Categorizing Sex Work Expenses
As the third business quarter is in full swing, we felt like it was time to go over how (and why) you should categorize your expenses.
When you’re doing your quarterly estimate, it’s not actually necessary that you categorize, so it may be tempting to just not worry about it… Until the year’s end, when you have to fill out your Schedule C. You can save yourself some time and hassle later on if you categorize now.
Save yourself some time and hassle later by categorizing business expenses now.
What Are the Categories?
For most of our clients, expenses fall into one of several categories: Supplies, Car expenses, Travel, Travel meals, Advertising, and Other.
Supplies are usually things like lingerie and costumes, makeup, and toys, but can also include things like lighting and photography equipment, a phone (purchased outright), or a computer (purchased outright).
Car expenses usually means mileage. We encourage our clients to track their business and personal mileage as accurately as possible, because the simple mileage write-off tends to be a big money-saver.
Travel can be hotels or Air BnBs used for shoots, or things like plane tickets, conference tickets, hotel stays, transit, and housekeeping tips if you’re away from the city where you live to do work. (This often applies to dancers who travel, or companions who tour.)
Travel meals include all business meals (if you’re meeting with a client or an employee, or if you’re networking with other professionals) as well as meals when you’re traveling outside of your “tax home” (the city, town, or village where you live) for work. In 2021 and 2022, meals that fall under one of these categories that you purchase from a restaurant (whether you eat in or take away) can be written off 100% – this rule is going to revert back to 50% after 2022. If you purchase food from a grocery store or gas station, you can only deduct 50%. You can include the cost of alcohol and the cost of your tip in your deduction if they apply.
Advertising includes both the obvious ad placement fees, as well as any cost you incur to set up and maintain a website, and anything you pay to other performers for shout-outs.
Finally, we have Other, which is where we typically record stage fees and tip-outs, as well as subscription fees for things like editing software, cloud storage, and screening sites.
How to Set Up Your Spreadsheet
Now that we know which of our expenses fall into which category, how do we actually set up our spreadsheet? I would recommend one sheet where you record every single expense transaction with the date, dollar amount, what you purchased, where you bought it, and the category it falls into. You should then create a second spreadsheet where you have each category and the total amount that you spent for the year.
If you’re like many of our clients and you pay a quarterly estimate, you might find it easiest to use our Sample Income & Expense spreadsheets, which includes an income sheet separated by quarter, an expense sheet separated by quarter, and a second expense sheet separated by category for the entire year.
When you’re trying to work out what you’ve spent in each expense category, first you’ll want to sort your expenses by category, to make adding them easier. In most apps, you can select the cells you want to sort (in this case, you’d select all of the cells representing one quarter), and then Sort By the column where your categories are. Your expenses should now be sorted by category, rather than by date.
Next, you’ll want to select an empty cell and type =SUM, then select all of the cells you want to add, and close the parenthesis. This will give you the total that you’ve spent in that expense category, for that quarter.
Beyond Taxes and the Schedule C
Even if you’re not planning to fill out your own Schedule C and will be hiring a pro to do it for you, it can be really helpful to categorize your expenses just for your own edification.
You might not have a true appreciation for how much you’re spending in some categories, and might find that you want to adjust your budget, either to spend more or less on particular categories. You can even start to pick up important trends if you pay close attention, like comparing what you spent on advertising and how that translated to sales across quarters.
