If you want to learn what happens when you do or don’t pay taxes, visit the San Fernando Valley. As the porn capital of the world, the Valley is home to both self-employed success stories and tax disasters. Everyone pays their taxes on the due date or forgets to pay, owes the IRS thousands of dollars in back taxes and burdensome fees, and then files for bankruptcy. (Or, in the worst cases, goes to jail.)
Most failures make the same mistakes. Most successes follow the same tax strategies because nearly all adult performers serve as independent contractors, i.e. people who provide services to a business without being employees. Unlike old-fashioned workers, independent contractors are responsible for their taxes. We don’t respond to a boss. Therefore, a company isn’t withdrawing our taxes from each paycheck.
Once upon a time, porn was one of the only industries comprised of independent contractors, but today numerous Americans are self-employed. Everyone from Uber drivers to publicists to project managers work as independent contractors. As more and more Americans enter self-employment during the pandemic, this trend will continue to grow.
Over the past six months, we (Cherie DeVille and Alix Lynx) have been preparing an online course for new porn stars, and we noticed many of our tax lessons apply to other workers. We’re sharing our tax guide in honor of Tax Day because more and more people are filing taxes like porn stars. Americans can now learn about both sex positions and write-offs from porn stars. Let’s expense away!
STEP ONE: Incorporate
When you strip down for your first adult scene or start a new job, you’re too nervous to worry about taxes due in a year. Everyone should enter the adult business, or any other sector, with a game plan before working. First, you should incorporate as a business because it protects you in several ways. You can write off many expenses (in our case, makeup and lube!), and in many states, you also lower your tax burden. (An accountant can advise you on your taxes.) Best of all, incorporating shields you from legal liability. If shit hits the fan and someone sues you, they will come for your business, not your personal assets, like your house or car.
Incorporating may sound complicated, but it’s easier than ever. For a small fee, LegalZoom.com will walk you through the process and help you incorporate your business. Depending on how much you expect to earn, you will either want to set up as a sole corporation (AKA an s-corp) or a solo-member LLC. As an s-corp, you will pay yourself through payroll and pay taxes through payroll. Until you make a certain amount of money, it’s more expensive to operate as an s-corp than a sole-member LLC. A third option would be to organize yourself as a sole proprietorship, but we recommend avoiding that since it doesn’t protect you from liabilities. If you live in most states, LegalZoom should cover your bases, but if you’re in a less business-friendly state, such as California or New York, you may want to hire an attorney.
STEP TWO: Pay Your Taxes
The biggest mistake is when people neglect to incorporate. The second biggest mistake is when people fail to pay taxes because the process overwhelms them. It’s understandable. Employees receive one W-2, the tax form employers give employees, but when you shoot for hundreds of porn companies, you receive hundreds of 1099s, the tax form clients provide independent contractors. (And yes, a production company is your client!) It’s so much paperwork coming in the mail, girls say, “Fuck it,” but the IRS will not say, “Fuck it.” They will find out, seize your money, and haunt you till you pay them.
As an s-corp, you will pay corporate taxes and enroll in payroll, which deducts Medicaid and other employee taxes. If you go with a sole-member LLC, you will write a check to the IRS and your state tax group, so you should talk to your accountant about how much you should expect to pay, then save a percentage of your income. To make matters easy, you could transfer 40 percent of your income into a savings account at a separate bank, so it’s hard to access. This account is just for taxes.
You should save most of your income anyways because, in our business (and frankly, any business these days), you never know when you might have an injury, surgery, or simply age out of the business. Alix needed a breast implant readjusted, which cost her months of work. Thankfully, she had saved tons of money, and she kept her savings in separate accounts!
STEP THREE: Keep Your Business and Personal Expenses Separate
Speaking of separate accounts, we keep all our personal and business checking, savings, and credit accounts separate. It’s easy to accidentally buy a personal item on the Amazon account reserved for the clothes, dildos, and camera equipment you need for OnlyFans shoots, so just keep them separate. You’ll thank us later.
STEP FOUR: Track Your Expenses
As an independent contractor, you’re a small business, and like any small business, you rack up expenses. In our case, it’s lube, handcuffs, and the aforementioned cameras, makeup, clothes, and dildos. But for others, it could be gas, meals, or software. If you wait till the end of the year, it can take weeks to go through bank statements and go through expenses, so track your expenses throughout the year on QuickBooks. We also keep track of our costs through our credit cards. Today, most business credit card websites break down your charges into categories, such as travel, meals, and supplies. These features will save you hours.
STEP FIVE: Hire a Professional
When you’re an employee, you can file your taxes via TurboTax or other software, but as a porn star (or any other type of independent contractor), you will receive 1099s from tens to hundreds of clients and rack up thousands of expenses. To make sure you don’t miss a 1099 or a deduction, hire a professional accountant. As your business grows, invest in more professionals. We’ve both hired bookkeepers to review all of our transactions, and they often catch expenses we would have missed. Today, you can hire a bookkeeper for cheaper than ever, thanks to online bookkeepers who pay less. They save you more than they cost, so invest in yourself.
Always hire a standard accountant or bookkeeper. We’ve heard of porn accountants who “specialize” in adult stars’ taxes. Some of these guys request blowjobs as payment, keep paper records, and will screw up your taxes. A business is a business, so hire a business accountant.
STEP SIX: Stay On Your Shit
It’s easy to let an accountant and bookkeeper handle everything, but you need to double-check everything they do. Often, very wealthy, very lazy people give accountants access to all their accounts, and the accountants rob them. Restrict access to your checks, pay your bills, and monitor everything your team does. Even Oprah writes all her own checks, so you should too!
STEP SEVEN: What to Do If You Get in Trouble
If you receive a statement from the IRS, you should handle it pronto. It may seem intimidating, but the sooner you address it, it’s easier. The IRS will add extra fees the longer you wait to pay.
STEP EIGHT: Remember: It’s easier than you think!
When we entered the business, we feared setting ourselves up as businesses. Alix even has an MBA, and nobody taught her about these practices. We had to reprogram our brains, but the good news is that it’s easy once you learn the basics. Far easier than learning the editing software we use to edit our OnlyFans videos!
