We all know we are SUPPOSED to keep records of our income and expenses, because if we don’t, we could have big trouble at tax time. But when you think about it, that is a really intimidating task, keeping track of everything we make and spend for work. And then, you have an additional problem, trying to determine where your personal expenses leave off and business expenses begin. The article that follows is meant to help you straighten out some of these issues. I am going to include

List of Income sources to report
A comprehensive list of expenses you should keep track of
Methods used by some real dancers to keep track of expenses

Stuff to keep track of:

The following is a list of everything I could find to keep track of. Depending on your unique business situation (whether you work only in a club, maintain your own web site, moonlight doing phone sex, or whatever) not all of these may apply to you. I would keep track of everything if you are not certain, and then ask an accountant or tax preparer to help at the end of the year. You can always throw out some receipts you did not need, but you can’t retrieve something you unknowingly tossed.

I. Income

You do need to know whether you are an independent contractor or an employee for you club. There are some helpful definitions at http://www.eda-sf.org/lawstoknow.html. As a general rule, if you get a W-2 at the end of the year, then your taxes are being withheld for you, and you are an employee. If you get a 1099 at tax time, you are an independent contactor and are responsible for paying you own income and self-employment tax. Not all clubs and agencies will give a 1099, so you may be on your own to record and report all your income. In many cases, you might be both an employee of one company and independent contractor for another. Or you may be doing something on your own, like running a web site or picking up some freelance modeling work. In that case, you are a “sole proprietor” or in other words, just plain self-employed.

Theoretically, you should report every penny you make. The easiest way for most dancers to do this is to keep a journal or ledger and write down their gross income for each night, deduct tips and payouts, and then write down the net profit. Alternatively, some dancers deduct house cuts, tips, and other non-traceable expenses before calculating their gross income. This gives them a lower gross over all and eliminates the need to justify such deductions. That is a personal call. If you want your income to seem higher (for example, you are thinking about buying a house) then definitely report everything.

At any rate, you do need to report everything you take home at the end of the night. There are many reasons for this, the most important of which is, if you do not keep your own accurate records, you have no proof of how much you did or didn’t make. In one case I read about while researching this article, a dancer worked at a club for a few days several years ago, and the club issued her a 1099 saying she had made over $100,000! Since she did not keep records, she has no way to prove otherwise. Now the IRS is coming after her for back taxes on money she never made. Don’t let this happen to you! (See http://exoticdancerforums.com/showthread.php?s=80561a3a76a715360f2ff57a54c1a7bf&t=764 for the whole story.) If you want to buy property or get other kinds of credit (like for a car or even a good credit card) you will need to have proof of employment. If you hope to collect Social Security or similar benefits in the future, you need to report what you make. Not to mention, it is impossible to budget or plan for the future if you do not have an accurate idea of what you make.

II. Expenses—Here is a long, long list of things you should keep track of. As I pointed out, it is best to hold on to everything at the beginning. No everything here is going to apply to every situation. You can always refine your list as it suits your needs later. These ideas come not only from dancer and industry-specific web sites, but also from self-employment sites and accounting sites, and the IRS site as well.

A. Accounting, legal, and tax-prep fees

1. book keepers expenses

2. legal fees related to work

3. tax-preparer

4. misc.

B. Advertising, promotion and publicity

1. Services of photographer, videographer, etc to create promotional materials

2. business cards,

3. comp cards,

4. publicity posters

5. Internet advertising

a) Company name—month—amount

6. print advertising

a) publication name—month—amount

7. Internet portfolios and services (for example, One Model Place)

a) Company name—date—amount

8. Portfolios, prints, covers, sheet protectors, etc

9. Resumes and related expenses

C. Banking and money handling expenses

1. Fees and charges associated with bank account you maintain strictly for business purposes

2. Checks, rubber stamps, etc

3. Charges for credit cards you maintain specifically to buy work items

4. Fees for money orders if you buy them

5. Safe-deposit box

D. Business equipment

1. Computer, Software, & Accessories

2. Music system and music if you need to provide your own

3. Practice pole

4. luggage to carry costumes

5. Camera or video camera and related equipment) if you need it for work-related purposes

6. Desk, filing cabinet, etc.

E. Mobile Communication Charges

1. Cell phone

a) Equipment

b) Monthly Service

2. Pager

a) Equipment

b) Service

F. Fees to Agents

1. Agency fees

2. Booking fees

3. House fees

4. Misc.

G. Clothing

1. Costumes and Accessories

2. Clothes for interviews, photo shoots, or other business situations

3. Laundry expenses

4. Dry cleaning

5. Mending and alterations

H. Mail expenses

1. Postage, delivery and shipping to send comp cards and promotional materials

2. PO Box

3. Mail containers or envelopes

I. Cost of any equipment you may have to rent

J. Professional beauty services

1. Hair styling

2. Manicure/pedicure

3. Facials

4. Hair removal (waxing, etc)

K. Cosmetics/ Personal care items

L. Cosmetic surgery/dentistry (Before making any big investment, be sure to find out whether what you have in mind qualifies as a tax deduction. Sometimes the rules in this area are confusing.)

M. Insurance on business assets

N. Medical Expenses (this applies to all medical expenses, not just work-related injuries)

1. Doctor/dentist visits (and travel to and from)

2. Medicines

3. Corrective lenses

4. Hospitalization and all related fees (labs, etc)

5. Nursing services (visiting nurse or CNA)

6. Emergency services

7. Insurance/HMO

8. Alcohol treatment, drug abuse treatment, and certain stop-smoking treatments

9. Any other health-care professional visits, such as chiropractor, physical therapist, etc.

10. Equipment such as crutches, etc.

O. Interest on business loans

P. Internet

1. Your service provider (so you can send e-mail, apply for jobs, keep up with industry news, etc)

2. Web hosting

3. Professional services for your web site (web design, content providers, etc)

Q. Travel expenses for auditions, engagements, etc.

1. Transportation (car expenses, air tickets, train tickets, etc.)

2. Hotel

3. Meals

4. Entertainment

5. Dry cleaning and laundry during and immediately after your trip

R. Car expenses:

1. Repairs and routine maintenance

2. Insurance

3. Gas & car washes

4. tolls & parking

5. License and registration

6. Auto club membership

7. Also keep a mileage log. You can either deduct individual expenses or a per-mile standardized deduction. It’s best to keep records both ways so you can compare and figure out which will give you the bigger deduction. Also, if you have one car you use for both business and personal use (like most of us) you will have to use your mileage log to figure out how many miles you drove for business and adjust your deduction accordingly.

S. Meals and entertainment for documented business meetings (even if you meet at someone’s house for a business purpose)

T. Exercise

1. health club memberships

2. Home exercise equipment

U. Research costs (not sure what you would put in this, but I keep receipts for girlie mags and videos I would not normally buy that are related to the shoots I do for my website)

V. Union dues, work dues memberships, subscriptions

W. Home expenses—in some cases, you have to have a special area or room just for business purposes, such as working up new routines, doing paperwork, and so on. If you use that area for non-business purposes, it does not count. Even if you do not have such a space, keep track of all these things. Some of them can still be claimed under other parts of the tax law. Also, if the nature of your business changes, i.e. you decide to open up a web site or take on phone sex for extra cash, your home expenses could change, too.

1. Mortgage and interest

2. Expenses associated with getting a mortgage or refinancing

3. Rent

4. Insurance

5. Maintenance and repairs

6. Utilities—Especially your phone bill

7. real estate taxes

8. Strata fees

9. Home improvements

10. energy-saving devices

11. Employment-related moving expenses

X. Gifts to business associates

Y. Dependents

1. Child care expenses

2. Care for elderly or dependent adults

3. Health insurance for all dependents

4. Medical expenses for all dependents

5. Support of a non-dependent student who lives with you

Z. Education Expenses

1. College costs

a) Books

b) Tuition

c) Other fees

d) Travel

2. Professional education to help you improve yourself in your career

a) Classes

b) Seminars

c) Videos

d) Books

e) Dance or other lessons

3. Student Loan Interest

4. Any other education expenses for yourself or dependents (may be deductabe in some states)

AA. Office supplies (Too many things to list, but basically anything you buy at an office supply store to run your business—paper, envelopes, pens, and so on)

BB. Taxes

1. Personal property taxes on cars, boats, etc

2. State income taxes from last year

3. Last year’s self-employment tax

4. Any tax you paid to a foreign government ( while traveling or ordering something form overseas, for example)

5. Estimated state income taxes that were paid last year

6. Mandatory contributions to state disability funds

CC. Charity and charitable donations

1. Any property donated to a recognized charity (costumes, wigs, hairpieces, books all count here)

2. Cash contributions to charity

3. Mileage incurred in relation to charitable activities

In the forums on Stripperweb.com (www.stripperweb.com) one dancer made a very good point about certain classes of personal expenses, such as manicures, gym memberships, and so on. They fall into a “grey area” of not being clearly deductible because many people who are not entertainers buy these things. Therefore, the benefits that derive form such purchases are supposedly more personal than business-related, and not deductible. To be totally honest, I would not be sporting inch-long fire-engine-red fingernails if they were not getting me extra tips, so for me, nails are clearly a business expense. If I were audited, however, the IRS might see things differently. For expenses of this sort, the IRS will apply the “housewife test.” This means, they will ask, “Would an ordinary housewife reasonably pay for this product or service, or is it something only a dancer would want for business reasons?” The classic example is breast implants. A C or D size implant would not be deductible, because lots of ordinary women get these all the time, just for their own enjoyment. But huge implants would pass the test and be deductible, because they have a business purpose and because almost no one other than a dancer or adult entertainer would get them.

I agree with the opinion posted in the forum: it never hurts to try to claim these deductions. If you should ever be audited, it will be up to the discretion of the IRS agent whether the deductions will be allowed or not. The worst thing that can happen is that you could get a big bill for back taxes. But if you never get audited, you will have saved yourself a lot of tax money.

III. Keeping track

I have seen dancers recommend everything from tossing everything in a shoebox for their accountant to straighten out, to daily recording every penny of income and expense on a financial software program. Most people I talk to have a system somewhere in between. At the bare minimum, you need to:

1. Record income as you make it

2. Record mileage on your car

3. Save all receipts

A. Recording income: The best thing to do is carry a daily diary or journal and write down you income at the end of every shift. If you have tip-outs that you want or need to record, you can do this on the same page, or you can keep a separate receipt book for that. Here is a sample heading for a page:

Don’t forget to have everything initialed by the person who received it. Keep a note which initials are whose in the front or back cover of the book.

B. Car mileage: You can get a simple book at any office-supply store, or you can keep a simple log for yourself. Keep it on your dash board with a pen, so you can always record your mileage before you leave home. Here is the info you need to record:

C. Receipts: now this one is tricky because you can accumulate so much paper in such a short time. Most people use an accordion file separated by month or type of expense: costumes, cosmetics, etc. etc., and then throw all receipts in the file at the end of the day. My system is a little different: I carry a 24-page 4” x 6” photo album in my purse. Each pocket has a label for what goes in there: Cosmetics, costumes, professional services, etc. Every time I spend money on my business, I put the receipt in the appropriate pocket. If I have to buy a money order to mail to my cell phone company or my Internet provider, I put the money order receipt in there, too. This takes only a moment when I am putting my change or credit card back in my purse, and it keeps everything neat. Also, if I have to return something or prove I paid a bill, finding a receipt is easy. Here is one hint: Do not use permanent labels or markers until you he your system set up and have been using it for a while. It is easier to change and adjust your categories if you write each one on an index card and put the card in a pocket in the book. Then you can slide all your receipts in behind the card. If you find you need to split, combine, eliminate or add categories, you will be able to do so by simple changing the index cards.

Some dancers use a credit card or debit card to pay for everything, and then they keep their monthly statement to show what they paid for. This is a pretty good system as well, but you usually just get the merchant name on your statement, not the actual type of merchandise or service you bought. For example, you may come up with several entries for JC Penny, and then have to figure out which one was the cosmetic counter, which was the hair salon, which was lingerie for a costume, and which was a baby gift for your sister. Some of this confusion can be eliminated by keeping separate cards for business purposes only. It does not have to be a special business credit account, any personal Master Card or Visa will do fine. The point is, it needs to be separate.

D. Software: Many self-employed people use a software program like Turbo Tax or Microsoft Money to keep track of their expenses. If you are very business-minded, you might enjoy some of the extra features of these programs, such as the profit-and-loss analysis and other business tools. They are not necessary, however. If you are careful, you can do a very good job with paper and pens.

While keeping track of all your income and expenses can seem like a daunting task, it is not too hard once you have a system established and get in the habit of using it. It will save you money at tax time, both on your taxes and on the accountant preparing them, if he does not have to wade through a box of receipts. More important, it will save you from a lot of grief if you ever get a wrong 1099 or get audited. If you don’t report your earnings accurately, you will have to be very careful what you buy and how you pay for it.