The money, honey part 2

the-money-honey-part-201
Disclaimer: This lovely pile of dosh was not all earned by Amber O’Hara, neither is it indicative of an amount a “typical” sex worker could expect to earn on a daily basis in New Zealand
 

One skill that all working girls could consider getting would be the knowledge of how to keep a cash book or basic analysis book system.  You don’t have to go over the top and learn MYOB or anything like that, although that could be useful to know for a straight job later, but even a basic Income and Expenses (Money In and Money Out) system is useful.  Keeping records is essential, so if everything you earn goes into your bank account, your bank statement can be really useful as a record of your Income and if all your spending comes from that bank account, all the better, as the record of your Expenses.  Obviously keep all your receipts as evidence of your expenses.  I asked the bank to send me statements with my transactions from the first of the month to the last day of the month rather than from the 17th of last month to the 16th of this month or any other random period from the day the account was opened.What I do is, at the end of the month, I put all my receipts in order as they appear on my bank statement, and I have an analysis book which I write everything in in the same order as it appears on my bank statement.  That is my super basic cashbook but being a geek, I also have a spreadsheet with everything categorised in different columns (eg advertising, room rental etc) and I have formulae in the spreadsheet which also adds up all the columns so I enter everything there first before I write it in my analysis book (in fact the analysis book is really only for ease of reading and to give to my tax person).  And the spreadsheet with formulae is because I’m a maths freak and like everything to be automated.  I have shared this system with other working girls in the past, and I am still more than happy to share my blank spreadsheet now, although it is pretty basic, please just call me to discuss (022 074 8964).  There are small business courses that you can do which cover the basics – I would recommend getting clued up on financial record keeping.

Finding a tax agent or accounting person is a good idea, but watch out for timewasters where you are paying for inefficiencies, (or long discussions about sex work).  Also, do you really need the boss and the staff member who is taking care of you sitting in together with you at rapt attention at some of your expenses?  You would be paying for both of their time, although I have to say, money spent on someone who knows this area well is money well spent.  Also, bear in mind, that you can make an appointment with the IRD and take along your bookkeeping or whatever you have and get free advice from or check things over with them – you’ll probably have to call them to clarify which expenses are able to be claimed as tax deductible expenses, at the very least, the chunk of money used for advertising and accommodation if you are independent can reduce the amount of tax you pay significantly. The Prostitutes Collective are funded by the health department (which is how condoms and other supplies are so well subsidised), so advice they can give about finances could be limited, but they may be able to make recommendations for businesses who can help with financials.

Running your business as a sex worker doesn’t need to be complicated – you don’t need to set yourself up as a company or partnership or anything like that.  As a self-employed (independent) escort, which we mostly are – even those who work at escort agencies who are officially contracters so the agencies don’t have to worry about PAYE – we are sole traders.  This is probably the easiest way to do it, but I would like to be corrected if anyone has other ideas or can demonstrate other advantageous scenarios.

Getting a little more complicated, but you might also have to consider other taxes, like provisional tax (tax estimated and paid in advance) and GST.  If you earn more than $5000 per month consistently, you should register for GST, which isn’t that hard, except that you have to get an ACC code, and the one for sex workers spells things out a bit vividly as “95300 – brothel-keeping, massage parlour, and prostitution services” which could be off-putting for a working girl who has a concern about her anonymity.  Perhaps they could reword the category with a euphemism such as “personal services” or something equally as vague.  However, your information which the tax department and ACC hold would be confidential, and I believe is not accessible to possible future employers or anyone else.  I have asked the IRD and they say information about individual tax payers is kept private, but if this is not the case, they really should do something about that if they are wanting to get working girls to go legit.

You pay tax on your earnings after your tax-deductible expenses are taken out.  You pay GST on all your income before your expenses are taken out.  But you also get GST back for all the things you pay for.

You can pay tax throughout the year at Westpac banks, or wait until the end of the financial year and pay it after you have worked everything out and filed a tax return.  When you register for GST, you choose how often you will pay it, eg, monthly, two monthly or six monthly.  I think monthly or two monthly is best, because it forces you not to neglect or get behind with your bookkeeping.

In summary, if you are a working girl, start keeping records of your money in and expenses out as soon as possible and open a bank account.  Keep receipts.

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