Escorting: Legal Requirements

[susi]

Not sure who put the watermelon up your butt, but I was just answering the question that was asked, about being completely legal. I pointed out what would have to be done and then pointed out that many don't bother with worrying about it.

I think that the fact that the government doesn't bother to do anything from the income tax or sales tax angle just shows that they aren't likely to change any other laws to tighten up against prostitution, either.

the government does try to collect, i was audited because of GST and they demanded $30,000.00. i believe it was a result of me trying to assert my rights and pissing off the vice officers of the time. i think they called the government on me as a way to shut me up and show me that they had the power...which they still do.

the laws will change, we are working our asses off on it actually, for oh..... 7 years now.

city council passed a motion last summer directing all city departments to assess where they interact with the sex industry and to propose ways of increasing the safety of sex industry workers in vancouver.

we have been developing a plan in an ongoing way for some time now( 3 years) and many of the aspects of that plan have been vetted here including propsed by law revisions. we met recently with city of vancouver staff, vpd, sex worker support agencies, LIC committee, SFU and UBC as well as sex consumers and workers at harbour center downtown and it seems people understnad and support our plans.

i am going to the police board as a delegation next wednesday to present our report to the VPD executive and will also post findings and recommendation here for scrutiny as it affects us all. i feel optomistic that these plans will be adopted by council.

it's dangerous to assume the government don't care because they don't appear to be doing anything. at anytime should they feel like it they can press us and turn our lives upside down on a tax level or many other ways as well. this is why i believe it is so important for us to try to find ways to protect ourselves and balance the way we are treated by the system at large.

the reason booking girls favour workers who tip them is for the most part a result of the fact that they are not paid a wage. they work by comission and receive $20 per call booked. they generally expect a tip if you receive a tip as a worker. 10% is a standard of the amount you were tipped. agency workers generally require a tip on top of the fee for "companionship" as the amount made out of the hourly fee is divided up between agency fees, driver rates, booking girl fees, etc

please see www.tradsecretsguide.blogspot.com occupational health and safety training for the sex industry

there is very complete information on the laws and information about working with sex industry support staff such as booking girls, drivers, bouncers, DJ's etc. the guide was funded by vancouver coastal health and is a draft. our funding was cut 3 times and we finished it on a volunteer basis. it is not complete by any stretch and we welcome anyone who wants to contribute their knowledge and wisdom. some comments have been less that useful with workers arguning that information contained is not accurate. that is hardly the point. all workers experience different things and this info reflects the experiences of the workers who took part and as such IS accurate.

 

[Larry Storch]

please see www.tradsecretsguide.blogspot.com occupational health and safety training for the sex industry

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You only have to remit GST/HST if your gross sales are above $30,000 per year, its possible some SP's have GST numbers but given the hassle involved and the added attention it would bring, I'd imagine that most try to keep their declared income below 30K. If the gov't had any brains at all they would realize decriminalizing this industry would bring it out of the under ground and bring in tons of tax revenue.

My advise to the OP would be for their friend to work out of an apartment or such and then create a shell company and declare income through that.

kimbot83, thanks for the reply.
We had thought about that, maybe a house keeping company or even a consulting company, but if there were any type of an audit down the road they might be a little PO'd that she had set up a false company. Its bad enough being audited and fined etc. but you really don't want to make them even more angry at you. I'm sure they could find all kinds of little reasons to fine you to the max. Besides she needs to get a business license as an escort and that may just complicate things, I imagine more people are busted by bylaw infractions than by CRA. Trying to keep it as legal and as simple as possible

 

[island-guy]

I don't think you need a fake company & that isn't what kim is suggesting. Many consultants & trades people form a private company though which they provide their personal skills for a fee. An SP can do the same as a self employed person. Business income and expenses plus taxes related to that business income are all handled by the company & the SP takes income from the company and pays personal taxes on that.

It would actually be a smart tax strategy for an SP since their income is going to eventually go down and go to zero as they get older but starts out high when they are young.

They can leave money in the company at a much lower tax rate than they pay and then pay themselves later on, sort of like a pension plan, carrying the loss backwards to the years when the company made money. Or, with the help of a good tax accountant, they can set up the equivalent of an RRSP within the company with no contribution limits and do it that way.

That's what people like hockey players do to balance out their income tax over their lifespan and pay a lot less tax.

 

[island-guy]

You only have to remit GST/HST if your gross sales are above $30,000 per year

Yes, I'm sure that there are lots of SPs out there with GROSS SALES of under $30,000 a year. But I doubt that any of the east hastings SW crowd are declaring their income. I wonder if they can claim their heroin and crack as business expenses.

 

[HubbaHubba]

Yes, I'm sure that there are lots of SPs out there with GROSS SALES of under $30,000 a year. But I doubt that any of the east hastings SW crowd are declaring their income. I wonder if they can claim their heroin and crack as business expenses.

No need to make slight of people with addictions.

 

[FunSugarDaddy]

Which would kind of leave you in a bit of a pickle, wouldn't it? No sps to see?

The tax evasion accusation is both lame and tired. People like to make the claim, but have no proof. Actually, accusations and claims without proof are kind of common around these island guys, lol. I doubt the sps are going to show you tax returns and business info just to satisfy your need to know. But, just to say, if an sp is in that condo and it is bought and paid for by her, then the only way to do that is to claim income.

So sad to say, you lost your point.

He never lost his point at all, because the GST/HST issue is real. On perhaps an even more important note if you don't claim at least part of your income, good luck trying to qualify for a mortgage or perhaps even a car loan.

 

[FunSugarDaddy]

While not all escorts pay their income taxes and GST, many do. I do, and so do several ladies that I know personally.

We don't charge GST/HST on top of our prices. They are included in the prices. That's why you haven't "seen or heard of a single SP charging and remitting GST."

You are completely right that trying to avoid paying taxes is a bad idea. Not only is it unfair to everyone else, you'll always be worrying that it may come back to haunt you. I couldn't handle the stress of that. It's better to just do everything legally and feel secure that nothing is going to crop up later and ruin your life.

As someone who runs a business preparing tax returns and remitting GST this isn't a valid answer. Even if it's included, it would still have to be remitted to the government, because technically they consider it their money, not yours. That said, you could reduce the amount you have to remit by any GST you pay to in the course of conducting your business.

In terms of the overall issue of taxes, whether a company should be used or not, depends on someone's particular tax situation. There's no reason why an SP can't just max out her RRSP every year or take other steps to reduce her income. All one really has to do when completing a tax return is determine the amount of income you want to declare, declare expenses that can be supported, call it massage therapy or something along those lines when preparing the tax return, remit the required GST on this activity and that's about it. It's not all that complicated. If a company is required, then it adds a certain level of complexity but it's no different than many, many people who own corporations.

And as I've said before, and will say again, the main reason this matters to someone is because the one of the most important things anyone can own is a good credit rating. I don't even know where I'd be without it. No mortgage, no loans to by my business, no car loans, no RRSP loans, I'd be screwed, because loans, specifically leveraged to buy real estate is the way the vast majority of people have accumulated wealth in this city.

 

[susi]

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sorry spelled it wrong, try this.....

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[Larry Storch]

Wow! Thank you all so much! This is VERY helpful. She was thinking about the best way to go about this tax-wise and had mentioned something about setting up a corporation.
alinburnaby: thanks for the out line that is very helpful.
While doing some research into the licensing, bylaws etc for escort agencies I found that there are none licensed in the city she is living in, yet there are several doing business. They are all licensed as massage or reflexology. The bylaws require (among other things) that the company keep a record of the name and address of any clients along with the date and name of the escort visited. This information must be kept at the place of business and must be made available to the RCMP at any time. Obviously that is why none of the agencies are licensed as an escort agency, so she may have to go that route as far as the licensing goes, but it seems that what you advertise doesn't matter as long as you are not too explicit about what services you provide (which is something that goes out the window with Craigs List). All in all it does look very confusing, but I believe that as long as there is a license in place and her activities are very discreet there should not be a problem.
Again I appreciate all of the information and if there is any more please keep it coming.

She may be looking at setting up in a small one bedroom apartment in a nice clean building. The location will be for work only and not used as a residence. I think this is a good idea as it may offer a bit more security as she would have to buzz them in and there are people close by. She may want me to act as her contact person, but we haven't decided on anything yet. And that leads to yet ANOTHER question: What has been the experience of any SP's who have had to call the police? Do they arrive with an attitude of: "Well what did you expect. Look what you are doing for a living" ?

Was just wondering if anyone had any experience/info on this?

 

[susi]

yes they do arrive with that attitude, depending where you are but it sounds like you are not in vancouver so expect bias treatment from law enforcement and criminal justice. we do have rights though and an advocate from a support agency can often ensure fair treatment. they can accompany you to meet police, go to court with you, or help you access services and often their presense is enough to prevent police being unfair or rude.

in terms of the apartment, make sure it is concrete for the sake of discretion, sex sounds travel and she won't last long in a wood frame building. also, make sure they have an intercome camera so she can see who whe is buzzing in, i have caught 2 guys trying to come up together that way when i was only expecting one.

love susie

 

[Larry Storch]

susi, thanks for the reply. You are correct she is not in Vancouver, I am looking into finding an advocate from a support agency locally if there is one. Although I would assume speaking with a lawyer to get a solid understanding of what her rights are would go a long way in dealing with any encounters with the police. I know they can be jerks at times, personally I had one talking to me in such an accusatory tone that I actually thought I had done something wrong by pulling into a gas station with a rental truck. Sometimes their attitude leaves a lot to be desired.
She has decided to go with a small one bedroom house in a quiet neighborhood with as much room between houses as possible. (May have to go with a small two bedroom as ones are almost non-existent) She said that an apartment would not offer enough discretion and some clients may feel uneasy walking into a building where they may encounter other people or maybe even a friend. I worry about this a bit, but she feels that it is best. She would be able to easily monitor who comes to the house and be able to keep the door locked if things looked a bit sketchy. I mentioned in one of my earlier posts that she would likely have me act as her contact person; in that she would call when the client arrives and I would call back at the appointed time. This affords some level of security and lets the client know that she is not completely alone.
Thank you everyone who has posted to this thread it has been very helpful and I would like to hear more if anyone has anything to add. Especially the ladies, after all you are the ones with the most experience and any info you can provide will be helpful.

 

[Pillowtalk]

There are a couple of real problems here:

susi, thanks for the reply. You are correct she is not in Vancouver, I am looking into finding an advocate from a support agency locally if there is one. Although I would assume speaking with a lawyer to get a solid understanding of what her rights are would go a long way in dealing with any encounters with the police. I know they can be jerks at times, personally I had one talking to me in such an accusatory tone that I actually thought I had done something wrong by pulling into a gas station with a rental truck. Sometimes their attitude leaves a lot to be desired.

I have read posts by some sps who used lawyers to find out about the laws, etc, regarding this biz, and most of the time the general lawyers are completely clueless. One even said the lawyer told her prostitution itself is illegal, another said that she was told discussing rates and services at any time was illegal -- which makes you wonder how she did any biz lol. (phone conversations are completely legal, btw -- you can google this info, btw) The last person I would ask is a lawyer. Use the resources susi provided to find someone who knows what they are talking about in your area. Susi's link to the tradesecrets site lists resources from many cities across Canada.

She has decided to go with a small one bedroom house in a quiet neighborhood with as much room between houses as possible. (May have to go with a small two bedroom as ones are almost non-existent) She said that an apartment would not offer enough discretion and some clients may feel uneasy walking into a building where they may encounter other people or maybe even a friend. I worry about this a bit, but she feels that it is best. She would be able to easily monitor who comes to the house and be able to keep the door locked if things looked a bit sketchy. I mentioned in one of my earlier posts that she would likely have me act as her contact person; in that she would call when the client arrives and I would call back at the appointed time. This affords some level of security and lets the client know that she is not completely alone.

A house offers less discretion and less safety than an apartment. Getting buzzed into an apt building, then making their way to the apt puts them as one of many people coming and going into the whole building. Once inside, no one will know where they are headed. When they leave no one will know where they came from. There is only one entrance, and the front door offers a second level of security. If worst comes to happen, she has neighbours very close by to call on for assistance.

A house (ground level) has multiple points of entry, for a guy who ends up getting the address but no showing up, might appear at any time of the day or night. A predator could take advantage of someone new like this. Anyone who is a seemingly ok client could also decide it is ok for him to show up any time without calling first and just knock on the door. In addition, you will have several people driving up, parking in the driveway, or nearby, knocking on the front door, day after day after day, and staying for an hour or two (or less) then leaving. If the neighbours nearby don't think she is an sp, they sure will think she is selling drugs with that kind of traffick.

Thank you everyone who has posted to this thread it has been very helpful and I would like to hear more if anyone has anything to add. Especially the ladies, after all you are the ones with the most experience and any info you can provide will be helpful.

The only way a house situation might work, and I doubt it would ever be the best decision is having on site security, and for someone who is not brand new to this biz and knows how to defuse potentially dangerous situations.

 

[Larry Storch]

Pillowrtalk: Thank you for the reply!
I appreciate the information provided.

Use the resources susi provided to find someone who knows what they are talking about in your area. Susi's link to the tradesecrets site lists resources from many cities across Canada.

I have bookmarked tradesecretsguide blogspot. Thanks!

A house offers less discretion and less safety than an apartment. Getting buzzed into an apt building, then making their way to the apt puts them as one of many people coming and going into the whole building. Once inside, no one will know where they are headed. When they leave no one will know where they came from. There is only one entrance, and the front door offers a second level of security. If worst comes to happen, she has neighbours very close by to call on for assistance.

A house (ground level) has multiple points of entry, for a guy who ends up getting the address but no showing up, might appear at any time of the day or night. A predator could take advantage of someone new like this. Anyone who is a seemingly ok client could also decide it is ok for him to show up any time without calling first and just knock on the door. In addition, you will have several people driving up, parking in the driveway, or nearby, knocking on the front door, day after day after day, and staying for an hour or two (or less) then leaving. If the neighbours nearby don't think she is an sp, they sure will think she is selling drugs with that kind of traffick.

She has been been in the business for a couple of years, but always with a particular agency. My OP mentioned the probs she was having which has led to her decision to go independent.
My main concern was security and she is concerned with clients showing up at an apartment and having second thoughts or being 'scared off' by other people they may encounter in the building.
She has worked at an incall before and in this case it would not be her residence, but used exclusively for business. I can see how the activity would be perceived by the neighbors and how some guy could try to take advantage of the situation and those were my concerns. I think she should use an apartment, but ultimately it is her decision and I am just trying to get and provide as much information as possible for her to do this as safely as she can and to have it work out for her.

I think it is always best to got to the people who know what they are talking about because they are actually involved in the industry. Thanks again for the info.