I enjoyed reading Al's comments about SP's setting up LLC's for themselves.
I honestly think from a tax planning and privacy perspective this is absolutely the best was to go. That is until I started reading one SP's comments about the maximum amount an SP should pay an accountant for tax preparation services is $75. But honestly, the benefits for a busy SP would be very significant, assuming she's making some decent $$$.
"I really don't understand why these SPs don't set up an LLC to manage their shared incall space. The LLC can also be the name of record for their work phones.
The best path is likely an LLC (Limited Liability Company). The advantage is the company can "reside" in a tax environment other than where the person resides. That's not to say that a person would be well advised to go offshore to a "tax haven", the CRA does check. An LLC is considered a "pass through" entity which means that the operator can declare the income from the LLC on their personal return and then, when they have employees, declare the income from the LLC in a corporate form. Another advantage (http://www.mondaq.com/canada/article...rticleid=98458) is that if the person "tours" and therefore has to account for income in many tax environments, a LLC simplifies reporting and allows some election on where taxes are paid.
http://en.wikipedia.org/wiki/Limited_liability_company
http://www.thefreelibrary.com/LLC+tr...da.-a090388295
An Example:
Mary Jane is an SP working in Vancouver. However, Mary Jane spends the winter in Florida with her Snowbird clients. Mary Jane also occasionally "tours" in Calgary.
Therefore Mary Jane has these things managed and owned by the LLC
An Incall in Yale Town
An Incall in Brower County
An agreement with a Calgary SP to share an Incall in Calgary
A small car located at the Brower County Incall
Utility accounts for cell phone, internet, telephone and cable in both Yale Town and Brower County
A Credit Card in the name of the LLC
Mary Jane has these things which are separate from the LLC
Mary Jane also has a Condo in Kits which is her own residence
Her "Pride and Joy" which is her own vehicle
Utility accounts for personal cell phone, internet, telephone and cable at the her Kits Condo
A Credit Card in her civilian name
The LLC makes life easier for her because the LLC pays her Vancouver and Brower County Escort Licenses, pays her extended Canadian and American Health Care Coverage (Mary Jane pays her personal BC MSP payment), collects in one place all of her costs to run her escort business, collects in one place all of her escort business income, prepares and files her American Tax return as a function of the LLC, pays for personal liability and life insurance as a function of the LLC, is the customer of record for the various utilities used by the escort business, is the merchant of record for her escort business's credit card account and separates her escort business from her personal life.
Mary Jane is never double taxed on income (because she is able to declare the income from the LLC on her personal Canadian return), is able to declare expenses in the tax environment that permits them and doesn't need to obsess about a client knowing her civilian name because of a search on a phone number or a billing line on his credit card statement. When Mary Jane "hangs up her stilettos", she will be able to wind up the LLC and take any remaining assets directly into personal ownership without adverse tax implications. Mary Jane has Canadian Employment Insurance and Canadian Pension accounts that the LLC paid into and she can easily show income for any financial transaction.
One note. Mary Jane must always have the LLC pay her, the LLC's bank account cannot be used as a personal bank account.
Setting it all up takes some time and competent advise, but it insulates the SP from many of the common problems. "
I honestly think from a tax planning and privacy perspective this is absolutely the best was to go. That is until I started reading one SP's comments about the maximum amount an SP should pay an accountant for tax preparation services is $75. But honestly, the benefits for a busy SP would be very significant, assuming she's making some decent $$$.
"I really don't understand why these SPs don't set up an LLC to manage their shared incall space. The LLC can also be the name of record for their work phones.
The best path is likely an LLC (Limited Liability Company). The advantage is the company can "reside" in a tax environment other than where the person resides. That's not to say that a person would be well advised to go offshore to a "tax haven", the CRA does check. An LLC is considered a "pass through" entity which means that the operator can declare the income from the LLC on their personal return and then, when they have employees, declare the income from the LLC in a corporate form. Another advantage (http://www.mondaq.com/canada/article...rticleid=98458) is that if the person "tours" and therefore has to account for income in many tax environments, a LLC simplifies reporting and allows some election on where taxes are paid.
http://en.wikipedia.org/wiki/Limited_liability_company
http://www.thefreelibrary.com/LLC+tr...da.-a090388295
An Example:
Mary Jane is an SP working in Vancouver. However, Mary Jane spends the winter in Florida with her Snowbird clients. Mary Jane also occasionally "tours" in Calgary.
Therefore Mary Jane has these things managed and owned by the LLC
An Incall in Yale Town
An Incall in Brower County
An agreement with a Calgary SP to share an Incall in Calgary
A small car located at the Brower County Incall
Utility accounts for cell phone, internet, telephone and cable in both Yale Town and Brower County
A Credit Card in the name of the LLC
Mary Jane has these things which are separate from the LLC
Mary Jane also has a Condo in Kits which is her own residence
Her "Pride and Joy" which is her own vehicle
Utility accounts for personal cell phone, internet, telephone and cable at the her Kits Condo
A Credit Card in her civilian name
The LLC makes life easier for her because the LLC pays her Vancouver and Brower County Escort Licenses, pays her extended Canadian and American Health Care Coverage (Mary Jane pays her personal BC MSP payment), collects in one place all of her costs to run her escort business, collects in one place all of her escort business income, prepares and files her American Tax return as a function of the LLC, pays for personal liability and life insurance as a function of the LLC, is the customer of record for the various utilities used by the escort business, is the merchant of record for her escort business's credit card account and separates her escort business from her personal life.
Mary Jane is never double taxed on income (because she is able to declare the income from the LLC on her personal Canadian return), is able to declare expenses in the tax environment that permits them and doesn't need to obsess about a client knowing her civilian name because of a search on a phone number or a billing line on his credit card statement. When Mary Jane "hangs up her stilettos", she will be able to wind up the LLC and take any remaining assets directly into personal ownership without adverse tax implications. Mary Jane has Canadian Employment Insurance and Canadian Pension accounts that the LLC paid into and she can easily show income for any financial transaction.
One note. Mary Jane must always have the LLC pay her, the LLC's bank account cannot be used as a personal bank account.
Setting it all up takes some time and competent advise, but it insulates the SP from many of the common problems. "
