative of your time and willingness to answer this very question I had wanted to ask myself. Also, thanks Violetta for asking.
Always glad to help. :-)
Z
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Re: Is it possible to file your taxes under your own LLC somehow?
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Originally Posted by
violetta
Wow thank you so much Melonie & Zofia. I am very grateful for your posts. I am indeed looking to buy a home in the future so your information is very helpful in my plans to save money the right way! Thanks a bunch.
Melonie, if you could recommend an agency in Wyoming that you've had good results with, I'd really appreciate it! I am still processing all of the information you have told me lol! I think I am going to indeed go with the Close LLC with s-corp tax structure as you have recommended.
Thank you x infinity!!
You are most welcome. Glad to help. :-)
Z
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Re: Is it possible to file your taxes under your own LLC somehow?
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I had heard of Wyoming being a lower-cost state in the past to do business in, so based on what I have heard & what you have personally shared with me about your business in Wyoming, I thought it would be a great fit for me
When I was exploring the formation of my S-Corp, I looked at the pro's and con's of incorporating in my home state, versus incorporating in all of the 'popular' states. Three things ultimately pushed me toward Wyoming. First, there aren't any 'hidden costs' of maintaining the corporation ( i.e. mandatory annual filings / high fees for a state business license, publication of corporate directors, etc. ). This was actually my biggest initial concern, since at that time my earnings level was low enough that incurring an extra $500 or whatever per year in 'hidden costs' might have tipped my S-Corp into being a 'money loser'.
Second, the state of Wyoming isn't part of the 40 state agreement to share financial info with the IRS and other states ( meaning that anyone seeking such financial info at least needs to prove 'probable cause' to a Wyoming judge ). This was important to me personally because, at the time I was forming my S-Corp, I had already had a 'run-in' with a state professional licensing agency over my previous history of adult industry related work - and I wanted to make sure that any future linkage between my own name, address and SS# and 1099-misc payments from well known strip clubs, webcam hosts, video producers, etc. would be as difficult as possible to establish.
Lastly, Wyoming itself is - and is likely to remain - business friendly ( meaning near zero chance of Wyoming imposing a future tax on state registered businesses ). This was a minor concern at the time, but has become an increasing concern as many states and/or cities have turned to business license fees / business taxes as an additional source of revenue. As you infer, City of Los Angeles business license fees and business taxes may now cost an LA based unincorporated business operator an extra $1-2-3,000 per year ... with those business license fees and business taxes arguably being legally avoidable via routing business income through an out-of-state S-Corp or LLC electing S-Corp tax treatment. Besides LA, cities like Philadelphia, Seattle, Portland, parts of Florida, the entire state of Tennessee, etc. already assess a business tax. And, like LA, increasing computer power to perform cross-reference searches against state / federal tax returns now provides them with a powerful 'tool' to seek out and collect business taxes from residents who reported 'business' earnings on their personal tax returns ( which doesn't happen if business earnings are routed through an out-of-state corporation which files its own tax return separately ).
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Re: Is it possible to file your taxes under your own LLC somehow?
I haven't signed on until only now since I've last posted! I have started dancing and have accumulated about $5k (more like $7k before gas/tolls/food/outfits) in 11 days. Thank you Melonie, again, for the last post you wrote, you have been an immense help.
I think I am ready to make my LLC. I have the money for the startup cost for the LLC on a debit card, however that money I had made prior to dancing at a vanilla job, so that money has already been taxed etc. I figure this would be better than to deposit $500 of the dancing untaxed cash I have, randomly into a bank account, as that would probably raise IRS concerns possibly in the future if an audit were to take place.
I have a few more questions, if anyone has the time or answers. It would be much appreciated.
I worked at two clubs during my 11 days dancing. Club A, I worked at for 3 days. They do NOT issue 1099s, and they do not take your social security number. All I did was sign an agreement saying I am responsible for my taxes myself and that I am an independent contractor, not subject to workman's comp etc.
Club B, which I worked at the rest of the days, also does NOT issue 1099s. However, they did take down my social security number. The manager said they "can" issue 1099s if requested, but they do not do it otherwise. I signed pretty much the same agreement as I did at Club A.
My question is, if I indeed make this LLC or S-Corp, do I get my club to issue a 1099 to the LLC? At my club, we get paid cash up front by customers and there is no debit card purchases for dances/no private rooms, so I get paid in only cash tips. The club has no idea how much I have made that night, they do not keep track of how many dances anyone does or anything like that, all they keep track of is that I have paid the mandatory tip outs, and house fee.
How does the club issuing the 1099 to the LLC come into play with all of this? What would the 1099 even say? Would the manager just write down whatever money I told them I made, onto the 1099? Would the only stipulation be having to have my cash deposits into my bank account, match the amount written on the 1099, as to avoid IRS concerns about tax evasion?
Also, when issuing myself a W2, what would be a good job title to give myself from my own business to keep the "anonymity"?
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Re: Is it possible to file your taxes under your own LLC somehow?
First topic ... 1099's being issued by strip clubs - recent TPP / TAA legislation has resurrected the legal requirement that ANY business which pays more than $600 per year to another business must issue 1099's or face potential stiff IRS penalties. As such, the assumption that a strip club won't issue 1099's next spring because they haven't issued 1099's in past years is now somewhat 'dangerous'. Where clubs issuing 1099's are concerned, if an LLC or S-Corp has been formed, the club can be provided with the official name of the corporation and the corporation's tax ID#. Thus any club issued 1099 will bear the name of the corporation and the corporation's tax ID# as opposed to the dancer's real name and SS#.
In the way of history, this 1099 mandate was originally enacted as part of the ACA, but was repealed by the US congress before it was actually put into effect due to the degree of complaints by small businesses. It remains to be seen whether another repeal effort will be mounted / successful. If not, 1099's could be issued next spring by tons of clubs which have not done so in previous years. And this in turn could catch tons of dancers by 'surprise' ... both in terms of ( a portion of ) their dancing incomes being officially reported to the IRS, as well as the creation of a 'paper trail' linking their personal name, address and SS# to an 'adult business' via strip club issued 1099's. But, again, both the final terms of the TPP/TAA laws containing the resurrected 1099 mandate, and any ( subsequent ) effort to ( again ) repeal the 1099 mandate, are still 'up in the air'.
When clubs prepare 1099's there is some 'leeway' regarding what portion of dancer income they keep track of and report. Typically the 1099 amount has only covered non-cash customer money which was routed through the club's cash register i.e. private dances / VIP charged to a customer's credit card, club 'funny money' cash-ins etc. The club has a strong incentive to issue 1099's for these sort of customer money 'transfers' since, in the absence of 1099's being issued to report this money as someone else's earnings, this money could be considered as additional taxable income for the club itself.
I would also add that, if the resurrected 1099 mandate is allowed to stand, dancers making 'mandatory' payments to independent contractor DJ's and bouncers will fall under the same mandate. Like the clubs, dancers failing to issue a 1099 to each DJ, bouncer etc. for the total moneys paid to them during 2015 could not only subject the dancer to a new IRS penalty for failing to issue 1099's, but would also force the dancer to claim such payments as additional dancer's income upon which additional income taxes would be due. Obviously, without the 'layer of separation' of an LLC or S-Corp, non-incorporated dancers would now be forced to provide their real names, real addresses, and real SS#'s to DJ's and bouncers via the dancer issued 1099's !!! If dancers choose not to issue 1099's to DJ's and bouncers, and the resurrected 1099 mandate is allowed to stand, at best it is likely that dancer payments made to DJ's and bouncers will be treated as non-tax deductible voluntary 'gratuities' by the IRS ( as opposed to a tax deductible business expense as is now the case ).
In regard to your own LLC or S-Corp issuing you a personal W2, there isn't any line on the W2 form which reports 'occupation'. When it comes time to file your own personal tax return, when filling out the 'occupation' line on your personal tax return, you can pretty much list anything that is remotely relevant vis a vis your 'role' in your corporation ... sales representative ?
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Re: Is it possible to file your taxes under your own LLC somehow?
Thank you so much, I had no idea about any of this potentially changing in the next year. Since my club insists they don't issue 1099s at all, do I even need them to issue me one? Or can I just put the money I make into my business bank account and just pay the taxes on it & call it a day?
Thank you a million!!!!!! You truly are so knowledgable I am so grateful once again for your outstanding advice/responses!
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Re: Is it possible to file your taxes under your own LLC somehow?
^^^ Your 'professional' business setup and separate business bank account allows you to deal with a situation of both a 1099 being issued or no 1099 being issued. In practical terms, the only consequence will be that your business tax return will either list that income under the '1099 payments' column or a different 'other business revenues' column. The only kicker is that you'll need to wait until mid-march of 2016 before finalizing your business and personal tax returns to see whether a 1099 actually shows up in your business 'mailbox' or not.
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Re: Is it possible to file your taxes under your own LLC somehow?
This is all amazing information! I'm not even a dancer yet but I am preparing myself to audition soon. Should I have this set up before I go or is it ridiculous to put money into it before I even know if I have a career? Also, I live in MN, I've been doing some reading and from what I can understand it looks like we have some similar tax laws as Wyoming when it comes to LLC and S-corp... now which one to choose!...?
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Re: Is it possible to file your taxes under your own LLC somehow?
^ My unprofessional opinion is that you should dance for a couple weeks at least to see if it's really something you want to do seriously.
The benefits of filing as just a sole proprietor vs. an S-corp are negligible until a certain level of income though. I think the deadline for filing your S-corp papers to make it applicable to 2016 is around March/April (someone correct me!) I don't think you'll know if there's a benefit that quickly, since you don't know what your $$ will be like.
Personally I would just spend the first year as a sole proprietor, see how much money you make, then evaluate next year.