How to register an escort business in Colorado

Colorado is one of the few states that recognizes the escorting industry as a legal trade and requires a license in order for both individual escorts and escort services to operate. In some ways, this is progressive and something to be proud of. In other ways, the judgmental nature that often surrounds this profession has some strong ties in Colorado’s cities, and you need to be aware of what you’ll be working with when starting your business.

In 1959, the city of Westminster came to this conclusion:

The City Council hereby declares that the operation of escort services in this City affects the public health, safety, and welfare and that City regulation of such operation is in the public interest.

This regulation within the state created high fees for escorting license applications and even higher ones for obtaining the accepted license. In the city of Westminster, the application fee is $200 for an escort, $300 for a service. If accepted, the license fee is an additional $500 for the escort, $5,000 for the service. Even if working under the umbrella of an agency, all escorts need an individual license.

Other cities are not as extreme, with much more manageable fees. But, no matter what, you must have a license to work as an escort in Colorado: “If a local authority does not license escorts, escorts and escort bureaus may not operate within that jurisdiction” (Colorado Office of Economic Development and International Trade).

In this article you’ll find clear step-by-step advice on how to legally create your escort service within the state of Colorado, and links to where you can get more information. To learn why it’s vitally important to register your business, refer to our article Don’t get busted for tax evasion: Why registering your escort business is the only option.

Most registration forms in Colorado are done online, so make sure to consult them for the information you’ll need and then return to them when you’re ready to file.

Step one: Define and describe your business

There are several kinds of business structures applicable for registering your escort business with the government, and picking the right one for you is important. For example, someone working completely as an independent escort and someone who wants to run an agency would file for different types of businesses. Ask yourself these questions to define what your business is / will be and under which structure you should register:

  • How do I define my work? What is it, in essence, that I serve? Do I supply the connections between escorts and clients, or am I myself the escort and am providing the company?
  • Am I the only one who will benefit monetarily from my business? If not, who else will and why are they collecting profits?
  • Am I the only one who will manage my business – schedule clients, hire drivers etc.? If not, will it be another owner doing this or someone I employ?
  • Will I be hiring regular employees to take calls, set up appointments, manage any office work on a regular basis etc., or will I maintain my business by myself?
  • Will I be hiring independent consultants (freelance escorts) and, if so, how do I expect to manage and pay them?
  • Who will fund costs such as buying advertisements in newspapers, renting an office or the cost of running a website?
  • Would I ever want to brand my business name or logo?
  • Who will be responsible for my business if I run into debt? Is this just me?
  • Will I ever want to sell my business?

Write the answers to these questions down and your business model will start to take shape for you.

Another step in articulating your business is to write a one-sentence summary of what the business actually does. As an escort you’re registering a service you provide, rather than a product that you sell, and this service will need to be articulated. Having this readily on hand will save you time when filling out various forms. Make this unique to you from the questions you’ve answered above, along the lines of “We provide company to our clients in a social setting”.

For information on what terms you legally can and cannot use, refer to our article The fine legal line between escort and prostitute: some strategies for an escort to stay out of trouble.

Step two: Choose your business structure

Once you have a handle of what your business is and how it will be run, it’s time to pick out a business model. Below are four quick definitions of what it means to be one of the four business models that make sense for an escorting service: a sole proprietorship, a partnership, a corporation and an LLC.

  • Sole Proprietorship: One person owns and operates the business, and is responsible for all profits and losses. Legally, there is no difference between your business and you. If you are just starting out and/or will be working and managing and collecting your fees alone, this is what you want.
  • Partnership: Two or more people own and are responsible for the business. If you have a small group of close friends who will share contacts and the actual time spent with clients or will work with one person as a manager and you as the only escort, this is what you should choose. However, as you are equally responsible for losses and this structure requires more paperwork, it can be a risky investment.
  • Corporation: The business is a legal entity owned by shareholders. While the shareholders may invest money and collect in profits, they are not responsible for losses or claiming personal bankruptcy if the business claims it. This model requires much more paperwork, and most likely the addition of an accountant and possibly a business lawyer as well. A corporation is definitely the way to go if you have been in business for a few years, juggle many consultants and clients, and want to expand and legitimize your work on a higher platform. If that’s not you, don’t become a corporation.
  • Limited Liability Company (LLC): An LLC provides the liability insurance of a corporation with the tax efficiencies of a sole proprietorship or partnership. One or more owners are referred to as members. The taxes of the business are filed with the income taxes of the members, but they are not responsible for (most) company losses. If you have a small company involving a few close friends and want to expand to having a separate bank account and records slightly more independent than your own, an LLC is for you.

Step three: Create your name

Let’s pretend your name is “Jane Doe”. First, decide whether you simply want to call your business your name — “Jane Doe” — or take on a DBA name (‘doing business as’ name, also called an ‘assumed name’ or ‘trade name’).

With a sole proprietorship or partnership, you have the option of using your own name as your business name, and won’t be required to register your business name in Alaska. If you’re a corporation or LLC, you will have to take on a DBA name. If you’re required to or simply want to take on a DBA, have fun picking your company name.

Do you want to be brassy and devil-may-care? Pick something as straightforward as “Jane Doe Escort Service”. Want to be flirty and funny? “Jane Doe—The Company Company”. Feel like being a little more discreet and want to stay out of the limelight? Try something demure, like “Jane Doe Social Consulting”. Your name can be as simple or as flashy as you’d like, just make sure it’s honest to what you want your business to be. And keep in mind that escorting is a controversial issue in the United States. Do you want to push the envelope of acceptability or maintain a low profile?

Make sure the DBA name is not already being used in Colorado. You’ll have wasted time and money if you apply to register the name and it’s already been taken. A simple internet search and comb through the yellow pages will take care of this. Also know that you shouldn’t do business with a DBA name until the registration has been approved.

Step four: Register your business / business name

Sole Proprietorship:

Sole proprietorships are not registered businesses with the government—they are simply an entity that helps you track profits and losses and report those with your own tax payments. So you don’t need to register your sole proprietorship, another reason why this is a great choice for a small escort service.

In Colorado you are not required to register your name or a DBA name if it is your name and service: “Jane Doe’s Escort Service”. However, if you take on any other form of a DBA name, you have to register it with your Secretary of State. You can do this at the Secretary of State’s website or by completing the online form.

Partnership:

General partnerships are not businesses that are registered with the government, and exist solely to help you run your business more efficiently and pay appropriate taxes to the government.

In Colorado you are not required to register your name if it is the name of the partners in the partnership agreement. However, if you take on any other form of a DBA name, you have to register it with your Secretary of State. You can do this at the Secretary of State’s website or by completing the online form.

Corporation:

In Colorado you’ll be automatically registering your company name when you file your Articles of Incorporation online with the Secretary of State. You’ll need basic information such as where you company is running and the primary shareholders, as well as how many shares you’ll be able to distribute. You’ll also be able to search to make sure the company name is not being used in Colorado before you fill the form. You can do the search and fill out the form online at the Secretary of State’s office.

Because of the complex nature of preparing a board and workout out shares, we suggest consulting a business lawyer in your area for more information.

LLC:

Your name will automatically be registered when you file your Articles of Organization with the Colorado Secretary of State. You’ll be able to search the name availability for your service and then provide basic information about where you business will be running and who will manage it, and the members involved. You can find the form and more information at the website of your Secretary of State.

Step five: Get an Employer Tax Identification Number (EIN)

If you are a sole proprietor in Colorado, your EIN will be your own social security number, whether you do or do not register a DBA/trade name. But if you are a partnership, corporation or LLC or say YES to any of the following questions, you’ll have to apply for a new EIN.

  • Do you have employees? This means anyone you pay regularly, such as a personal assistant, office manager, driver etc.
  • Do you plan to open a bank account solely for the business? Will you be collecting money from clients and then using that money to pay escort or other employees (if you have any employees, you should have a separate bank account for this)?
  • Do you operate your business as a corporation or a partnership?
  • Do you file any of these tax returns: Employment, Excise, Alcohol, Tobacco, Firearms? If you hire employees, you’ll need to pay employment taxes. Other than that, as an escort service this answer is most likely no.
  • Do you withhold taxes on income, other than wages, paid to a non-resident alien? Are any of your employees non-Americans?
  • Do you have a Keogh plan? (A retirement plan you set up for yourself in the business)
  • Are you involved with any of the following types of organizations? (I’m going to save you an explanation of what all of these mean, because you’ll most likely know if your business is involved with such, and the answer is probably no.)
    • Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
    • Estates
    • Real estate mortgage investment conduits
    • Non-profit organizations
    • Farmers’ cooperatives
    • Plan administrators

All application processes require only basic information: your legal name and contact information, a name and description of your business, the type of entity, your social security number, employees etc. And there is no fee.

  1. Online: This is the currently preferred way to obtain your EIN, and you’ll get the results immediately as soon as your business is approved without needing to fill out a separate SS-4. You have 15-minutes to complete the form. Go to IRS.gov to apply for an online EIN.
  2. By Mail: Fill out an SS-4 form, which you can obtain on IRS.gov. and mail to Internal Revenue Service, Attn: EIN Operations, Philadelphia, PA 19255. It takes about 4 weeks to get the EIN once your application has been processed.
  3. By Fax: Fill out and fax an SS-4 form to (859) 669-5760. If you include your fax number on the form, they’ll fax your EIN within 4 business days.
  4. By Phone: Call toll-free (800) 829-4933, 7am-10pm, Monday—Friday. An assignor will take your information over the phone and then directly process the application and give you your EIN.

Step six: Register for your Colorado state and local city taxes

There are a few basic types of taxes small businesses in Colorado may register for:

  1. Individual Income Tax: The state collects income tax on each person making a profit in Colorado. If you’re a sole proprietor, general partnership or LLC, you’ll file your business profits/losses along with your personal income tax. For more information on each of these models and the forms you’ll have to file, go to Colorado.gov.
  2. Taxes on Corporations: Corporations must pay taxes pending the amount of profit they make through a Form 112. More information on when and how to file form 112 can be found at Colorado.gov.
  3. If you have employees: If you have paid employees that are not members or owners of your company, you’ll have to pay withholding tax to cover their Medicaid and Social Security contributions to the federal government, currently 4.63%. More information on wage withholding in Colorado.
  4. Self-Employment Taxes: If you own and operate your business and are not paid as an employee, you’ll need to file your own self-employment taxes for social security and Medicaid. This is particularly true for sole proprietorships, general partnerships and LLCs. Download form 1040 or get more information.

More information on business taxes in Colorado can be found at the Colorado Department of Revenue.

You can pay Colorado taxes online.

Step seven: Get necessary licenses and permits

In Colorado you need a specific license to work as an escort or service in the state, which can be obtained through your city council. The registration fees vary by city, but the application processes are similar: you’ll be asked about your legal history, if you’ve ever been in the military, the state of your physical and mental health, including if you’ve ever been institutionalized for mental health reasons. Most cities also require a background check, done by your local police department.

This procedure may seem invasive. Yet if you are seriously considering taking escorting on as a profession, it is important to register your business and obtain your license. If you work without one and are caught, you face serious legal battles that will be far harder than the registration process.

More information on licenses in Colorado is available at the Colorado Office of Economic Development.

More useful links

Colorado prostitution laws

Much like the rest of the United States, Colorado law prohibits prostitution in all forms. However, Colorado law makes one distinct difference in the wording of its legislation that stands out compared to many states in the U.S. The law strictly prohibits knowledgeable involvement in activities construed as and defined as acts of prostitution. Continue reading