Adult Entertainment Taxes; Independent Contractor, SMLLC, LLC, S-corp, etc?

Question

I've been dancing for a few years. I've been filing taxes as an independent contractor. I do not receive any 1099s. All my earnings are cash, received that day. I pay a house fee (rent for being allowed to work in their building) to the establishment, tip out (fees to dj, wait staff & host) & dance/VIP fees (a percentage of all dances or VIPs paid to establishment for using their couchs or VIP areas). I do not deduct these from my taxes because I didn't adequately keep track. I will for future tax returns. I have been deducting all other expenses related to my job (work uniforms, memberships,services for presentation like hair/makeup/nails).

My question is, should I create SMLLC, LLC, S-corp or continue as a Independent Contractor?

As a dancer, I'm not normally personally liable. I'm not sure if liability coverage of business would extend to me.

The reason I've been considering opening a SMLLC, LLC, S-corp is because of discrimination, trying to recieve loans, apply for apartments or homes, and growth.

Discrimination

A lot of companies like Chase, Paypal Venmo will freeze funds from workers like me. Even though I'm not doing any illegal activities. Some hotels refuse to serve workers like my Hyatt, Airbnb, Marriott. I do not bring anyone to my hotel. I use it for sleep, exclusively, for myself, alone. I am wondering if I create SMLLC, LLC, S-corp, I might have more protection from bank freezes, blocks or returning funds to customers? Also, if I'm a legitimate business, I might not be rejected from hotels.

Loans

As an independent contractor, its hard for me to get loans because I dont have 1099s. All I have is my tax returns. My taxs returns, are normally denied to 'inadequate income'. My taxs are so high; that I use the max deductions, to make tax payments lower. The problem is, when you do that, it makes your profits look smaller than what they actually are. Ive been have to pay cash for cars or anything big I want but it takes years to save for those things. I'd like to eventually get a house & start rentals but I get denied for home loans, personal loans & business loans. Would getting a SMLLC, LLC, S-corp help with this?

Applications

I get denied apartments because I'm not able to show consistent, adequate income. I dont receive receipts of payment or 1099s. I just have bank statements & tax returns. A lot of apartments, don't know how to deal with kind of income or see it as illegitimate income. My bank statements will show, one month I'll only make, 1200 a month & the next, 6000. I've been told by apartments, bank statements dont work as proof of income because I could be transferring the same income from bank to bank. Will creating a SMLLC, LLC, S-corp help with this?

Growth

You can achieve a lot today with social media & growing your name or business. All social medias (Instagram, tictok, snapchat, twitter, etc) systematically bans, blocks and shuts down workers profiles. Normally its from people reporting accounts for being 'over sexual'. These people are people who find dancers immoral. So, they report content. (Even though its a legal profession). All my content is fully dressed, not revealing anything and nothing being insinuated. Its normally, stories, precautions, day in the life videos (showing just my face, talking to a camera). If you get enough reports, they automatically remove your account. I've seen girls become famous or make thousands from exposure or one viral video. These can be great platforms for growth & to share my experiences with others, along with cautionary tales. If I have a SMLLC, LLC, S-corp based on dancing, can they take my information down or ban me (if I'm not doing anything sexual)?

Answer 1

Being self employed is always a bit more complicated for loan underwriters because you don't have the proof of income from a third party, like a W2 and pay stubs from an employer. I've heard crazy stories like a lender requesting the bank statements of tenants to prove rental income was actually paid by a tenant. So some of this has nothing to do with your profession.

With that said, almost all single member LLCs or S-Corps are just pass through entities. So you could form your LLC and issue yourself paystubs and W-2s, but the corporate income would still just flow to your tax return. But, you could also choose to have your LLC be taxed like a corporation. Doing this would allow now require you to issue yourself a W2 and paystubs from an employer, and the employer would be completely separate from your finances. However, and this is a big however, you'd have to

• start withholding taxes from yourself and remitting those withholdings to the relevant tax authorities, on time (though you probably should be paying quarterly estimates now anyway)

• file a tax return for the corporation and a separate one for yourself

• to the extent the corporation earns a profit, it would be taxed before it could be paid to you via a dividend because corporations are double taxed (this is why almost all single member LLCs are just pass through entities)

• keep the business and personal finances very separated.

So you'd have a lot more book keeping, a second tax return, a corporate bank account, and the associated costs of those things, but you'd also get a W2 and pay stubs, and a tax return with no self employment information on it, which would probably alleviate almost all of your problems with landlords and car lenders and other consumer credit.

You'd probably want to talk to an accountant in your area to better understand the costs and effort involved because I suspect both would be substantial.

A lot of the rest of your question wouldn't be helped. If people complain to Venmo about you or whatever, I can't imagine a ficticious corporate name will help much.

Answer 2

One very short answer ...

Applications. I get denied apartments [etc] because I'm not able to show consistent, adequate income... Will creating a SMLLC, LLC, S-corp help with this?

Unfortunately the answer I have found is pretty much No!

My life has been in exactly the same boat as you, except my dancing is crap. The various ways I have made money have been extremely boring/uncontroversial, but like the OP erratic.

I have literally tried (in Europe, Americas, Asia) every possible corporate structure etc, and landlords and the like just say "too erratic", regardless of how much money is on hand.

My guess would be

1. Go ahead and try it, it is not expensive to get an LLC. An LLC is all you need. Make the company name utterly innocuous, like Western Engineering LLC. Get business cards printed up ($5 at Staples, use the web site) and so on.

2. Unfortunately, as I say, in my decades of experience with precisely the problem you outline, it just doesn't help much - you may find it helps a little in some ways with some items mentioned. :/

Unfortunately that's my take. More power to you.

I've always found that people like eg. dancers hve incredibly sharp business minds because they have to be continually on the ball juggling money and they actually understand how consumer demand works as a mental process. My guess is you'll have great success as time goes on in your various business endeavours - but yes paperwork is a bitch.