Trade Secrets – Our Business (Filing Taxes, etc)

Post reproduced from Trade Secrets: Health and Safety in the Sex Industry which was published in BC, Canada in 2009. All advice given in these posts comes from sex industry workers who shared their experience and knowledge for this guide.

The Naked Truth will occasionally feature one section from the guide. This week’s post is from Chapter Nine: Our Business

This chapter addresses common issues of being self-employed in the sex industry, such as finding a business space, licensing, filing taxes, employment insurance, advertising, and how to earn more money. Be sure to read Chapter 12 – For Business Owners – because it also holds lots of good information if you’re running your own business.

Finding a Business Space

“Discretion is key. Be polite but avoid getting to know your neighbours. The less they know about your business, the better. Especially in an apartment setting.”

“My dream for this is universal with most people, in every walk of life. I want to find a low cost but high quality suite to rent for business.”

Adult Film/Photography/Webcam Studio: Look for warehouse space in industrial areas for cheaper rent and neighbours who won’t notice or won’t care.

Apartment: It is a good idea to live in a high rise for security sake as well as so no one will notice the traffic in and out in a big building. Pick a location with soundproof features such as concrete floors. Hang drapes or fabric from your walls to lower noise transfer. Work during hours when others are working to avoid them overhearing you.

Dungeon: Find a space that is sound proof, has no carpets, strong wooden beams, and high ceilings in a non-residential neighbourhood.

Hotel Room: One of the benefits of renting a hotel room for your work is that your residence remains confidential and you can go home after work.

Strip Club: Find out which municipalities have adopted bylaws banning exotic entertainment to narrow down your search possibilities. Or try to find clubs that have a “grandfathered” liquor license, which omits them from being subject to bylaws that came into place after their liquor license had been purchased.

Licensing Requirements

If you are a self-employed individual running your business under your own name or alias and claiming taxes as a self-employed individual, you do not need to register for a business license.

However, if you are running a business with its own name (ex: The Naked Truth Entertainment), you are first required to apply for name approval (costs about $40 in BC). Once the name is approved, you must register the business within three months (also costs about $40 in BC).

You are also required to purchase a business license from your municipal licensing office to run a business in your community.

In some cities across Canada, escorts and/or exotic dancers are required to purchase licenses. Call the city you work in to ask if they are one of these cities. Licenses are often declined for people with prior criminal convictions. (See Chapter 4 – Our Work – for more information on licensing for dancers and escorts.)

Skill Building and Training

“It may be better to apprentice in this type of work as there are many laws and liability issues that can arise. If you want to open your own film company it may be wise to partner up with someone who is more skilled and has more experience.”

While most of our learning in this industry comes from “apprentice-like” relationships with industry veterans, there is a lot we can do to become better business-people.

There are programs available through your city recreational services, colleges, and universities that teach basic accounting programs, how to write business plans, computer courses in Photoshop, and other programs.

What skills would help you run your business better? Choose the skills that you’d like to learn and pay others to do things you’re not so interested in learning yourself. For instance, if you are artistic but not very mathematical, learn how to make great ads for yourself, but hire an accountant to do your books.

Another important certificate all sex industry workers should have is First Aid. We hope down the road there will be First Aid courses designed specifically (and offered free) for sex industry workers, to address the kinds of hazards most common for us.

Workers Compensation

“Due to the criminalization of sex industry work, we are not protected by worker’s insurance for the actual duties we perform. People in other industries are covered if they contract diseases in the course of their work. If the sex industry was legitimized and able to truthfully apply for worker’s insurance, we could potentially be eligible for compensation when we get STI’s, like people with asbestos poisoning from insulating do.”

For the writing of this guide, we were unable to engage all the provincial worker’s insurance companies across Canada. However, we spoke at length with WorksafeBC and got some feedback from Manitoba and Saskatchewan.

British Columbia

It is required in British Columbia that all businesses that employ people must register with WorksafeBC. That includes strip clubs and massage parlours.

The Sex Industry

Massage parlour workers are covered for work related injuries under the Workers Compensation Act. This could include wage loss for time away from work due to work related injury.

WorkSafeBC classifies employers by industry groups. Services and occupations under these industry groups are described in the classification units. There is no “Sex Industry” or “Adult Entertainment Industry” classification, as yet.

Classification Unit 761021 Massage Parlour, Steam Bath, or Massage Services, includes escort services as part of its service description and escort is listed as an occupation. However, because it is illegal to own or operate a “bawdy house,” sexual services are not included in any classification unit descriptions.

If you work at a massage parlour and you suffer from a work related injury, you can make a claim. (Even if an employer is not registered, if they are in fact an employer under the Act, their workers are protected by the Act, and so can make a claim.) If a patron assaults you, you can make a claim but you may need to report the incident to police to be eligible for compensation.

Once you’ve made a claim, it is reviewed on an individual basis to determine if you qualify for compensation. There is no guarantee that you will receive insurance benefits.

Exotic Dancers
Exotic dancers who work in strip clubs are eligible for workers’ compensation benefits if they are injured while working in a club.

Self-Employed – Personal Optional Protection
A person in business who is considered independent or a labour contractor may be eligible for personal optional protection. Applicants are approved on an individual basis. To date and to our knowledge, no one has applied as an exotic dancer or escort in British Columbia.

An example of how this may or may not apply: an exotic dancer working in one club at a time, week to week, will most likely not be eligible for Personal Optional Protection; whereas, an exotic dancer who is working in more than one venue in a day or week – dancing in clubs, doing seminars, pole dance parties, seduction workshops, stags, etc – may be eligible for Personal Optional Protection as an independent operator.

Making a Claim
WorksafeBC has what they call a “no-fault” insurance program so that even if you took unnecessary risks in your work, you may still be covered for work related injury under the Act.

Business owners with WorksafeBC insurance are required to provide training and health and safety supplies to reduce the risks associated with your particular job. Claims can include but are not limited to: assault, injuries from performance, and contraction of a disease in the course of your work.

The business owners are required by WorksafeBC to do a risk assessment and reduce identified risks as much as possible. For instance, they may be required to provide security if your safety is at risk; pay for your Hep B vaccinations if you are at a high risk of exposure in your job; or provide conflict resolution training if you deal with confrontations in your work.

If you make a claim, you, your doctor, and the business you were employed by at the time of the claim, must submit a report to WorksafeBC. If your employer does not make a report, they will be contacted by WorksafeBC and asked for it.

If the business did not have procedures and training in place related to the risk that caused your claim, WorksafeBC could possibly penalize them. They may also require that your contractor/employer does another risk assessment and develops policies and procedures related to all risks.

WARNING: The employer’s assessments (premiums) may also increase depending on the amount of the claim. For this reason, you could potentially be blacklisted or worse if you make an insurance claim on a business. You may feel you have to choose between Worksafe or “be safe” and being safe may be your best option.

A person can anonymously report an employer safety violation. A person cannot make an anonymous claim for their workplace injury.

For safety violations or workplace health concerns contact WorkSafeBC at 1-888-621-7233.


Manitoba does not have compulsory WCB coverage for athletes or entertainers. However, if you are deemed on an individual basis to be an independent contractor, you can apply for optional coverage.

Manitoba WCB will determine a person’s status by examining a number of factors. For independent contractors, they use a “bona fide” business test. They look at the situation and ask a number of questions to determine whether the person is in fact operating a business.

Here is a copy a section of contractor policy that talks about the business test:

Determining Status as an Employer, Worker or Independent Contractor

When a person is in a traditional employment relationship (i.e., works set hours for one person and receives T4 income), it is easy to determine that the person is a worker. However, in some cases it is not obvious whether a person is a worker or an independent contractor because of the manner in which the relationship between the service provider and the principal is structured.

The WCB will consider the details of the relationship between the service provider and the principal in order to determine whether the service provider is a worker or an independent contractor. The status of the principal (i.e., whether or not he or she is an employer) will be determined by the status of the service provider.

Specific considerations
In making the determination, the WCB will look at all of the facts. The manner in which the parties characterize the relationship will be considered by the WCB but will not determine the matter. The factors that the WCB will consider in making this determination include:

  • Is the service provider paid T4 income or business income? A person receiving T4 income is likely a worker. Business income suggests independent contractor status.
  • Does the service provider work under the supervision and control of the principal? In other words, does the principal dictate specific hours of work and/or how a particular task is to be performed or is the service provider free to determine those matters on his or her own? The more control that is exercised by the principal, the more likely it is that the service provider is a worker.
  • Does the service provider perform work that is an integral part of the business of the principal? The more integral to the business the work performed is, the more likely that a service provider is a worker.
  • Does the service provider have significant financial investment in and responsibility over, the vehicles, tools and/or major pieces of equipment that he or she requires to perform the work? Financial investment in, and responsibility over, vehicles tools and equipment suggests independent contractor status.
  • Does the service provider take financial risk or have the possibility of increasing his or her profit by, for example, performing the work in a shorter period of time? Significant risk and the possibility of reward suggest independent contractor status.
  • Is the service provider hired for specific jobs or is the working relationship between the service provider and the principal continuous and on going? Being hired for a specific job suggests independent contractor status; having a continuous, on going relationship is more indicative of a worker.
  • Is the working relationship exclusive or does the service provider perform the same or similar work for a number of different people or entities? Provision of service to one person suggests that the service provider is a worker.
  • Is the service provider responsible to pay all business expenses and remit his or her own income tax, GST, etc? Responsibility for business expenses and taxes suggests independent contractor status.No one factor is determinative of the matter. The relationship as a whole will be considered.

WCB looks at the whole picture, not at just one or two of the criteria and make the determination. If they decide that a person is an independent contractor, they can purchase coverage.

If a person does not appear to be independent, they will be considered a worker and the employer will be responsible for coverage.


Artists, entertainers, and performers are also excluded from coverage in Saskatchewan.

Filing Taxes

“Screw everyone but the tax man.”

The following information came from Johnny Demos, of Selective Income Tax: 604-460-6466 and the website of the Sex Professionals of Canada (SPOC):Why pay taxes?

It is money paid to a government to fund its programs and services. Examples are roads, public utilities, education, health care, economic development, cultural activities, national defense, and law enforcement. Without a tax system, a government would not have any money to provide services.

Filing taxes allows you to save for an RRSP, buy a home, and make any other large purchases without questions from CCRA (Canada Customs and Revenue Agency). If you do not file, and live in a home or apartment, pay your rent, buy things, and are pretty much self-sustaining, the government may question how you can live with ‘no income’.

Eighteen percent of all the claimed income you have made in your life can be invested into an RRSP for your future. There is no better time to plan for the future than now, so when the day comes that you want to retire, you will have a nice little nest egg waiting for you. You also get GST rebates, rent credits, claims on dependants and/or children, credits for donations, and many other ways to get benefits.

Sex work is technically considered ‘self-employed’. A beneficial tax for sex workers is the Canada Pension Plan contribution paid out of our net business income, (The profit that remains after paying business expenses to earn money such as phone, car, rent, advertising etc.). It is beneficial because the government gives it back when you turn 65 and your contributions determine how much you get back. It also comes with a built in insurance policy benefit for death or severe disability that can be triggered before retirement. This is important to protect your family in case something happens.

Unlike private insurance policies, you qualify based on your contributions and not your profession. There are minimum contribution amounts in terms of years and dollars per year. This is why it is important to file your income tax and pay the CPP. Your contribution also reduces your taxable income. Also, if you wish to, you may pay more so that later you will receive a larger benefit.

What is the downside?

Since you do not get deductions taken from your pay like Income Tax, Employment Insurance and so on, you will most likely not get a tax refund.

Do I have to pay taxes?

The Canadian tax system is based on self-assessment. Each of us has the responsibility to ensure our tax return includes all necessary information for reporting income, claiming tax deductions and tax credits, and, finally, calculating our tax liability. In complying with the tax laws we all have the right to pay as little tax as is legally possible.

How can I claim my taxes, if what I do is considered illegal? Won’t I get arrested?

Being a sex worker is not illegal in Canada. Also, the CCRA is not a law enforcement agency. Their only mandate is to collect taxes. They only contact law enforcement if you avoid paying taxes or commit tax fraud. Therefore, there is absolutely no risk to you for claiming your taxes. When filing your taxes, it is perfectly acceptable to use a generic term like ‘entertainment’ as your occupation. (One SPOC member has been filing for years using the term ‘escort and tourist service’).

What about income earned outside of Canada?

Income earned, whether in Canada or outside Canada, must be declared. CRA has tabled monthly or yearly averages to convert currency for each country. If a country outside of Canada taxed foreign income, CRA will let you claim a tax credit for the foreign taxes you’ve paid.

How does paying tax work? What am I taxed on?

In Canada we are subject to Federal and Provincial tax rates depending on our taxable income bracket. Our federal tax owing is then reduced by non-refundable tax credits. For self-employed individuals, gross business income minus business expenses equals net income. In most cases, net income is usually taxable income.

What can I write off?

Agent fees – including GST, Socan, fines, DJ tips.
Travel – hotel, taxi, car rental, ferry, airplane, luggage, driver.
Meals – all bars, restaurants, groceries when working out of town.
Advertising – posters, business cards, photography, photo film, gifts to audience, ads.
Auto – gas, repairs, parking tickets, towing charges, BCAA, license and registration, Aircare, car wash, car loan interest, insurance, lease payments, capital cost of value of vehicle.
Cell phone minutes and long distance calls relating to business
Home Expenses – rent, mortgage interest, property tax, gas, hydro, strata fees, insurance.
Office Expenses – postage, courier, business license, computer, internet, printer, desk, filing cabinets, furniture or fixtures for office.
Costumes and supplies – costumes, shoes, tanning, nails, drycleaning, props, cd’s, lingerie, jewellery, hair appointments and products, makeup, sex toys, condoms, lubes, towels, gloves, equipment.
Miscellaneous expenses – RRSP contributions, tuition, charitable donations, child care, child fitness programs, accounting fees, dental, chiropractor, massage therapy, cosmetic surgery, prescription drugs, botox, laser surgery, eyeglasses, contact lenses.

What can I not write off?

Any expense used as personal and non-business related. Examples would be going to the movies, food or coffee in town, gym membership, alcohol, cigarettes, personal hygiene products such as soap, shampoo, tampons, deodorants, toothpaste, and toothbrush.

What receipts should I keep?

Keep all receipts listed for six years.

How do you suggest keeping my receipts and records in order?

Staples or Office Depot sell a receipt organizer binder.

What should I file my taxes under?

You file your taxes under your own name (sole proprietorship) but your business income and expenses can be filed under your own name or business name (stage name / alias). If you choose to file your business under a name other than your legal name then you must perform a name search first and then, when accepted, register the name with BC Registries.

How much does it generally cost to get my taxes done?

Between $200 – $500 per year depending if receipts have to be organized or calculated. There is also a $100 free for filing a GST return. All fees are deductible as a business expense.

What happens if I haven’t paid my taxes in a few years?
CRA will continue to charge interest (Bank of Canada Rate) on taxes owed to them. CRA would send your file to collections and eventually garnish your wages thru your place of employment. They could also freeze and liquidate your bank account.

Do I have to claim tips?


(Exotic Dancers) What happens if I lost my contracts for each week I worked?
Each agency charges a small fee for a printout of your dancing history for each year. My company has accounts set up for each agency and I will request this information for you at your convenience.

What happens if the government disagrees with my accountant’s calculations?

CRA will reassess your return and inform you of any changes on a notice of reassessment. If you disagree with the reassessment, you can file a Notice of Objection. You must file the Notice of Objection within 90 days from the mailing date of the Notice of Reassessment. I would call CRA first to discuss the matter before filing.

What is the proper way to file GST info?
There are two methods of filing a GST return. First is the simplified method where you report GST collected on income and claim GST paid on business expenses (Input Tax Credits). Second method (which I recommend) is the quick method. Here, you receive a tax break on GST collected. You still collect 5% GST on income earned but you submit 2.6% on the first $30,000 and 3.6% on income above $30,000. This method is beneficial to taxpayers with small amounts of business expenses. It is also easier to calculate. Johnny Demos also recommends you file your GST on a yearly basis.

Budgeting and Investing

“Save your money because you won’t always make this kind and then you can have a nest egg for the future. Also take courses and classes. If you have the money, make investments in real estate, art, gold or antiques. I did, then I resold them at a higher price when I needed cash later.”

To figure out your budget, add up all your expenses for each month: rent, hydro, utilities, phone, internet, cable, cell phone(s), groceries, toiletries, car insurance, gas, debt payments, etc.

Now add in the things you’d like to spend money on: entertainment, clothes, furniture, RRSP’s, savings, etc. Add the two amounts together to reach your goal. This amount is how much you’d like to earn each month.

If your goal is too big for now, look at ways to cut down on your expenses. Can you move to a smaller place? Can you work and live with one phone? Do you watch that much TV?

Take the amount you’d like to earn each month and divide that by how much you charge for calls. That will tell you how many calls / shows you need to do each month to reach your goal. Break that down into days per week.

Be sure to schedule days off and extra days for unforeseen episodes of burnout or last-minute opportunities for fun. Don’t sacrifice fun for money. You’ll make way more money if you’re happy and well adjusted, than if you’re struggling through each day due to burnout.

How to Earn More $

“You can still play the game. But hustle. Don’t rob.”Set and Stick With Your Price

“Trans workers: Don’t go cheap! You are valuable! Check other trans worker’s rates to see what your earning potential can be!”

 “Stay true to your price.”

“When lap dancing, never rub their laps continuously until you get as much money as they have. If they come in their pants, they will go home! You want them to stay hard a long time and buy more dances from you.”

If you’re new to the industry or to a particular part of the industry, find out what the going rates are so you know what to charge for your expertise. Adjust that rate, if you like, to something you’re comfortable with, without undercutting too much. If you charge more than the going rate, you may get fewer or wealthier clients. Choose the rate and clientele that suit you best. Decide what your time is worth and stick to it.

You can upsell with toys, services, panties, lipsticks, and dirty talk, among other things. Get creative! Upsell but try not to push your customers’ limits. Don’t hold back on what you agreed just to take more time than you agreed to or you could make them angry. They won’t come back, and they might think all sex workers do this.

Ask for a Tip

If you feel a client is very satisfied, ask for a tip for your excellent work.

Offer promo during your show. As soon as someone tips, pick up a poster and give it to the tipper. This will encourage others in the audience to tip too.

If you work for an agency that takes a cut of your fee, charge money for extras (anything above and beyond what is covered by the fee). Don’t feel bad about asking for it. Most clients are aware that this is standard practice by agency workers.

Get Regulars and Keep ‘Em

“Stand with your head held high, like you’re proud. You get treated better and picked up sooner.”
To keep them coming back, treat customers with respect. Make a point of learning their names, saying hello to them, and chatting with them about subjects you’ve discussed in the past.

Better yet, keep a database with their names, phone numbers, enjoyed activities, and special kinks. Clients are more likely to return if they think you’ll remember them or that you have a special place for them in your heart.

Maintain an online profile where regulars can find you and keep in touch with you.

Learn New Skills

“Keep them turned on with hot photos or movie clips. Set up times to do online web cam shows with the option of phone sex. Then he can get off while at the office, and you keep him thinking about you.”

Depending on your area of the industry, learn new skills. For instance, you can learn different types of massage, female ejaculation, pole dancing, BDSM, and/or other kinky activities. The more you can offer, the more versatile of a service provider / entertainer you’ll be.

Sex Them Up

“The more cliché lines I used the faster the client would finish.”

“I was turned out by an old school madam who taught me how to offer very reasonable, safe services in a way that would be sexy for the client.”

“The best attitude to have is ‘always horny’!”

Clients like dirty talk and compliments. Make them feel attractive. Boost their egos. Make them feel like “king for an hour.” Be genuine, flirty, compassionate, and confident. Behaving ditzy can sometimes up your bank too.Update EverythingUpdate your photos and ads often. Update your wardrobe and equipment/toys. New sexy lingerie, a naughty nurse costume perhaps? Keep the fantasies alive and versatile.Be Professional
Be responsible and reliable. Repeat business is better than a lot of one-timers.

Care About Your Appearance
To maximize your earning potential, it helps to look tanned, keep your nails manicured, maintain a neat hairstyle, and put on makeup before going to work.

There’s a wide range of acceptable body types in this business. Some sex industry workers, such as exotic dancers, are not required to be model-thin to get work, but should look reasonably fit and toned.

It also helps to invest in quality costumes and lingerie. Try to look as clean and polished as possible when working.

Make Safe Sex Fun
Learn how to put a condom on with your mouth and other sexy techniques that increase your health and safety.

Do What You Love and Love What You Do

Quotes from Trade Secrets contributors:

“Work hard and choose modeling jobs that you enjoy. The camera picks up on everything and if you are not enjoying the scene, it really shows. If this is the case, reputable employers may overlook you for future shoots after seeing your lacklustre work.”

“Be a serious and ethical businessperson. Get a lawyer. Develop character. Pay your taxes. And stay safe. Do not believe everything agencies tell you. There are ethical ones, which will work with you properly. But sometimes things happen and you have to be able to protect yourself.”

“As difficult as it is sometimes, try to maintain a pleasant demeanour on stage. A scowling, grumpy and/or bored-looking stripper will only alienate the crowd. The friendlier you appear on stage, the more likely customers are to tip. When I’m in a bad mood I find that dancing to music I enjoy and trying to get my heart rate up a bit helps me turn on the happy face on stage.”

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