Important Tax Deductions for Solo Creators

Now that your OnlyFans business is growing, it’ll benefit you to talk to a tax professional to help you pay less in taxes. However, your average accountant may not be experienced or specialized enough to help OnlyFans Creators with reducing their tax bills.

This article aims to shed light on the most common mistakes that “traditional” accountants make when filing taxes for clients in the adult entertainment business, and what you should be looking for specifically in your next tax professional.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or professional advice. Always consult with a qualified tax professional for advice specific to your situation.

Find an Accountant Who Understands Tax Planning

Many tax professionals only know the basics. They can help you file your taxes, but they won’t know how to structure your company to save the most on tax as possible. When tax day comes around, most accountants rely on basic deductions without giving much thought into in-depth tax strategy. They may not understand how to properly structure your business or compensate your workers, potentially costing you a substantial percentage of your income come tax season. Some common oversights include:

1. Failing to properly advise on the benefits of opening an LLC elected as an S-Corp, which can reduce your 15.3% Self-Employment tax that you pay by default as an independent contractor.
2. Not paying health insurance premiums and 401k contributions from your own LLC, which can reduce your taxable income by hundreds of thousands of dollars.
3. Not knowing about cutting-edge deductions passed in the past couple of years, such as the Pass-Through Entity tax to reduce your federal income tax.
4. Overlooking an accountable plan for high-income earners, which allows pre-tax reimbursement of certain business expenses for those making six figures or more.
5. Failing to advise on strategic employment of family members within the business structure to optimize tax efficiency and potentially reduce overall family tax liability.

Find an Accountant Who Understands Your Industry

Most accountants and CPAs have never worked with anyone in the adult entertainment industry and aren’t familiar with the business model. This can lead to costly mistakes when tax day comes around, such as:

1. Misclassifying expensive camera equipment, props, and cosmetics as personal expenses rather than legitimate business deductions.
2. Failing to properly account for OnlyFans’ platform fees and chargebacks, overstating your taxable income.
3. Incorrectly reporting Cash App or Amazon wish list gifts as taxable income.

Ask the Right List of Questions

When you’re looking for your next accountant, you’ll need to make sure that they know what they’re doing. Here are some questions you can ask them to double check that they not only know how to do your taxes, but they’re knowledgeable about your line of work, and can set up the correct structures far in advance of tax day.

Q1: “What business structures do you recommend for content creators, and why?”

A knowledgeable accountant might say:

• LLC taxed as an S Corporation for potential self-employment tax savings
• Allows for salary and distribution payments
• Enables pre-tax health insurance payments, solo 401(k) contributions, and Pass-Through Entity Tax deductions to reduce federal tax liability

Q2: “How do you approach business expense deductions for digital content creators?”

A well-informed accountant might respond:

• Separate personal and business expenses, focusing on “ordinary and necessary” criteria
• Consider deductions for equipment, props, home office, software, and content-related personal care
• Maintain proper documentation and consider depreciation for larger purchases

Q3: “How do you handle gifts from fans?”

A knowledgeable accountant might respond:

• Determine if it’s a genuine gift or payment for services
• Track all gifts, considering their value and nature (cash, items, gift cards)
• Ensure proper documentation to differentiate gifts from taxable income

Conclusion: Don’t Settle for any Random Accountant

Don’t settle for an accountant who lacks experience with the adult entertainment industry or isn’t up-to-date on the latest tax strategies. The right professional should understand the unique aspects of your OnlyFans business.

Effective tax planning involves structuring your business correctly, maximizing deductions, and staying ahead of tax law changes. Take the time to find the right tax professional—you’re not paying them to do the same job you could have done. You’re paying for them to knock it out of the park with their industry-specific expertise, so you don’t have to worry about overpaying your taxes.