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The Complete Guide To Running Your Sugar Baby & OnlyFans Business
For those of you that may have never heard of them, OnlyFans & Myystar are social media platforms that allow content creators to share video and other content behind a paywall. The use of these platforms has increased dramatically during the lockdown.
Subscribers to OnlyFans & Myystar creators can pay them directly, but most times they pay their subscription fees directly to OnlyFans & Myystar. OnlyFans & Myystar retain a % of those fees, and sends the OnlyFans & Myystar creators the net amount.
If you’re an OnlyFans or Myystar creator, that means that you are in business for yourself.
You are NOT an employee of OnlyFans or Myystar, you are a sole proprietor running your own business. This is extremely important to realize for many reasons. You will not receive a W2 at the end of the year. You will receive a 1099NEC form that reflects the total amount OnlyFans or Myystar paid you during the year in box 1.
ESTIMATED TAXES
The money that you are paid by OnlyFans or Myystar will not have any taxes taken out of it and so you will have to pay estimated taxes yourself during the year.
Estimated taxes are due quarterly on April 15th, June 15th, September 15th and January 15th.
When you create an OnlyFans or Myystar account to become a creator, they are going to require you to fill out a form W-9. If you look at your screen or if you’re reading the memo you’ll see a copy of one.
Some of you may never have filed a tax return before, so this entire process can be very intimidating. But I want you to relax and realize that you definitely can handle filling out this form and getting your OnlyFans or Myystar business up and running right away.
IMPORTANT NOTE: You don’t have to form a company such as an LLC or a corporation to start your content creator business. 99% of my content creator clients are sole proprietors and are filing their businesses using their name and social security numbers. This also means you don’t have to get a Federal Employer ID Number from the IRS. You will use your social security number as you business ID number.
So let’s look at the W-9 together.
LINE 1 & LINE 2
You always want to fill out Line 1 which is your full name. If you formed a company such as an LLC or a corporation, then you would put that name of that company on line 2. If you didn’t form a company, leave Line 2 blank.
LINE / BOX 3
Now looking at Line or Box 3, most of you will check the first box, which says individual, sole proprietor or single member LLC. So, if you didn’t form a company you would check the first box.
LINE / Box 4
Most of you will skip Box 4 as this deals with exemptions.
LINES 5 & 6
You can fill out the mailing address you want to give OnlyFans or Myystar in Lines 5 and 6.
LINE 7
Skip Line 7
REQUESTER’S NAME AND ADDRESS
Most of you will skip this.
PART 1
Now just below Line 7 you’ll see something that says Part 1. This is where you will give either your social security number or you will give a Federal ID number if you did form a separate company.
Do not give both a social security number and a federal ID number here. The vast majority of you, who did not form a separate company, will simply put your social security number in that space provided.
PART 2
Sign and date the form in Part 2 and then you are done!
GETTING PAID FROM ONLYFANS And Myystar
OnlyFans and Myystar will give you the option of having your income deposited directly in a bank account.
My advice is to create a brand new checking account and give that information to OnlyFans and Myystar. You do not want to give them the banking information for the main bank account you’re using right now to pay your personal bills.
You will use that account to take in your content creator income and to pay your content creator related expenses.
You should allow OnlyFans and Myystar only access to this new and separate checking account that you’re creating. You want to do this to protect the money in your main account. This is a very important step so please don’t skip it.
Okay, so you have sent in that form W-9 to OnlyFans or Myystar and your account is created. They will now periodically send you your income.
Remember, that you are not an employee of OnlyFans and Myystar, you are a business owner. So that means that you will be able to take expenses that you incur for your content creator business.
Below are examples of expenses that you can write off against your content creator income. Remember, anything that you spend money on that relates to your content creator business can be deducted. You want to keep track of this and that is another good reason why having that separate checking account is a great idea.
Deductible expenses include, but are not limited to:
- Advertising
- Costumes
- Makeup & Hair Styling
- Beauty Supplies
- Dry Cleaning
- Photography
- Props
- Travel
- Repairs & Maintenance
- Utilities
- Insurance
- Tolls & Parking
- Legal and professional fees
- Commissions
- Interest Expense
- Tax return preparation
- Telephone
- Office Supplies
- Postage
- Clerical help
- Bank charges
- Equipment purchased (Computers, Cameras, Cell phones, Printers)
- Business miles driven
- Dues & Subscriptions
- Office Rent
- Web Services
- Internet Related
- Bank Charges
- Facsimile
You’re content creator income will come into that separate checking account and then use that money to pay your business expenses. Then transfer the net money left over into your regular personal account. This will make it much easier at year end for us to total your expenses and do your accounting so we can get your tax return done.
Most importantly, this separates your main checking account from your content creator income.
Do not pay personal expenses out of this business account. Transfer money to your personal account and pay personal bills out of there.
TAX TIME
At the end of the year it will be tax time. Most content creators will fill out a form Schedule C, Profit or Loss From A Business, and include that on their form 1040 tax return.
All of the accounting that we discussed a few moments ago would go on this form. So your income will be shown at the top and your various expenses will be shown in the middle part of the form. You will pay income tax and self-employment tax on the net income shown on your Schedule C.
SELF-EMPLOYMENT TAX
Your OnlyFans and Myystar net income will be subject to ordinary tax as well as self-employment tax. This is something that people often miss and so their tax bills are higher than they expected.
Self-employment tax is how business owners pay their FICA tax. Many of you who have had jobs before have seen FICA taxes taken out of your paychecks. Social Security and Medicare Taxes are what comprise FICA tax. When you’re self-employed you also have to pay this. FICA tax is 15.3% of your net income and this is in addition to your ordinary taxes that you pay.
It is extremely important that you put aside money every time that you are paid by OnlyFans and Myystar so you can pay your estimated taxes later. Again, the money that you receive from them is not the amount of the money you have available to spend on your personal expenses.
It is vital that you have a good CPA working with you to make sure your accounting gets done on a monthly basis and also that your estimated taxes are calculated during the year.
It is very important that you realize that you can’t wait to pay the taxes that you owe until April 15th. Self-employed people with their own businesses need to pay their taxes quarterly during the year. If you don’t pay taxes that way, and you wait to pay when you file your tax returns, then you’ll be subject to penalties and interest for late payment.
All of my business clients work with me many times during the year to keep their accounting up to date as well as to calculate their estimated taxes and get them paid during the year.
My CPA firm will help you every step of the way with your OnlyFans and Myystar businesses.
DOCUMENT RETENTION
I want to give you some document retention advice.
- Save all of your business records for 7 years.
- Take your time! For many of you this might be the first time you’re filling out paperwork like this. But don’t be intimidated you can definitely handle it.
- Be sure to save copies of everything either in PDF form in a directory on your computer or in paper form in a folder. Remember that you can print many screens in your browser window to PDFs. This is called a paper trail and when in doubt save as many applications and other online documents that you can as PDFs.
- You should save important emails that you are sending or receiving from OnlyFans as PDFs as well or print them out and save them in a special folder.
- You also want to keep copies of all of your receipts for all of your business expenses that you’re going to have.
- Keep pdf copies or paper copies of all of your business bank statements and be sure to also have copies of all checks that you have written.
INSURANCE
I do advise everyone to get some business insurance. You should speak to an insurance agent and get a simple business owner’s policy just to protect yourself from commercial and business liabilities.
ONLYFANS TOS (TERMS OF SERVICE)
I urge all content creators to print and read the TOS (Terms of Service) for the platforms they are using. You have to agree to these in order to create an account. TOS are usually very restrictive and slanted and biased against you. You may also want an attorney to review the TOS with you.
You can read the OnlyFans TOS here https://onlyfans.com/terms
Please take a moment and listen to my podcast related to content creators and sugar baby scam artists that are out there.
Podcast – Warning for Sugar Babies and OnlyFans Content Creators
Questions? Concerns? Call me on (732) 673-0510.
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Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.
Tax Laws are complex.
It is very easy to make mistakes that can incur penalties.
Do you have a Tax, Accounting or Business Question?
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Remember,
“If We Aren’t Working For You, Then You Aren’t Working At Your Best”
Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com
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