Only Fans has emerged in recent years as a way for content creators, entertainers, and influencers to earn income from a dedicated fan base. 

If you use this social platform and have been receiving tips or payments from your followers, you may be wondering what it means for you as a brand and individual at tax time. Are you self-employed? Do you need to register as an LLC? How do you claim this income?

The short answer is no, you do not necessarily need an LLC for your Only Fans, but you will want to find a way to separate your business income from your personal income and protect your personal assets with limited liability. Because of its clear benefits, this article is full of reasons why you might want to consider registering as an LLC for your Only Fans! 

To help you figure out if registering as an LLC is right for your business, this article gives you the details you need and walks you through the various tax implications.

 

How Only Fans Works

Only Fans is a social platform that allows creators to upload videos, photos, or articles for their fans. This platform differs from other social media channels in that the content is hidden behind a paywall. Fans pay for access to the content and the creator keeps 80% of the money paid, with the other 20% going to the platform.  

While not exclusively so, much of the content on Only Fans is adult in nature, requiring all users to be 18 years or older. Privacy is paramount at Only Fans and the company takes extreme steps to ensure that content cannot be shared beyond the firewall. 


Only Fans, Taxes, and LLCs

If you are an Only Fans account holder and you receive income from the account, you are expected to declare that income to the IRS. 

You have a few different options for how you can declare this income and file your taxes. 


Sole Proprietorship

Most people with Only Fans accounts will file as a sole proprietorship. To do this, income is reported on Schedule C of your Form 1040. All expenses deemed necessary and essential to your business can be deducted come tax time. 

If you file as a sole proprietorship, your net income will be subject to federal income taxes AND self-employment taxes. As a sole proprietor, you are responsible for paying self-employment taxes at a tax rate of 15.3%. This rate breaks down to 12.4% Social Security tax and a 2.9% Medicare tax for the first $137,700 of net income. An additional 0.9% for medicare may apply if your income is greater than $200,000. 

This tax rate is higher than traditional payroll taxes. If you were employed by someone else, this tax burden is shared between you and your employer meaning that you each pay 7.65% for a total of 15.3%. 


Limited Liability Company (LLC)

While it is not necessary to do so, there are lots of benefits to forming an LLC for your Only Fans business. 

For starters, if you decide to register as an LLC, your personal assets will be protected from most liabilities incurred by your business. This means that should your Only Fans business get sued or run into some other form of financial trouble, your personal assets will not be on the line. 

An LLC provides greater flexibility at tax time. LLCs can file as a sole proprietorship or as an S Corporation

If you are not generating high income through Only Fans, carrying on as a sole proprietorship may make the most sense, but, if you are earning the big money, an S Corp can save you bundles when taxes come due. 

As an S Corp, you will no longer have to apply the self-employment tax rate. Instead, you will pay yourself a reasonable salary which will be subject to the 7.65% that you would be responsible for as an employee. Anything you earn above and beyond that salary will be treated as business income. This means that becoming an S Corp could provide significant tax savings. 

If you decide to establish your business as an LLC, you will have to pay the required and state-specific fees when filing both the initial and annual paperwork, but you can outsource this task to a registered agent so you do not have to worry about going through these documents on your own. 

How to Become an LLC

Registering as an LLC is relatively easy. Start by securing a business name. Run your chosen name through a search tool to make sure that it is available and that it isn’t covered under trademark. 

From there, find out what documentation is required by the state in which you will be operating. At the very least, you will be required to provide: 

If you are not located in the state where you want to register your business, you will need to hire a registered agent who is working in the state in which you want to operate. This registered agent will receive and file paperwork on your behalf and they must be open during normal business hours. Be prepared to provide this information if you are filing your paperwork on your own. 

You will also need to create an LLC Operating Agreement and fill out the state’s Articles of Organization form. Once the paperwork is submitted you can go about obtaining an Employer Identification Number (EIN) that will be used by the IRS to identify your business. 

After all of this, you will need to pay the LLC Filing Fee. After that, an annual report and annual (or biannual) fee will be required. 

This sounds like a lot of work but it is not nearly as complicated as it seems. If you choose to register your Only Fans business as an LLC, you can find more detailed how-to information in our step by step guide, or you can use Northwest Registered Agent to file for you.