Escort business: Do I want to be part of a partnership?

“I have a business partner in mind who is responsible and whose talents and work ethic match my own.”

“I want to open a business but need a partner to share in the management and startup costs.

I have been part of a community of escorts, sharing client information and referrals, and we want to legitimize our business together.”

I want to go into business with some friends but want to keep the paperwork minimal.”

If you’re thinking along these lines, you want to set up your business as a partnership. With a partnership, two or more people own and are responsible for the business. It is similar to a sole proprietorship in that the business is you, only now it is you and another/others. You share a business name, invest your own monies into the business and share in the profits, and are all responsible for any losses that accrue. You file your business taxes along with your own, and are responsible together for providing your service.

With a general partnership, all partners involved share responsibility equally, and the business is not recognized as a separate legal entity than the partners. This means you won’t have to register the business officially, as you would with a limited partnership.

With a limited partnership, partners may be invested in varying degrees, depending on what is outlined in the partnership agreement you put together (there is no one form to fill out for this, but there are many companies that offer free templates online that you can build yours from). There is more paperwork involved with a limited partnership, including registration forms, fees and separate tax filing. For the purpose of starting a small escort partnership, we recommend becoming a general partnership. In this way you are starting your business with a group of people but maintaining the legal ease of a sole proprietorship. If you were to want to have clearer definitions of responsibility within the company, we suggest become a limited liability company (LLC). That model requires extended paperwork but you’ll have more financial security as an LLC than you would as a limited partnership.

The steps to starting a business: a partnership

  1. Research and Articulate Your Business: This is relatively easy because chances are you already know what your business is and what clientele you will serve, so all you need to do is articulate what that is, along the lines of “We provide time spent with our clients in social situations” or “We provide social consultations for our clients”.
  2. Finance Your Business: With other business models, you’d have to have startup funds and ways to pay employees. Because you’re working in a small group, there aren’t many things you’ll need to purchase initially. However, those things should bought from a bank account that has been set up for the partnership and into which all partners have contributed. Also, any items purchased need to be carefully recorded so that reimbursements can be made if necessary and so that you all know who’s been spending and on what.
  3. Register a Business Name: As a partnership, the business name is you. If your name is Jane Doe and your partner’s is John Hancock, your business name would be “Doe Hancock”. In some states you do have to officially register this name, while in others it’s not required but sometimes an accepted practice. You also have the option to take on a Doing Business As (or DBA) name if you want to take on a business identity that is separate from your own. In this case, you may have to register the name with your state. You can find out more information on this at Business.gov.
  4. Get a Tax Identification Number: When you form a partnership, you need to get a tax identification number so that you have an identification number that is separate from your social security numbers (which you would use if you were a sole proprietor, for example). You can get more information under Starting a Business at IRS.gov or apply directly online.
  5. Register for State and Local Taxes: With a partnership, you’ll file a profits/losses form at the end of the tax year (a 1065 form), and then include that with your own income taxes. There may be other taxes that you have to register for, depending on your state. More information as to what your state requires can be found at www.business.gov.
  6. Obtain Business Licenses and Permits: As a small escort service, 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 with a small group of people and most likely managing your business through the phone/internet from your homes, you will most likely only be required to get a general permit for doing business, if any. This varies by state and can be found at www.business.gov.
  7. Hire and File Employee Forms: IIf you don’t have to hire anyone, don’t. For example, if you use drivers to take you to and from clients, try to use a taxi or car service or a friend who has set up their own business as a driver, rather than hiring someone as an employee. This way they’re not a part of your business, and you can deduct these travel expenses from your yearly taxes. 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 a partnership?

Let’s say you have a very business-savvy friend who knows how to manage a business and get things done. Let’s say you are horrible at getting things done but are a whiz at spending time socially with clients. Or maybe you know of a few more escorts who are not your “type” and have something different to offer your clientele. You trust each other to work equally and all have something both to invest and to lose by going into business together.

Also, if one partner decides to leave the partnership, additional paperwork is heavily involved. You may have to dissolve the partnership and start anew, or register instead as an LLC, or sell that partner’s share to another partner. So only engage in this business model if you are confident that the person/people you are going to be working with can be trusted to carry their own weight. If the business goes down because of one person, you all go down with it and your personal income/assets can be brought into play.

What are the disadvantages to being a partnership?

Because you are going into business with a group of people and you share responsibility, things can go sour rather quickly if all aren’t carrying their own weight or fulfilling the terms of the partnership agreement. The chances aren’t too great that you’re going to run into serious debt as a small escort service. But let’s say you are in a partnership with four other escorts and one manager, and one of the escorts isn’t clocking in any time but is benefiting financially from the agreement. Do you want to be making money that others are receiving? Or invest in the additional paperwork with any underlying fear that the partnership is going to go bust rather quickly?

Also, if one partner decides to leave the partnership, additional paperwork is heavily involved. You may have to dissolve the partnership and start anew, or register instead as an LLC, or sell that partner’s share to another partner. So only engage in this business model if you are confident that the person/people you are going to be working with can be trusted to carry their own weight. If the business goes down because of one person, you all go down with it and your personal income/assets can be brought into play.

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:

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.