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Thread: Are You Legally A Business?

  1. #1
    Veteran Member Breannasparks's Avatar
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    Default Are You Legally A Business?

    My agent suggested this to me a while back when I was doing videos and said its better for taxes and you can also open an account in banks under your alias (since it technically your business name) which makes filing some things a lot easier and is also one less thing with your real name on it. Has anyone done it and is it worth it? I believe the price for a business license in CA is $500. I have one in Vegas for dancing which is $200 but I currently do my ca work and reside in CA so I know I would need one here.

    Thanks in advanced for your response

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    Banned Melonie's Avatar
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    Default Re: Are You Legally A Business?

    Yes, establishing a legal business entity, and segregating income and expenditures for that business via a separate bank account, offers a number of advantages. Perhaps most important these days is that it is perceived to be 'professional' by the IRS, by banks etc. This in turn confers greater credibility to the person operating that business when a tax audit, a loan application etc. arises.

    Indeed in some jurisdictions local gov'ts require the purchase of a business license. Other jurisdictions merely require the registration of a DBA with the county clerk. And anybody can obtain a TIN, which avoids having to use your own social security number for business purposes. Also, segregating all payments from strip clubs, webcam hosts, video producers, etc. under the 'alias' business name and business bank account, with said business entity then 'paying' the individual business owner a 'salary', does throw up an additional level of obscurity for would-be future straight job employers, family court attorneys etc.

    From a personal standpoint, since I first started working in this industry, I have always operated a registered business entity named Melonie Charm Ent. under its own TIN with its own business bank account. I have always used the registered business name and TIN when filling out club / webcam host documents for 1099's. And from a personal standpoint I officially reported Melonie Charm Ent. as my 'employer' ... so that Melonie Charm Ent. shows up as the 'employer' name on my personal credit reports and ( I assume ) private databases instead of Ricks or IFriends or Hustler or any other easily recognizable adult industry business sending me 1099's.


    I have one in Vegas for dancing which is $200 but I currently do my ca work and reside in CA so I know I would need one here.
    Not necessarily. My business address is a PO Box. Unless some local laws mandate something different, if you already have a Nevada Business registered and licensed, all you really need is a Nevada PO Box address rented in the name of your Nevada Business to continue doing business in any other US state. Of course this also means that any checks and 1099's sent to your business entity will have to eventually be collected from that PO Box in Nevada. But I'm pretty sure that the 'privately owned' mail drop companies offer automatic forwarding i.e. anything delivered to a Mailboxes Inc. Box in Nevada can automatically be forwarded to a related Mailboxes Inc. Box in California. I've never done this personally, but it's worth checking out. To be consistent, this would also require opening a business bank account at a Nevada bank - but a Nevada bank that also has branches in California !
    ~
    Last edited by Melonie; 11-12-2011 at 07:30 PM.

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    Default Re: Are You Legally A Business?

    I know that in the UK, it is a GREAT idea to set yourself up as a Ltd company...makes taxpaying much easier and you get some breaks as well.

    You'd have to check your local legislation on what is required...another good question for a CPA!
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    Banned Melonie's Avatar
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    Default Re: Are You Legally A Business?

    In the USA, setting up sole proprietor businesses is super-easy ( just a county clerk business registration DBA ) but offers zero tax advantages. The OP apparently already has registered ( and paid the license fee for ) a sole proprietor business based in Nevada as a result of her working as a Vegas dancer. However, setting up an LLC or S Corp is still fairly easy, offers a couple more tax / liability advantages, but does have some 'paperwork' burden. Setting up a C Corp is more complex, and much more burdensome in terms of 'paperwork', costs more to set up and 'operate', but offers the greatest tax advantages.

    In the final analysis, it comes down to how much money the business is earning, and how many personal assets the person needs to 'insulate' from a potential business judgement going against her, as to whether anything beyond registering a sole proprietor business is actually worth the additional money and effort. IMHO, webcam girls who have zero personal interaction with customers, and thus have zero chance of being sued if said customer has a heart attack while 'spanking his monkey' watching thfroe webcam girl perform, webcam girls who don't have hundreds of thousands of dollars worth of personal assets that might be at risk in a successful lawsuit against her business, have no compelling reason to go beyond the basic sole proprietor business registration. On the other hand, a high earning exotic dancer / video actress / model who might want to purchase and operate a vehicle exclusively for business purposes, who might want to purchase comprehensive health insurance for herself, who might want to contribute to a retirement account, or who has 1/2 million dollars worth of investments / real estate ownership etc. might benefit greatly from an LLC or a corporation ( due to the tax and liability advantages ).

    Also, I checked and Mailboxes Etc / UPS Store DOES offer automatic forwarding service. And unlike the US Postal Service, it's mailboxes allow you to list an actual street address for your 'mail drop' based business entity ... which potentially reduces official 'suspicion' levels re banks, potential future employers etc. And obviously where any would-be 'stalker' is concerned, having web searches 'dead end' at a UPS store in a different state is a plus !

    ~
    Last edited by Melonie; 11-12-2011 at 07:58 PM.

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    Default Re: Are You Legally A Business?

    Thank you for all the amazing info Melonie! Since my license expires next month in Vegas I'm most likely getting one in California. Can it be done online or do I need to go into the court house to fill out the paperwork?

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    Default Re: Are You Legally A Business?

    Quote Originally Posted by ManyRoses View Post
    I know that in the UK, it is a GREAT idea to set yourself up as a Ltd company...makes taxpaying much easier and you get some breaks as well.

    You'd have to check your local legislation on what is required...another good question for a CPA!
    been thinking of this just now lol - do i go as a sole trader or a limited company?

    the big thing for me is that with a limited company, the company pays corporation tax and the employee (you) pay income tax

    i think im gunna have to ask my accounts tutor which will be better (of course i will do it as a hypothetical situ though lol!)
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    Default Re: Are You Legally A Business?

    with a limited company, the company pays corporation tax and the employee (you) pay income tax
    In America this same 'double taxation' situation exists with C Corporations, but not LLC's or S-Corps. Again the decision boils down to how much money the business is earning, how many 'perks' you plan on your business providing to yourself etc. as to whether or not the benefits of a full corporation outweigh the costs.


    Since my license expires next month in Vegas I'm most likely getting one in California
    You might want to rethink that ... given that Nevada levees zero state income taxes, while California state income taxes are pretty steep ! If you're working in California, you can't avoid the Cal state personal income tax, but your 'business' in another state potentially can ( at least partially ) ! And for that matter, do you really need to change your official residence to California ? Just because you are 'temporarily' living in California doesn't mean it has to be your 'official' residence.

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    Default Re: Are You Legally A Business?

    melonie you seem great at this kind of thing so im going to be cheeky here, can you break down the two types of perks for each please? i will add that i cant drive so that doesnt need to go on the list but can you list everything else xx
    I deserve the life i want. To be adored by men, treated like a princess and to be indulged. I deserve nothing but a life of luxury.

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    Default Re: Are You Legally A Business?

    Quote Originally Posted by Melonie View Post
    In the USA, setting up sole proprietor businesses is super-easy ( just a county clerk business registration DBA ) but offers zero tax advantages. The OP apparently already has registered ( and paid the license fee for ) a sole proprietor business based in Nevada as a result of her working as a Vegas dancer. However, setting up an LLC or S Corp is still fairly easy, offers a couple more tax / liability advantages, but does have some 'paperwork' burden. Setting up a C Corp is more complex, and much more burdensome in terms of 'paperwork', costs more to set up and 'operate', but offers the greatest tax advantages.

    In the final analysis, it comes down to how much money the business is earning, and how many personal assets the person needs to 'insulate' from a potential business judgement going against her, as to whether anything beyond registering a sole proprietor business is actually worth the additional money and effort. IMHO, webcam girls who have zero personal interaction with customers, and thus have zero chance of being sued if said customer has a heart attack while 'spanking his monkey' watching thfroe webcam girl perform, webcam girls who don't have hundreds of thousands of dollars worth of personal assets that might be at risk in a successful lawsuit against her business, have no compelling reason to go beyond the basic sole proprietor business registration. On the other hand, a high earning exotic dancer / video actress / model who might want to purchase and operate a vehicle exclusively for business purposes, who might want to purchase comprehensive health insurance for herself, who might want to contribute to a retirement account, or who has 1/2 million dollars worth of investments / real estate ownership etc. might benefit greatly from an LLC or a corporation ( due to the tax and liability advantages ).

    Also, I checked and Mailboxes Etc / UPS Store DOES offer automatic forwarding service. And unlike the US Postal Service, it's mailboxes allow you to list an actual street address for your 'mail drop' based business entity ... which potentially reduces official 'suspicion' levels re banks, potential future employers etc. And obviously where any would-be 'stalker' is concerned, having web searches 'dead end' at a UPS store in a different state is a plus !

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    Default Re: Are You Legally A Business?

    Added book to amazon wish list =)

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    Default Re: Are You Legally A Business?

    I'm definitely going to order it!

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    Default Re: Are You Legally A Business?

    can you break down the two types of perks for each please?
    lots of details on this issue over in dollar den, but the 10 cent tour on US business / corporation options goes like this ...

    - sole proprietor business - legally the business and the person are interchangeable. This makes for the easiest business registration, the simplest income tax filings etc. However, it also means that the person is financially responsible for any debts the business incurs ( like lawsuits / judgements ). And it means that anyone investigating the business will immediately be able to identify the person who owns and operates the business

    - LLC and S-corp - financially the business and the person are the same ( meaning one tax return ), but the business gets its own 'persona' from a legal standpoint. This means that the person gets some insulation from business debts / lawsuits / judgements, and that the business can operate separate accounts under it's own name and EIN. This in turn provides some 'smoke screen' regarding anyone investigating the business 'persona' discovering the real person. However, these also require specific documents be filed to form them, may involve annual fees to maintain them, and do require that a separate set of 'books' be kept. There are a few differences between an LLC and an S-corp, but they don't apply in a 'single owner' scenario with one exception. With an LLC all pass-thru income i.e. salaries and profits are subject to self employment tax, whereas with an S-Corp only salaries are subject to self employment tax ( but paperwork is far more burdensome ). Personally, I am the one and only 'member' of an LLC based in a 'business friendly' state.

    - C Corporation - from a legal and financial standpoint this corporation is considered to be a separate artificial person. Negatives are much more extensive documentation and costs to form and maintain them, separate 'books' and separate tax returns ( with a separate corporate tax ). Positives include a near total 'disconnect' re personal liability, the ability to write off a wide range of 'perks' as corporate business expense tax deductions, near total anonymity for the 'majority shareholder', and from a tax standpoint the ability to build and invest 'retained earnings' that are subject to the tax laws of the corporation's home state not the shareholder's home state etc.

    Also, other than the sole proprietor business, every other business entity can be based in a different US state than the state of residence of the 'business owner'. Since different US states have different laws pertaining to business entities and different state tax rates, there is often fairly good reason to base an LLC or corporation in a US state that is 'business friendly', and particularly so if the US state you reside in has high state tax rates and is 'business unfriendly' . In particular, there are three US states which offer low/no taxes plus very 'business friendly' laws regarding LLC's, S-Corps and C-Corps - Maryland, Nevada and Wyoming.

    I should elaborate on the last point considering that the OP resides in the high tax state of California. For starters, all California business entities except sole proprietor are subject to an $800 annual 'fee' plus a ~1.3% 'franchise tax' on every dollar they transact. In addition California individuals earning say $100,000 a year are subject to an additional ~7% state income tax. On the flip side, Nevada business entities are NOT subject to similar annual 'fee' or 'franchise tax', and Nevada levees no state income tax on business entities or individuals. So consider an example where the OP was to form a Nevada C-Corp. $100,000 in annual earnings flows into the C-Corp. The C-Corp then retains and 'invests' $50,000 of those earnings in the name of the C-Corp, and pays the OP a $50,000 'salary'. In that scenario the invested money, and the interest earnied on that invested money, is free of California state taxes. Additionally, while the California individual income tax cannot be avoided, the tax rate applying to $50,000 in 'salary' income is only ~3%. But on the flip side, if the OP is earning $50,000 a year or less, it probably makes more sense to avoid all of the complexity, the annual 'fee', the 'franchise tax', the additional costs re accounting and tax prep etc., and simply operate as a an unincorporated California sole proprietor business.

    ~
    Last edited by Melonie; 11-13-2011 at 06:26 AM.

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    Default Re: Are You Legally A Business?

    Melonie you are so awesome! I wish I could thank you a million times over =)

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