FAQs

General

  • The Only Consultant® and Prisma Tax Group are both owned by Katherine Studley. Prisma Tax Group was created to support the unique needs of The Only Consultant’s clients. Our team is made up of experienced accountants, bookkeepers, and customer success staff, all dedicated to making the tax process clear and manageable for you. We also have strong connections to industry professionals who are "spicy-friendly," including financial planners, mortgage lenders, attorneys, and realtors.

    We know that taxes and entrepreneurship can be overwhelming, so we take the time to ensure every client fully understands their tax situation. Once you complete our onboarding paperwork, you’ll receive a tailored quote. Payment is required upfront before any work begins. If you’re ready to become a client, feel free to contact us!

  • We won’t lie, spicy tax deductions are way more fun but of course we can help anyone looking for a non-traditional tax experience.

    This includes:

    • Realtors

    • Hair Stylists

    • Freelancers

    • Creative Entrepreneurs

    • Beauty Professionals

    • Small Businesses

    • W-2

    • American Expats and Digital Nomads

    • Travel Nurses 

  • The Only Consultant® and Prisma Tax Group are remote-first, so we can help you no matter where you are in the USA. All consultations are done over the phone (not via video call—between content creation and the number of calls I take, Zoom just isn’t feasible <3). Occasionally, I do a city tour and offer in-person consults. Be sure to follow me on Instagram for updates and see when I’ll be in your area!

Income & Expenses

  • Track all cash payments, including the date, amount, and purpose. Use a spreadsheet, accounting software or even a journal. All income—including cash—must be reported to the IRS. To help with this, you can download our free expense trackers available here!

  • Yes! Every dollar you earn is taxable.

  • This is case by case and depends on your unique arrangement. Are the funds given out of love, affection and admiration? Do you have the documentation to prove that? Are you depending on the funds for basic needs? These are things you need to consider. 

     

     For 2024, the IRS gift exclusion is $17,000, but that doesn’t automatically mean you don’t need to claim income from a sugar daddy. So, if someone gives you a gift of $17,000 or less, neither of you has to report it or pay taxes on it. However, if the gift is over that amount, the giver may have to report it to the IRS and could owe gift taxes, but only after they exceed a lifetime limit (which is currently in the millions) 

    If you're in a sugar baby arrangement where you’re exchanging companionship or services for assets or cash, this could be considered self-employment income and may need to be reported as part of a small business. While you’ll need to pay taxes on that income, reporting it can work in your favor, helping you qualify for things like mortgages or credit cards, and allowing you to deduct business expenses against the income. This is better discussed on 15-minute consultation. 

  • The IRS defines a business expense as something "ordinary and necessary" for earning your self-employment income. In other words, it takes money to make money! Since running a business involves costs, the IRS lets you "write off" business expenses to reduce your taxable income. Just keep in mind, these expenses must comply with IRS guidelines (so, no personal or extravagant spending). If not, you could face penalties and interest in the event of an audit—definitely not worth it! You can learn more here: IRS Pub 535.

  • There’s no one-size-fits-all method for tracking your business expenses—just pick a system that works for you and that you can stick with. You can use notes on your phone, a spreadsheet, paper records, or a program like QuickBooks. I’ve even created custom spreadsheets specifically for OnlyFans creators and strippers, and you can grab them for FREE!

  • No! You can still deduct your business expenses as a sole proprietor (which is the default for anyone who receives a 1099-NEC).

    However, if you’re interested in the other benefits of an LLC—like separating your personal liability from your business—then setting one up might be worth considering. You can get started on that anytime!

  • Here are some of the most common business expenses for adult content creators. This is not an all inclusive list but a starting point.<3 

    • Percentage of rent and phone bill 

    • Percentage of wifi 

    • Makeup only used in content creation 

    • Camera, computers, ringlights and electronics 

    • Management fees 

    • LLC formation 

    • Health insurance premiums  

    • Video editing software 

    • Tax Preparation 

    **and many more, please note this is niche specific and you should meet with a tax professional to ensure you’re following IRS compliance  

  • Here are some of the most common business expenses for adult content creators. This is not an all inclusive list but a starting point. 

    • Tip outs 

    • House Fees 

    • Pleasers and Dancewear 

    • Pole Classes 

    • Health insurance premiums 

    • Entertainment Licenses 

    • Travel dancing  

    • Tax preparation  

  • Under the IRS passive activity loss rules, income is classified into three main categories:

    • Active income includes wages, commissions, bonuses, profits from a business in which the taxpayer materially participates, gains from the sale of assets used in an active trade or business, and income from intangible property if the taxpayer’s personal efforts significantly contributed to its creation.

    • Portfolio income covers most interest, dividends, annuities, and royalties, as well as gains from selling property that generates this type of income.

    • Passive income comes from trade or business activities in which the taxpayer does not materially participate, such as limited partnerships or S corps, and includes all rental activities, even when the taxpayer materially participates (with some exceptions for real estate professionals).

Tax

  • If you’re a sole proprietor or a single-member LLC, your business income is included on your personal income tax return, so there’s no need for a separate filing. However, if you’re part of a partnership LLC or a corporation, you’ll need to file a separate business tax return.

  • Take a big breath! This is more common than you think. So many people are behind on their taxes, don’t be hard on yourself. If you’re behind we need to start with the first un-filed year. If you’re not sure the last year you filed you can log into your IRS account at IRS.gov/account.

    Contact us for help getting back on track.

More questions? No problem.

Business Entities

  • The short answer is no. An LLC draws a line between your business and personal assets in case you’re ever sued or go bankrupt. There are no tax savings just from forming an LLC. But if you’re making money, entering into contracts, care about privacy, want to build business credit, or could potentially benefit from an S Corp election, you should consider forming an LLC.

  • The moment you start earning self-employment income, you’re considered a sole proprietor, a term often used interchangeably with freelancer or independent contractor. An LLC creates a legal boundary so that if something goes wrong in your business, your personal finances aren’t at risk.

    You can still deduct business expenses against your self-employment income with or without an LLC.

  • Not automatically!

    If you’re making a consistent profit, you can elect S Corp status, and that’s where the tax savings come into play.

  • This is a common misconception. The short answer is no, not unless you’re running a tech startup or have a specific legal strategy.

    For almost all small business owners, it’s best to form your LLC in the state where you live, to avoid double paperwork and unnecessary complications.

    Income is taxable in the state where it’s earned, not the state where the LLC was formed.

  • Yes, absolutely.

    Open a business bank account linked to your EIN, not your SSN. This keeps your bookkeeping clean and helps protect your LLC’s legal status by separating personal and business finances.

    Also, don’t forget to update your W-9s with your LLC information so that 1099s are issued to your business at year-end.

  • Sometimes!  An S Corp is an extremely effective tax strategy for the right people. You need an LLC or Corporation first and then you elect to have it taxed as an S Corporation and save on self employment tax. It makes sense if you’re consistently profiting $60k a year and can commit to the compliance of filing an additional tax return, running payroll to yourself and keeping tight bookkeeping. It can save tens of thousands! Set up an S Corp consultation call if you have more questions.