An escort may be tempted to just pocket all the money they receive dates and carry on with life, paying bills and buying things. However, a successful escort carries through with her money with a purpose. Escorts who keep track of their money, treat it as business income, and pay taxes are much more successful and safe in the long run. Here are some tips to use when working out your basic accounting as an escort:
Please note: SkipTheGames.com is not a legal service, nor are we tax advisors or accountants. We do offer you what we consider our best advice, but if at all in doubt, please consult a professional.
- Register your escort business and get an EIN (Employer Identification Number). An EIN is a federal tax identification number and can be used as an identification number if you choose to employ others in the future. Having an EIN number legitimizes your business to the Internal Revenue Service and other government entities. Obtain an EIN by visiting the IRS website or using the IRS toll-free telephone number. If you call for a number, you may receive one over the phone during your initial visit with the customer service representative.
- Open a separate checking account for your business. Your checking account should be used ONLY for business expenses and business income. Any personal purchases (items for your home, gifts for friends and family, food, etc.) should be taken out of other accounts. Your business account is only for business-related financial transactions.
- Create a payment policy for your clients. Most escorts abide by the policy that they only accept cash for payment. This is a good policy to adopt. Accepting checks or credit cards can create a trackable link between you and your clients. These links would inform government entities that you and your client have some sort of relationship. These types of connections can help others determine who is on your client list. Privacy is something you can offer to clients by only accepting cash, in addition to making your records less public. Today, cash is the safest, most private medium of exchange there is, second only to precious metals.
- Write checks or use your debit card for all business-related expenses. It’s important to be able to track all expenses for your business. For instance, you need to be able to document how much you spend regularly for utilities, rent, clothing expenses, condoms, parking fees, health examinations and any other items that cost you as a result of your business. By writing checks or using your debit card for each expense, you are creating a trackable record that you can use to build a list of genuine business expenses regularly. If you pay for any expenses with cash, it’s difficult to go back and account for the expenses.
- Deposit the fees you collect from clients as income. Never take too large a cut out of the fees before depositing them into your bank account. By depositing a balanced amount, you are establishing a credible record of how much money you took in as a result of your work as an escort. If you don’t deposit anything, it’s difficult to keep accurate record of your finances. IRS knows that you need some income to exist, so show them some income.
- Pay yourself with a check. Never pull cash directly out of your account in order to pay yourself. Write yourself a check from your account. Writing yourself a check provides a record for you to review when analyzing your finances. Additionally, depending how you choose to incorporate your business in the future, paying yourself may help you when it comes time to pay taxes, and having proof through cancelled checks is necessary.
- Pay your employees or contractors with checks. Never use cash to pay your helpers. For instance, if you use a driver or an virtual office with answering service, pay them with a check. The checks serve as information you need in order to determine your expenses, which help you to analyze how profitable your business is.
- Visit your accountant regularly. It’s wise to analyze your finances and business income with an accountant at least quarterly. Additionally, your accountant can help you to estimate what your quarterly taxes will be and can assist you to set up a payment plan with the IRS. An accountant can also help you to organize your expenses and deductions to make things less stressful when tax season comes around.
- Keep track of income from your clients. Even though you want to provide your clients privacy and no links to the government or law enforcement agencies, you need to have some record of who your clients are, how much they pay per encounter and how many times (and when) you’ve visited with them. Organization is key to keeping track of your clients and the rates you charge them. However, these records must be kept private and unavailable to others in order to maintain the confidentiality that you promise to your clients.