On today's episode of the podcast I'm wrapping up my intro series of the Unf*ck Your Biz framework to put your finances back together with legal and tax strategies. Today we'll be covering systems to take care of your bookkeeping.

If you're new to the series, take a pause to check out my intro episode and then Lesson 1 of the series. Missed the most recent lesson? Check out Part 7.

Prefer to watch your podcasts? Check out the Business of Drag podcast on YouTube. 

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🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 

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As I've shared in previous episodes, LLCs are like a magic bubble of legal protection for your business. They protect your personal assets from business liability. That is one layer of protection. Other layers include insurance and contracts. 

In my other business, where I work with service providers like planners, coaches, designers, etc., they are typically the ones providing the contracts and insurance. For drag professionals, things are a bit different because you are usually on the receiving end and have a contract provided to you unless you are organizing a drag show/hiring talent. To learn more about contracts, grab a copy of my book or check out my bank of contracts for just $30. 

When it comes to systems, in addition to setting up your cash flow systems (for example, paying yourself regularly) you also need to customize your tax systems including bookkeeping and setting aside money for quarterly estimated tax payments. During today's episode I'm walking you through my bookkeeping template so grab that free download here. Once you get that free template you'll also get access to buy my Business of Drag course for just $30. 

The IRS says "You may choose any record keeping system suited to your business that clearly shows your income and expenses. The business you are in effects the records you need to keep for federal tax purposes. Your record keeping system should include a summary of your business transactions. This summary is ordinarily made in your business books. For example, accounting journals and ledgers. Your books must show your gross income as well as your deductions and credits for most small businesses"

The most common way small businesses do this is with Quickbooks, but you don't have to. You can use a simple spreadsheet or even a pen and paper (though I do not recommend that). If you're relatively new in business you typically don't need fancy bookkeeping software, unless you find you're selling a lot of low-ticket items like merch, that way those transactions can be automatically pulled from your bank account into your Quickbooks. Once you hit about $150,000 - $200,000 a year in revenue, that's typically when I recommend you hire a bookkeeper, which I offer as part of my Drag Tax business. You can book a call here to learn more about that. 

Now to dive into our bookkeeping spreadsheet and show you how to use it. Be sure to download the spreadsheet to follow along. For a visual walk through, check out this episode on the Business of Drag podcast on YouTube where I share my screen as I discuss the spreadsheet template. 

First we start with Income categories. Let's assume as a drag professional one of your income categories is gigs, paid posts for sponsored Instagram content, and wig styling/salon services. We want our spreadsheet to break down our revenue sources by category and month to give us important financial insights further down the line.

Then, we'll go through our expenses and the Business of Drag tax deduction guide to decide all of our categories like makeup, storage, clothing, etc. (called Chart of Accounts). We'll log this at the end of each month when we open our monthly bank statement and log our expenses. This is why it really helps you to have a business bank account so you don't have to comb through every personal transaction to see what was for your business and it will be harder to argue what was a business deduction if you get audited. This gets especially tricky on Amazon or Target or other places where you do personal and business shopping. Separate your business purchases and pay for them with your business bank account. 

Looking to set up a business bank account? I recommend Novo (not sponsored, though I do receive a referral bonus). Novo has no monthly fees and offers a Reserve system so you can organize your money and even automate certain percentages of each deposit to go toward taxes, savings, etc. Click here to join Novo.

Analyzing your expenses compared to your income can help you calculate profit and find what revenue stream(s) are most profitable. For example, is wig styling making you much more money than sponsored posts and you should therefore spend more time on wigs?

In addition to tracking income and expenses, the bookkeeping template also has pages to track your travel, your mixed use expenses  (rent, gas, electric, things like that which can partially go toward a home office) and your cash flow. 

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘

📷 Instagram: https://www.instagram.com/dragtax 

🐦 Twitter: https://twitter.com/dragtax 

🤳🏻 TikTok: https://www.tiktok.com/@dragtax

🖥 Website: https://www.dragtax.com 

📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

On this episode of the podcast I dive into Lesson 7 of my series on the tax basics and legal fundamentals for drag queens and LGBTQ+ entertainers. Today's lesson is about cash flow management, or as I like to call it, the client to piggy bank pipeline. 

If you're new to the series, take a pause to check out my intro episode and then Lesson 1 of the series. Missed the most recent lesson? Check out Part 6.

Prefer to watch your podcasts? Check out the Business of Drag podcast on YouTube. 

_____________________________________________

🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 

_____________________________________________

The client to piggy bank pipeline explains cash flow management best. Someone hires you or gives you a tip, you get that money, and then what happens to that money? Does your cash get caried around and spent? Does it (hopefully) go into a business bank account? Are you setting a certain percentage aside for taxes? What about savings and retirement? Are you paying yourself from your business account to your personal account? This system is the goal of cash flow management and is what we're diving into today and what I cover in my book which you can order here. Want to dive deeper into cash flow management and taxes? Get the Business of Drag basics course. You'll be prompted to buy it at checkout when you download my free bookkeeping template. 

The first step in Cash Flow 1.0 is to put your tax savings on autopilot and built a habit of paying yourself regularly, not just transferring money to your personal account when you need it. 

To set up your tax automation, you want to set aside money from each paycheck or money you collect in tips towards your taxes. If you sign up for my preferred banking system, Novo (not sponsored though I do get a referral fee) you can easily set aside your tax flow savings in their Reserves system. Reserves are basically folders to organize your money and earmark it for certain things, like quarterly estimated tax payments so all that money will be saved when it's time to go online and pay the IRS each quarter. Novo is free and does not have a monthly cost. You can even automate the savings so a percentage of each deposit goes directly into your reserves. 

I have 25% set aside for taxes and 5% set aside for savings in my own business bank account. The purpose of the business savings is to have a slush fund for big projects like redesigning your website. Earlier in my podcast I showed you how to calculate how much to save for quarterly taxes. This is where you would apply that to save a percentage from each of your payments. I cover this in greater detail in the Business of Drag basics course. 

You want to pay yourself on a set, regular basis. I recommend every Friday be pay day. On pay day,  multiply your revenue for that pay day by your current profit percentage. Calculate this percentage and then transfer that amount. What's left in your business bank account is what's left for expenses. Don't reinvest your personal money in your drag, use the money you left for expenses to buy your wigs and new outfits. When we allow our personal payments to suffer when we need money in the business, it's time to make more money so we don't get complacent in bad habits of not paying ourselves. 

To recap: 

1. Open your bank account

2. Estimate how much you should be saving for taxes and set up your saving automation

3. Every Friday, do your cash flow system, log your bank balance, run your cash flow

If you're going to take anything away from this series, I want you to take away this lesson as I think it will be most impactful to your business. 

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘

📷 Instagram: https://www.instagram.com/dragtax 

🐦 Twitter: https://twitter.com/dragtax 

🤳🏻 TikTok: https://www.tiktok.com/@dragtax

🖥 Website: https://www.dragtax.com 

📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

On this episode of the podcast I dive into Part 6 of my series on the tax basics and legal fundamentals for drag queens and LGBTQ+ entertainers. Today's lesson is covering the Small Business Blueprint you need to legally set up your drag as a business. 

If you're new to the series, take a pause to check out my intro episode and then Part 1 of the series. Missed the most recent lesson? Check out Part 5.

_____________________________________________

🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 
_____________________________________________

In my book I teach what I call the "Unf*ck Your Biz Framework," a five part framework to put your finances back together with legal and tax strategies. So far in these lessons we've gone through about half of the book and covered general tax systems, business liability, how much you should be saving for taxes, and back taxes. Today we're talking about the Small Business Blueprint. 

With drag entertainers I find that there's a gap between those who view their drag as a business and consider themselves freelancers, and those who don't. If you're trying to make some money, you're doing yourself a disservice not treating yourself like a business. 

The Business Blueprint is made up of 14 steps and you can download your own copy of the Blueprint here. 

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘

📷 Instagram: https://www.instagram.com/dragtax 

🐦 Twitter: https://twitter.com/dragtax 

🤳🏻 TikTok: https://www.tiktok.com/@dragtax

🖥 Website: https://www.dragtax.com 

📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

On this episode Business of Drag episode I chat with Kyne about how she makes money from TikTok, why you need a business bank account, and the importance of bookkeeping and tracking your ROI.

_____________________________________________

🤓 Get a free copy of my bookkeeping template
📘 Grab a copy of the book 

_____________________________________________

On today’s episode of Business of Drag, I sit down with Kyne from Season 1 of Canada’s Drag Race.

Diving into our lightning round, Kyne shares her favorite queens, go-to lip sync song, favorite time of the year for drag and if you can find her out or at home on a night off.  

Known as Kyne both in and out of drag (she/her or he/him), she started her makeup YouTube channel in high school shortly after coming out. She started watching RuPaul’s Drag Race and saw that the queens were doing what she was doing with makeup, but taking it to a new level with costumes and wigs. She went to her first drag show during university and slowly just added to her makeup looks to evolve into full drag.

The audience on Kyne’s YouTube tutorial channel grew to over 100,000 subscribers before she was on the show. When COVID came, Kyne stopped her tutorials and eventually moved into making math videos. Studying math in university, she used to keep her math and her drag separate, until she noticed it was performing well, especially on TikTok, when she started merging the two. Social media is now Kyne’s primary source of income.

Prior to being on Drag Race, Kyne had been doing drag for about three years. When Canada announced Drag Race was coming, she applied to challenge herself. The season aired during July 2020, in between UK Seasons 1 and 2.

Kyne’s TikTok generates income with a few brand deal videos a month interspersed between her math content, attracting a wide audience including Gen Z and teachers. She likes working a few days a week and the flexibility and potential that comes with TikTok.

As a freelancer, Kyne started filing taxes in 2017 for her YouTube channel. She went to an accountant and during the start of the pandemic switched to trying TurboTax because she heard it was easy. She now has an accountant that focuses on entertainment clients.

Currently, Kyne has one personal bank account and two credit cards. I recommend she open a business bank account and then ideally open a business credit card linked to the business bank account, but in the meantime use one of the personal credit cards for business expenses and one for personal so it’s easier to differentiate on bank statements and better categorize business expenses.

If Kyne could go back and give herself one piece of advice, it would be to treat drag more like a business and keep better track of the finances. Too often queens are spending money to avoid wearing a look more than once when they could repeat looks to cut down significantly on expenses.

At the end of the day, it’s all about the ROI. If you invest $50,000 but those looks that get you to the Top 3, you will see a greater ROI than spending a ton of money than if you don’t make it as far.

Currently at 1.3 million followers on TikTok, Kyne is negotiating brand deals with the help of her manager for brands such as DoorDash, Taco Bell, Pizza Hut, Proactiv and more. She said she saves a lot of her money because you never know when TikTok won’t be what it currently is and the brand deals won’t be there anymore.

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CONNECT WITH OUR GUEST
📷 Instagram: https://www.instagram.com/onlinekyne/
🐦 Twitter: https://twitter.com/onlinekyne
🤳🏻 TikTok: https://www.tiktok.com/@onlinekyne
🎥YouTube: https://www.youtube.com/@onlinekyne
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CONNECT WITH ME
📷 Instagram: https://www.instagram.com/dragtax 
🐦 Twitter: https://twitter.com/dragtax 
🤳🏻 TikTok: https://www.tiktok.com/@dragtax
🖥 Website: https://www.dragtax.com 
📧 E-mail: [email protected]
_____________________________________________

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦
THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  
AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.
 

On this episode of the podcast I dive into Part 5 of my 8 part series of the tax basics and legal fundamentals for drag queens and LGBTQ+ entertainers. Today's lesson is covering back taxes and if you have them, you are certainly not alone.

If you're new to the series, take a pause to check out my intro episode and then Part 1 of the series. Missed the most recent lesson? Check out Part 4.

_____________________________________________

🤓 Get a free copy of my bookkeeping template
📘 Grab a copy of the book 
_____________________________________________

To kick things off, let's check in on your current tax situation,. Would you say:

I'm absolutely crushing it

I'm doing pretty okay

I'm paying quarterly taxes and keeping my books up-to-date but my systems could likely be improved

I'm not paying quarterly taxes but I've filed my tax returns on time each year and don't owe any back taxes

My tax filings are up to date and I'm already on a payment plan for back taxes

My tax filings are up to date, I owe back taxes, and I currently don't have a solid plan for them

I'm behind on filing taxes

The IRS provides a Taxpayer Roadmap. While it looks like a complete hot mess, if you owe back taxes it may become your best friend.

Zooming in on the Collection section, we can see a caution symbol labeled "Notice of Intent to Levy and Right to Collection Due Process Hearing." If you get an IRS form in the mail you can search it on the roadmap. When you click on a box, it will give you more info on the letter, where you are in the process and how you can respond to that letter. This roadmap will help you keep track of how close you are to going into collections.

I made a simplified version of the taxpayer roadmap that covers your tax payment whether you're prepared and processed on time or examined and sent to collections if you have back taxes.

Appeals and litigation is what you go through if your tax return got examined and you don't agree with the result so you appeal or file a suit in tax court.

During the processing phase is when the Information Returns Program (IRT).

The point of sending a 1099 is so the IRS can match tax deductions to your tax return. Not reporting the 1099 will result in you getting a letter saying you're estimated to owe that much and you need to make a payment for the 1099 you didn't report.

Other types of informational forms are K1s which are issued by payment processors like Venmo or Paypal. When you go to file taxes, go and look at every place online where you get payments and see if they have a form for you as they don't typically send them in the mail.

A lot of places that hire drag entertainers don't often send a 1099. That's a them problem, not you because you are still legally required to report the income regardless, but make sure you ask if they are going to send one before you file because if you file early you will have to go back and edit your return which is a pain.

A CP 2000 is the form you will get if the IRS says they didn't see you report the income they have record of. Don't always assume a CP 2000 is correct because the IRS can be wrong about them. For example if you reported the income without having the 1099, you can submit proof you already submitted the info on the 1099.

There are three types of audits that may happen.

Correspondence Audit - You get audited via letters and is the least serious type of audit.

Office Exam - You bring all your tax documents to the IRS office to review

Field Audit - The IRS goes to your place of work to review your tax information. Self-employed people don't usually get pulled for field audits,

If you're listening to this episode because you already have back taxes, you are most likely in collections. You can end up in collections if:

You owe taxes and you don't pay when you file

If the IRS makes a swift assessment through the IRT program

You owe taxes through the examination process i.e. you are audited and you don't resolve the money you owe in tax court or you do but you still owe money.

If you receive a tax letter, there will be a notice number and you can search that number on the Taxpayer Roadmap for more info.

I dive deeper into back taxes inside my book and my Business of Drag Basics course which will be offered to you at a discount after signing up for the free copy of my bookkeeping template.
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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘
📷 Instagram: https://www.instagram.com/dragtax 
🐦 Twitter: https://twitter.com/dragtax 
🤳🏻 TikTok: https://www.tiktok.com/@dragtax
🖥 Website: https://www.dragtax.com 
📧 E-mail: [email protected]
 ___________________________________________ 
𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦
THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.
COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  
AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

On this episode of the podcast I chat with Fena Barbitall about her multiple sources of income and answer her tax questions.

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🤓 Get a free copy of my bookkeeping template
📘 Grab a copy of the book 

_____________________________________________

We kick off the episode with a lightning round of questions including her favorite season of Drag Race, what she's doing on a night off and her go-to lip sync song.

If you see her in public you can call her Fena, or Ryan, using he/she/or they pronouns.

Learn more about Fena and how she got into drag on the Sloppy Seconds podcast.

Fena currently has multiple sources of income. In addition to drag shows and tips, Fena styles wigs and works behind the scenes styling Trixie and Katya and has been known to make costumes here and there. Fena also has a YouTube channel that she may be monetizing in the future. Working with Trixie and Katya are the biggest money makers for Fena, and costumes is the smallest slice on the revenue pie.

Throughout the years, Fena has changed her pricing structures and costs, having done hourly and sliding scale models. Depending on the turnaround time and supplies, Fena may charge a rush fee on wig styling.

Fena explains the difference between lace front and hard front wigs and what goes into the cost of styling a wig. Hard front wigs are making a comeback due to COVID and factory shutdowns impacting lace wig production.

Having auditioned for Drag Race 10 or 11 times, Fena viewed it as a stepping stone for her career, saying she she didn't want to wait anymore so she started her YouTube channel to get herself on people's screens.

Fena shares what it's like to work with Katya and Trixie on Netflix's "I Like to Watch," and how she balances styling for the show with her other projects.

To wrap up the episode Fena asks me questions about what the financial side of her busines should look like to buy a house in the next 10 years including saving or a mortgage, checking her credit score regularly, and be able to provide at least two years of tax returns, and maintaining your bookkeeping.

_____________________________________________
CONNECT WITH OUR GUEST
📷 Instagram: https://www.instagram.com/fenabarbitall
🐦 Twitter: https://twitter.com/fenabarbitall
🤳🏻 TikTok: https://www.tiktok.com/@fenabarbitall
🎥YouTube: https://www.youtube.com/channel/UCWZA0ofPI4lnfiG5F0bjZtQ
💰Venmo: https://account.venmo.com/u/fenabarbitall
_____________________________________________
CONNECT WITH ME
📷 Instagram: https://www.instagram.com/dragtax 
🐦 Twitter: https://twitter.com/dragtax 
🤳🏻 TikTok: https://www.tiktok.com/@dragtax
🖥 Website: https://www.dragtax.com 
📧 E-mail: [email protected]
_____________________________________________

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦
THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.
COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  
AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.
 

🤓 Get a free copy of my bookkeeping template
📘 Grab a copy of the book 
_____________________________________________
On this episode of the podcast I dive into business entities which is lesson 4 of my tax basics and legal fundamentals framework for drag professionals and LGBTQ+ entertainers. If you missed my intro episode, Part 1, Part 2, or Part 3 of the series, take a pause and go back and check those out.  

A business entity is how we structure our business. Your structure is really the way that you're setting up your business in terms of how you want to collect money and pay taxes and also how you are protected from liability. This might look like an LLC, S Corp or corporation. You don’t want to be personally liable for your business.

Today we’re focusing on sole props, LLCs and S Corps which is all that’s really relevant for US drag professionals and entertainers unless you have a business partner.

Sole prop – The default business entity. Think of it as a lack of entity. When you have a profit motive (aka not a hobby) you have a business in the eyes of the IRS, even if you haven’t formed anything like an LLC. This does not mean you’re off the hook when filing taxes.

LLC – The proactive step beyond a sole prop. Like Glinda the Good Witch’s magic bubble in The Wizard of Oz. Inside the bubble is your business – your wigs, your outfits, everything you have for your business. Anything you own on the outside like a home or retirement account is protected by your magical bubble, the LLC. The LLC is there to protect everything you own on the outside of the business from any kind of liability that can happen inside of the business. Even if you don’t have any assets now, if you get sued a judgement from the court is good for a decade and they can come for any assets you gain over the next 10 years. There is a cost to filing an LLC, which varies by state, but think of it as insurance for your business.

Disregarded entities – An entity not recognized by the IRS. Much like Mariah Carey responding, “I don’t know her,” when asked if she was friends with J Lo, when you form an LLC the IRS is like “I don’t know her,” meaning you get liability protection from the LLC but from the IRS point of view it’s not there meaning it doesn’t impact your taxes. On the flip side, partnerships, S Corps and C Corps are not disregarded and they have to file business taxes by March 15th of each year and the IRS sends you a personal tax return.

Pass-through entities – The income or profit from the business passes through to you personally, there’s no corporate taxes. All entities other than C Corporations are pass-through entities, to make this simple.

C Corporations – You pay a corporate-level tax, the corporation pays you a salary, you then pay taxes on the money you get from the corporation. This only makes senses when you have dozens of employees with benefits or you keep a lot of money in the business, for example if you want to buy a building. Entertainment and service-based businesses don’t do C Corps. Instead we can have an S Corp.
S Corporation – They’re not actually an entity, they’re just a tax status. You form an LLC or a corporation and then you file Form 2553 which is an additional election with the IRS that says you would like your LLC to get the benefits of sub chapter S of the US tax code. All this means is you get sort of preferential tax treatment. In our previous episode we discussed the 15.3% self-employment tax on our net business income to cover our share of Medicare and social security.

Assume your business brings in $100,000 and you are really profitable and have $20,000 in expenses and $80,000 profit. If we have a regular LLC or Sole Prop, 15.3% of $80,000 is $12,240 in self-employment tax (this does not include income tax). In an S Corp, you put yourself on a salary the way you would get if you were working full time at a company. Say you put yourself on a $60,000 salary. You’re going to pay self-employment tax and income tax on the $60,000. After the expenses and salary we have $20,000 left which is net income after salary (our profit in an S Corp) and we don’t pay self-employment tax on the $20,000 meaning the S Corp is saving us 15.3% of $20,000 which is $3,060. The lower a salary in an S Corp the more you save on taxes, but you must pay yourself what the IRS calls a “reasonable salary” based on what someone in your industry in your geographic market would make which is difficult for entertainers to estimate. You can also assess all the mini hats you wear in your business.

I don’t encourage people to file S Corps on their own, I always want people to know the options available to them to know if they are ready right now or have it in their mind for if and when they are ready and will consult a professional (I can help you). Typically I tell people you want your net income after salary to be at least $20,000 and you probably aren’t going to be really ready until you’re profiting at least $60,000 because we typically aren’t paying a salary less than $40,000.

To learn more about LLCs, S Corps, DBAs, etc. snag a copy of my book.

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘
📷 Instagram: https://www.instagram.com/dragtax 
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𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦
THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.
 

On this episode of the podcast, I interview JuiceBoxx from Season 1 of Canada’s Drag Race about her income, her expenses, and how she became a full time drag queen and entertainer. 

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🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 

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Kicking off the episode, I ask Juice a lightning round of get-to-know-you questions including favorite season, favorite lip sync song, and what performance she would choose for me if I were on Drag Race.  

If you missed my intro episode, my interview with Mayhem, or my interview with Bombae, take a pause and go back and watch those. 

When Juice started drag, she viewed it as more money for food and alcohol. It wasn't until about four years into it where she realized this could be a real career opportunity for her and she got sober and started putting more into her drag career.  

Before drag, Juice worked in film and TV and then worked at MAC as a makeup artist. Her time at MAC helped set the base for her drag makeup skills. Juice was making a fair amount of money with full-time drag and MAC, but also knew he always had his husband, Mr. Boxx, to fall back on if something went wrong.  

Juice went into drag full time about three to four years. She was having a difficult time with her manager at MAC and instead of addressing the problem MAC moved her to a store far away and Mr. Boxx came home one day and said they could afford for Juice to quit MAC and do drag full time, a scary move for Juice since drag bookings can be unpredictable.  

The drag standard for Toronto is $100 (Canadian Dollars) plus tips, maybe $150 on a Saturday night and could be $750 to $1,000 for brand deals around pride. Unlike in the US, Canada’s paper money starts at $5 so you aren’t grabbing as much in tips but when you are, it’s starting at $5. Drag Race stars tend to get paid more money and get more tips due to name recognition (which is why you should always tip all the queens at your show).  

On average, depending on the bar and how many songs you perform, Juice would expect $300 - $1,000 when starting. Juice was booked a minimum one, maximum seven nights a week. The expected monthly income for Juice varied. If you’re in a big city with the luxury of multiple places to perform, it is possible to make $5,000 a month.  

As a new drag performer, with the increasingly popularity of drag it is possible to still grow a successful business if you network, hustle and are kind.  

In addition to drag, Juice uses streaming platform Twitch to also make income. She’ll play games or just sit on there and talk, sometimes she’ll be sponsored by a brand and sometimes the income will come from subscribers who pay to interact with Juice and play games with her on the platform.  

When it comes to Canadian taxes, Juice has a tax account and she gets a check with an invoice from her management which says how much they charged her tax (her HSD number) and then she takes that money and puts it in her tax account and it builds up over the year and then pays her taxes. Last year, Juice would’ve owed $8,000 but because she wrote off her PC and games for Twitch and outfits she had made and her home office/studio so she only had to pay $3,000 in taxes.  

In 2020 Juice and her husband bought a house so proof of income for Juice was harder due to COVID and fluctuation of show schedules. If you don’t have a spouse and drag is your full time gig, in the US they’re going to look at your Schedule C that has all your business income to determine if you can get a mortgage or apartment.  

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CONNECT WITH ME

📷 Instagram: https://www.instagram.com/dragtax 

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📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

On this episode of the podcast I dive into lesson 3 of my multi-part series where I share tax basics and legal fundamentals. Today's episode covers quarterly taxes and how to know when you are responsible for paying them. 

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🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 

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If you missed my intro episode, Part 1, or Part 2 of the series,  take a pause and go back and watch those as all these episodes build on each other. 

Quarterly taxes, also known as estimated taxes, is the concept we should be paying taxes throughout the year instead of waiting until tax day to pay a lump sum. The government wants its money and it doesn't want to wait, especially due to the time value of money and inflation. 

If you don't pay quarterly, you will owe penalties and interest. The rule says you ✅ must pay quarterly taxes if you expect to owe at least $1,000 in taxes and ✅ you expect your withholding and refundable credits to be less than the smaller of 90% of the tax owed or 100% of the prior year tax. 

To see a visual breakdown of an example, check out my YouTube channel. In our example, our taxpayer owed $9,000 in taxes for the prior year. This person has a fulltime job where they make $60,000 a year and taxes are withheld automatically from your paycheck at a rate of 20% which comes to $12,000 in withholdings. On top of the job, they have a freelance income of $50,000 with no cost of goods so gross profit is $50,000. With expenses of $20,000, that comes to a profit of $30,000. 

With $60,000 employment income and business profit of $30,000 is a $90,000 total income. In our previous video we talked about our standard deduction, other tax benefits, etc. For this example, assume they have an effective tax rate of 15%. 15% of $90,000 is $13,500 (this is over $1,000 so ✅). Is the withholding to be less than then smaller of 90% of the tax owed or 100% of the prior year tax. 100% of the prior year tax was $9,000 and 90% of the tax owed ($13,500) is $12,150 ($12,000 withholdings < $12,150 so we are not required to pay quarterly taxes. 

My general rule of thumb is if you expect to have a profit in your freelance or busines income then you should pay quarterly taxes. The reason I give this rule is because I see people get in trouble not paying quarterly taxes and they get into an Oh Shit cycle of back taxes trying to make money to pay the back taxes and save for current taxes. 

Failure to pay taxes leads to penalties, which you can learn more about in my book.

An example of failure to pay is if you have $100,000 and a 20% tax rate, she should pay $5,000 per quarterly estimated payment. Assuming none of these quarterly payments were made but were made as a lump sum on tax day April 15, her first quarter payment is a year late, the second payment 10 months late, third payment 7 months late and fourth payment is 3 months late. The penalty is .05% per month. This brings this total penalty (in a very simplified calculation) to $800. 

Get access to my Quarterly Estimated Tax Calculator  with my Drag Tax Basics Course or with a copy of my book. My course includes a free 15 minute 1:1 call with me to go through the quarterly tax estimation guide together. 

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘

📷 Instagram: https://www.instagram.com/dragtax 

🐦 Twitter: https://twitter.com/dragtax 

🤳🏻 TikTok: https://www.tiktok.com/@dragtax

🖥 Website: https://www.dragtax.com 

📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.

🤓 Get a free copy of my bookkeeping template

📘 Grab a copy of the book 

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Bombae spills the tea to Braden about Canada's Drag Race Season 3, the inspiration behind the Butter Chicken palette, and what to expect from her booth at DragCon.

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𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 OUR GUEST

📷 Instagram: https://www.instagram.com/bom.bae/

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🖥 Website: https://www.dragtax.com

📧 Email [email protected]

_____________________________________________

𝗖𝗢𝗡𝗡𝗘𝗖𝗧 𝗪𝗜𝗧𝗛 𝗠𝗘

📷 Instagram: https://www.instagram.com/dragtax 

🐦 Twitter: https://twitter.com/dragtax 

🤳🏻 TikTok: https://www.tiktok.com/@dragtax

🖥 Website: https://www.dragtax.com 

📧 E-mail: [email protected]

 ___________________________________________ 

𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥𝗦

THIS IS NOT LEGAL ADVICE - Everything contained on this channel is meant solely for entertainment and informational purposes. Nothing herein should be considered legal advice nor does anything on this channel create an attorney-client relationship of any sort. Please seek guidance from a licensed attorney before making any legal decision.

COPYRIGHT - Any use of copyrighted content on this channel constitutes fair use pursuant to 17 U.S. Code § 107 as it is utilized for the purpose of criticism, comment, or news reporting allowed under that statute. See, e.g., Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F.Supp. 490 (S.D. N.Y., 1996); SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 2:08-cv-02616 (9th Cir. Mar. 11, 2013); Equals Three, LLC v. Jukin Media, Inc., 14-09041 (C.D. Cal. Oct. 13, 2015).  

AFFILIATE LINKS - This description may include affiliate links that allow me to make a small profit (at no extra cost to you!) on purchases made through them. I only include links to products I genuinely recommend.