I’ve been working with a small network of escorts, and we want to pool our resources to expand our business and bring it to the next level.
I want to work with a company of escorts, but don’t want the financial burden of being responsible should anything go wrong between us.
I want to make my business more legit, but don’t want to fill out too much paperwork.
A Limited Liability Company is the business model for you if you want to work with a few other people but don’t want the financial responsibility of any company debt. With an LLC, the owners are signed as members. These members can contribute financially, work for the business and share in the profits however they like. So if you want to work with a few escorts, a manager, a driver or the like, you can all be members, split responsibilities and pay yourself on whatever kind of scale you want.
With an LLC, you file the business taxes with your own tax returns at the end of the year, so you don’t even need to file separate business taxes. There are a few more forms you need when you register the business, but they’re at a manageable level.
The Steps to Starting A Business: Limited Liability Company
- Research and Articulate Your Business: As an LLC, your business may be more than just spending time with clients. If you have a business manager who matches clients with escorts, you’re offering companionship on an even greater personal level, as you spend more time providing what your clients want more specifically. If you provide transportation for your clients, advertise with pictures and details on networking websites or run one of your own, you’re providing a fuller service. Even if you’re just a small group of escorts sharing client information, you’re working as a network and providing more options to your clientele. So your business should be articulated to reflect this, something like “we are a full-service social networking company that brings together clients and independent consultants on a personal level”.
- Register a Business Name: You will need to come up with a business name as an LLC, and it will have to include Limited Company, LLC or L.L.C. In most states you don’t have to register this name separately, as it will be registered when you register the business itself.
- File Your Articles of Organization: With an LLC, you need to file an Articles of Incorporation form, usually with your Secretary of State but sometime with a different state office. These are very easy to fill out, requiring only the name of the LLC, what the LLC provides, the dates it is starting and (if applicable) dissolving, a registering member (sometimes all the members) and contact information. There is usually a fee for filing this form, between $50 and $200 depending on your state. Forms for you state can be found at LLC-Made-Easy.com.
- Create an Operating Agreement: Most states don’t require you to have an operating agreement an article that outlines responsibilities of the members and rules applied but it’s a smart idea to have one. In this agreement you’ll articulate who owns how much of the business, how it is to be managed, how profits are going to be split etc. And if you get into any disagreements, the government will turn to this article rather than apply their default rules. For more information, go to Business.gov.
- Finance Your Business: With an LLC, you’ll need a separate business bank account. Though you probably won’t have many outside costs, you will need something in the account initially, if only for bank fees, registration papers and the like. You can contribute personally as a loan into the LLC, just remember to keep such deposits and reimbursements recorded for tax time later on.
- Register for State and Local Taxes: An LLC isn’t recognized by the government as a separate business entity, so the federal (and most often state as well) taxes are paid through the members’ personal federal tax returns. You’re most likely creating your LLC so that you and a few other escorts can work together, so you’d file this as a partnership. In most states you will need to individually file self-employment tax forms and pay into social security and Medicaid taxes, but you’d have to do that if registering as a sole proprietorship or partnership as well.
- Obtain State Business Licenses and Permits: In the escort industry, chances are you won’t have to apply for any permits. Normally these are for things such as renting space, selling products, obtaining health permits or separate insurances for your clients or employees, etc. But since you will be working for yourself and most likely managing the paperwork and numbers for your business from home(s), you will most likely only be required to get a general permit for doing business, if any. For more information on business licenses and permits in your state, go to Business.gov.
- Hire and File Employee Forms: If you don’t have to hire anyone, don’t. For example, if you use drivers to take you to and from clients, start with this person as a member who would then pay themselves by drawing out of the company. If you were to hire employees, you’d have many more forms to fill out and additional taxes to pay.
What are the advantages to being an LLC?
With an LLC you get the liability insurance of a corporation with the operating ease of a sole proprietorship. Your business is controlled by its members—you can contribute financially and pull profits at any rates and percentages you choose. So if you have five escorts in your LLC and only two work heavy hours, those two can pull greater profits. And if the business goes under, the members do not take on the company debt personally.
The additional paperwork for creating an LLC is rather easy, and you file the business taxes with your own. So you get the structure of a formal business with the intimacy to manage and file it as you please.
What are the disadvantages to being an LLC?
Because the LLC is created by a small group of members, it is only considered a company if all those members are a part of it. So if one person wants to legally leave the company, the LLC is dissolved. So make sure you’re going into business with a team of people who are as dedicated as you are.
More information about LLC can be found at Business.gov.
For a step-by-step guide on registering your sole proprietorship in your state, refer to our article How to register your small business by state.
To learn more about why you should register your business to begin with, read Don’t get busted for tax evasion: Why registering your escort business is the only option.
If you are looking to start a business only for yourself, or want to expand your business into a larger venture, refer to our articles:
- Do I want to be a sole proprietor?
- Do I want to be part of a partnership?
- Do I want to be a corporation?
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.