Navigating the Niche of Adult Industry Accounting with Katherine Studley

Hello, and welcome to the Big Four Transparency podcast. I'm joined today by Catherine Studley, aka The Only Consultant, someone running a judgment-free consulting firm that helps people in the adult industry with all of their accounting needs. Welcome to the pod, Catherine. Thank you so much for having me. I'm excited to be here. Yeah, my pleasure. I had seen you reposted by someone on LinkedIn, and I had been explaining the importance of having a good niche and how that can be your strategic driver. And I was like, well, that's certainly a niche and probably a very, very underserved market. So I bet you're probably having a very disproportionate impact on people's lives that you work with. So yeah, I'd be curious to hear about your journey, how you got into that. Yeah, for sure. So I mean, we serve the adult space, people that are in-person and online. I am an accountant by trade. I graduated from Niagara University in 2017. I did what everyone does. I had an accounting internship, I got a job at a regional CPA firm, so I worked at two firms in Buffalo. I quickly realized that this was not my story, not something I'm interested in pursuing. I only went to school for accounting because I am from Buffalo, and I knew you could definitely get a job in the industry. And my father is a CPA in tax, so I've always known five seasons exist, obviously tax season being the fifth. So that was just kind of what I knew. So I went to school for accounting, had a bad time, said, okay, I'll do anything except for this. So the guy that I was dating at the time got a job in DC with the government. So I followed him down in 2019, I got a job with the government, or no, sorry, I got a job at a coffee shop and I was networking with local people, handing out cards, and I got recruited by the intelligence community to do the financial tracking for top secret projects. I did not know it was the intelligence community until I'd worked there for a few months, and then I realized why there were no windows. Yeah, I was like, oh, this is why everyone's been to 180 countries, and there's no logo, anyone else would have put these pieces together. So I did that, and then during the pandemic, I was on TikTok every day, consuming a lot of social media, and decided this was the time to start a business. So I started a social media marketing firm based off of the local businesses that I had been meeting when I was working at the coffee shop in Alexandria, Virginia. And then I was doing that for a few months, and then I came across OnlyFans for the first time. This was the middle of 2020, probably around July. And I had a friend who had a page, so I called her and said, what is this? I'm seeing this everywhere, what's going on? And she said, pretty much like, we're selling our nudes, I'm making 10 grand a month, this is crazy. And just in passing, as an accountant, I said, oh, you can write off your lingerie. And she was like, what? And I was like, what? Schedule C returns are the only returns that I know how to do, because I only worked for a couple of years in accounting firms. So that's what gave me the initial idea, but I was not in the position to actually do the work myself. I didn't have a CPA, I didn't have an EFIN. So I called the first firm that I worked at in Buffalo and said, boys, I got a deal for you. So the first year, I white labeled their service. Oh, interesting. So I would find the clients on TikTok, I would market in the same trends that OnlyFans models were. And at the end, I would just say, Judgement Free Tax Help. If you get it, you get it. And people got it. And initially, it was OnlyFans models, and then instantly dancers, exotic dancers found me. And then Sugar Babies. Sugar Babies just grew legs and became its own thing. So I think the first year, we probably had 50 leads and did 11 returns. Second year, I think we did 85 returns, and then 250, 500, 600, it's just exploded since. And the only consultant is the brand, the lead generator. That's me, that's what my socials are. And then two years into this, I said, okay, I cannot continue to white label this. There's enough here where I should build my own firm. So I initially started Prisma Tax in November of 2022. I had a business partner who was the CPA of the first firm that I worked at. And we worked together for nine months, and then I bought him out. So we did one tax season together. So that's why there's the two entities. So now I have 100% of Prisma Tax, I'm the only consultant. But Prisma Tax is like the vanilla identity. It's a little bit more digestible for people. Accountants are a little bit, you know, they work with that a little better. But yeah, so now it's been almost six years, and that's how I got here. Interesting. That's, there's a lot to dig in there, for sure. Yeah. I guess maybe we'll get this one out of the way. What for you like didn't work in like the traditional accounting firm where you said like really quickly, you were like, this is not for me? Oh, man. I mean, honestly, I never loved accounting. Like I really suffered through college. I was like, this is, I mean, I am a people person. I am creative. The only thing that I could actually understand on the chart of accounts was goodwill. And that's the only thing that my classmates could not understand was this like intangible thing. So I never really loved accounting. And then working in firms, I just felt that it was very dry. You know, mandated to work 65 hour weeks. I worked 63 hours one week. The partners pulled me in and said like, are you even taking this seriously? Do you want to even do this? And I was like, honestly, no. And I'm not even making millions. And then as we discussed previous this, as someone who's also worked in hospitality, I'm like, I can literally make the same waiting tables or working banquets or bartending, and I don't have to sell my soul. So that's why I decided to kind of like reset a little bit when I got to DC. The plan was to do like software sales. That's where I thought software pharmaceutical sales. Yeah. I mean, five minutes chatting to you before this, like, I think you would be good at that. But I think, again, like what you've tapped into seems like probably a very underserved market, right? Like there's all of these different platforms, banking where, when I worked in tax, I did a lot of work with like a lot of the cannabis companies and things like that as well, where it was like, they had to have duffels of cash because they like banks didn't want to work with them, but they would say they would fundraise $10 million and they would have to go like hide this $10 million somewhere, which is crazy, right? That these institutions aren't willing to work with them or even Stripe who I use for payments because I sell data and that's okay. But like, you know, gambling websites or whatever, no matter how legit above board they are, like a lot of these services just like have a kind of hard line in the sand. And I could see a lot of legacy accounting practices be among those, right? Just like, we just don't want to deal with that. Like whatever, it's going to be distraction or just whatever it may be. So, I mean, good on you for taking that step. Thank you. Yeah, I mean, initially, I mean, now my innovative ideas are celebrated, right? But I mean, initially accountants would hang up the phone. No one even take me seriously. People told me this will never work. You will never figure this out. And I said, oh really? Watch this. Because I knew what was happening on the other side of it. And what OnlyFans did, and it kind of changed adult content and porn in that it legitimized it by producing a 1099 in a way that people had not. Like major studios would get a 1099. If you're a dancer, you get a 1099 from your club, but they're doing something sketchy on it. But OnlyFans, you really, if you had, if you went viral in July and now you have a 1099 for 300K, you have to file your taxes. This is different now. And I feel like my clients had a lot of patience with me as a startup because they were also new and they were just happy to be working with someone who was judgment-free. I'm their age. Sorry, I think my camera maybe went out here. That's all good. Okay. I can probably keep it. Yeah. Yeah, but I just got along with my clients though because we were basically like peers. I felt like they were my little sister and they read that and had patience with me as I was starting this. Yeah. And so is pretty much all of the lead gen, like either outreach on TikTok or like content creation that you were doing there, or like, was there like a cost to acquire customers? Because that's like an increasing conversation around accounting firms, right? Is like, you know, it's not always easy to get in there, get in through the door, or you maybe need to start going to all these conferences and things like that, just to like make your presence known, right? Whereas like maybe on the kind of more viral platforms, plus the combination with an underserved market, like was it just kind of people flowing into you? I had clients before I had people do the work. I mean, I was literally shopping around a CPA firm saying I have clients right here that are willing to pay and they still would not take it. I have done all of my lead generation through social media, starting with TikTok being the top of the sales funnel. And then they were following me on Instagram to convert. That has, so I started the account in January of 2021. And then it's been, so I'm a content creator myself. Like I'm also making TikToks constantly, which is another similarity that my clients and I have. Like I genuinely understand what's going on because I'm living it as well. I've paid for some shout out for shout outs from bigger accounts. It's minimal, like $250 maybe a couple of times, but it's mostly been my own content that's been shared and saved. And then referrals now, because I'm working with influencers. So if one person has a great time and they shout me out, that stirs up business in itself. And then I got press, mainstream press very early on, which was exciting, but also like the worst thing ever because I'm like, I'm literally taking, I'm interviewing with the New York Times in the alley of the coffee shop. And I hope this doesn't stir up too much because we can't handle it. Wow, that's cool. And is this like mostly happening like, you know, in like DMs or something? Like, cause this is a conversation I've had with people where a big weakness in the accounting community is people aren't often willing to go meet people where they're at, right? So like I had talked about this at the time where I was doing some work in crypto. Like I got all of my client leads just because I was on Discord. And I hated Discord, but I was like, whatever, fine. I'll go answer you there. And that's where natively the person was then willing to go make a group chat and introduce me to whoever. So, you know, if you're selling to this kind of younger generation, is that happening? Yeah, like on Instagram, TikTok, like literally just DMs? A little bit in the beginning, I would call damn a lot of people and people would DM me, but I've always had a call to action. Like I'm directing people to forms. So I've always had at least like a basic clickup form and I'd be like in my bio. So like the call to action, so I get your attention on TikToks. I tell you boobs aren't a write-off. Everyone gets very intrigued and exciting. Four seconds in it says, you know, click the link in my bio. And then now you're in our ecosystem and then it's email newsletters from there. Also, a lot of people are booking consultation calls with me. So that's another one too is also in my link in bio, you can book a call. And a lot of times that's the first step for people. Gotcha. So boobs are not a write-off? Boobs are not a write-off. It does not come off at the end of your shift. It is part of your body. Yeah, unless someone maybe sponsors that specifically, then it would be an in and out and then nothing happens to wash. Interesting. I think I have seen like a comedy sketch basically loosely around that. So good to know that someone has actually done the diligence of that. Yes. And like, what is the place, you know, these creators are at? Like when you're meeting them and starting to work with them, like, are they like just completely like, it's just going into a bank account and I'm anxious about this. And I just kind of like hope for the best. Like, where is that community at when it comes to like, I guess, even just knowledge base of like taxes and how things apply to them? It's a very broad community, so it's hard to generalize. And there's also niches below, you know, it's not just only fans. It's, you know, what niche are you in? I would say initially when I first started this, it was pure shock and panic. People had no idea they were ever going to get a 1099. A lot of clients were still living with their parents. They're in college. They had, you know, they had a 1099 for a hundred grand or like, does this mean my mom can't claim me? Like general confusion. But then in that same breath, also to have a successful only fans or adult content site, you have to be a self-starter and you have to be self-sufficient and savvy to an extent. So also the first year we had, you know, I had 19 year old clients. It's a, you know, I made estimated tax payments over the last year. I just guessed on the amounts by at least know what exists. I've done the research, but, and also there's different, you know, I work a lot with exotic dancers. Their problems are different than content creators versus sugar babies. Dancers are earning all of their income in cash. They're not getting 1099s. They're often years behind. They come to me when they want to get a mortgage or financial aid, or they need proof of income for custody of their child. So there's a little bit different in that they don't even have the wage income to go off of, and they're not depositing the income. But everyone's genuinely confused and saying that they've tried another accountant, if H&R Block or someone else, and they had a very bad experience. If they, you know, scoffed at them, didn't understand, sexually harassed them. So I meet people right where they are. I talk to people like I'm talking to you, like I'm using emojis. It's very approachable. There is no tax jargon. I have loom videos explaining every single thing. There's no such thing as a stupid question. I will tell you what a 1040 is 10 times, and that builds trust. And then eventually people get caught up and get in the rhythm and then we're good. That's cool. So let's talk about, you know, this is all the upside of going into kind of that stream of business, right? Where probably underserved, like there is definitely a lot of money going around. And so, you know, great client base as well. Have there been kind of like challenges with, you know, either yourself or your own kind of business, feeling like you were kind of discriminated against for what you do or like, you know, have banks been an issue for you or things like that? Yes. So initially, like I said, I first couldn't even find any accountants to take the work, to even work with me. So that was the first challenge was finding someone to even fill the needs of the work. Second, I had a payroll company that I was working with. They were a small payroll company and they kicked us out for working adjacent to adults, even though no money coming in and out of my account was related to adult content, because it was just in the arena, we were kicked out. What else has happened? I'm drawing a blank. The banking. I mean, schools don't want me to talk to them, right? Because even though I'm an entrepreneur, I'm closely related to adult content and porn. And that's something that I kind of have to reconcile and deal with forever. If you Google me forever, this is the basket that I'm in. Yeah. And yet again, it's just that you're helping these people, right? So it is unfortunate that that's the case. And so have you found a set of preferred vendors who are really good to work with? Because I'm thinking niche service offering, that seems like a great distinguishing factor for you too. Even if the performers or people that you're working with, if you're able to say like, hey, this bank is friendly, or this service line is friendly, that to them might mean almost just as much as the help with the tax, right? For sure. And we have a wide network. I'm working very closely with one CFP, one financial planner who I've always sent everyone to. As far as banks, online banks are usually the best, but really if you read the fine print on any of it, adult is not allowed. Anything sexually related is not allowed in banking. It's case by case a lot of times, but a lot of people who I've networked with, I don't trust to be honest. It's hard to find people. It's few and far between because people have shady intentions. I don't think they'll buy with our clients. They're not willing to do the research and the diligence on what it looks like to work with sex workers. So I do have like a small network of people who I send them to and trusted vendors. It could be bigger, but it means a lot the trust that clients have in me and my referral goes a long way. So I'm just a little hesitant to refer people too much. Yeah. Yeah, no, that makes sense. And speaking of kind of diligence and research and all that, like as like a young, small firm owner who says firsthand, I'm not super into the accounting, where are you going to do the tax research, right? Like with the new big, beautiful bill or whatever that might be. And you're trying to kind of roll that out to your client base. I mean, a big one being, there was talk of no tax on tips and all these things. Where are your resources for that type of kind of research to stay on top of all of that? I hire really smart people to start. So all the accountants that have ever worked for me are legit and have years of experience. So just surrounding myself with smart people. And then I have a couple mentors that I've met over time. I have a CPA in Las Vegas who used to be an IRS agent who's been an amazing resource. So he's someone, we just talked yesterday. Like anytime something changes, we're going back and forth on sending articles. I have Google alerts set on my phone for IRS updates. And a lot of things I've learned just on the fly. A client comes in with a problem. Okay, let's figure that out. Now I know how that works. Now I'm learning the nuances. So now in my mind, I've tied the tax things that I've learned more to clients than to actual concepts that you would read in a chapter book, I guess. Yeah, okay. And so it sounds like you've done a really good job of kind of like leveraging your network for this as well, like where needed. Back to the white labeling as well. Like what does that arrangement really look like? Like, is it kind of like, did you continue to own the client base there or were you kind of getting paid for lead gen or like, what did that look like? I was hard on owning the client base. That is, I'm the consultant, that's what it is. Like I, it's my client list. It's where my money is really. So, and they were fine with that. They were looking for the work. So we had a deal. They charge, I think they charged me a flat rate for each kind of tax return. So 1040, 1065, 1120S, that was a flat rate. And then I would just upcharge based on top of that. And because I can guarantee the amount of work to come in, they were flexible with their rates on it. And I think we had to sign an extra consent form, basically that the clients would sign along with our engagement letters. They were engaged with the only consultant in PrismaTax and separately there was a consent letter behind it saying that like, hey, this CPA firm is actually gonna file it. And they would file the returns. And then when they would send me the 1040 package back, I would go through and take out all the PDFs in the front that say like, thank you for using this firm, blah, blah, blah put in our colored ones. They would sign the e-file forms. I was just the middleman. A lot of clients I don't think ever even realized that it was a different firm. They didn't care. Yeah, I mean, at the end of the day, if they're receiving the service, that's totally okay. But you're the first person who's told me about that kind of white labeling as a way to start their practice. And I guess it depends where strength lies. If your strength was really in the lead generation side of things. Because oftentimes what people have done to bridge the service is actually the opposite. Is they go out on their own, but they've maybe taken a contract worth 50, $60,000 a year from an old firm that they had a relationship with and they were doing tax prep into that firm. But I find this to be a really, really interesting model because at a certain point, because you just own the client relationship. So at a certain point when you decide to walk, you already have a very good built out revenue base and you can just immediately go out and hire your own team, right? Exactly, yes. And from the client perspective, it's seamless. They're still working with me. They're still consulting with me. It's just changing who's doing it on the backend. I considered getting my CPA, but this was so urgent to do. There was no time. There was no time to become fluent in tax. I don't have time to study. This has to happen right here, right now. Otherwise someone else is gonna take it. So I was the first mover here and I've just been putting the pieces together ever since. But I'll tell you, this didn't start out as a $60,000 contract. I think the returns were like 500 bucks. I did my tax consultations for free for a year. So I didn't make any money really for a while. I was just working as a barista and trying to gather as much knowledge as I could on both sides. I'm learning from the accountants as they're sending in their returns. I'm learning from clients on how their business works. Those two parties are not compatible. So how do I position myself in the middle to facilitate this basically? Yeah, interesting. And then where'd your early staff come from? Did they come kind of after the news coverage of like, I wanna sign up and do this? Or, cause I imagine kind of recruiting, would maybe be difficult like in colleges, like you said, they don't necessarily wanna like associate. So like, or did you just hire under kind of prism attacks and like then introduce the idea later or what did that look like for you? I'm always super upfront from the top. If this is gonna be an issue for you, then you can't be here, okay? If you're gonna be a perv, we're gonna be looking at people, you're gonna be snickering, you don't agree with this, this is not for you and then it's fine, thank you so much. My initial admin, I had a friend who was living in Vietnam. She was there for like six weeks and then the pandemic hit and she got there, stuck there for like two years. So she was my first help as far as admin goes cause she had nothing but time, she'd work overnight and so she'd help me. The first accountant that I hired was the partner from the CPA firm in Buffalo. And so for that year, the 2023 year, he did all of the returns and then LinkedIn, I've been using LinkedIn beyond that. Cause now that I have, I would say that my goal of being on LinkedIn is really to attract talent. That's really, I'm not gonna find any clients on LinkedIn but I want Prisma Tax and The Only Consultant to resonate with the right accountants who are looking for a flexible schedule and are on board with new age of accounting, basically. Yeah, well, so let's get into that. Is that, I mean, cause there's a lot of very qualified accountants who listen to this and I know that there is kind of sub-segment of people listening who, or maybe the managers at the traditional firms who are like, there's something else for me in this industry, I don't wanna write off the industry but like, this ain't it, right? So is it like, it's a remote first firm? Remote first. We happen to be mostly in Houston, just by luck. That is just pure coincidence. It is not necessary. I hired my college best friend May 1st, who's also in Houston. So he's like helping with the bookkeeping and the operations. And then for the tax preparation, we're gonna be hiring someone full time in January but in the past, it's been a commission-based which works for everyone. Here's the terms, you get a commission of the fee, it's fair for you, it's fair for us. I don't need to sit on a big pile of money. I respect accounting professionals. If it takes you 17 minutes to do this return, it's because you have perfected your expertise to be able to prepare this in 17 minutes. I don't need to pay you hourly and try to get a deal out of it. So we have hard deadlines, like things will be due in 48 hours. That means Wednesday at noon, that is hard. Whenever you do that is not my business, really. Like I don't care when you do it. But now we are moving more to working loosely in business hours, loosely, but it's definitely not, I'm not that structured of an individual. Just be there for the team meeting and then whatever. Yes, we have a standing meeting at 8.30. We have, for the standing things that go on, we have just an ongoing teams chat and you're gonna work more during tax season. You're gonna work less over the summer. If you take a long lunch on a Thursday in July, I hope you have a nice time. But April 1st, I'll see you. Yeah, yeah, yeah. And like, what's the split of this? Is it like kind of overwhelmingly tax work or like, because when you mentioned bookkeeping, I'm kind of like almost wondering like, what are they looking for out of the bookkeeping other than maybe just being ready to file their taxes, right? But I could be missing something on that front. I'm curious to just understand even the build out of the firm. Yeah, so we have most of our clients are one time 1040 tax clients, which is annoying. A lot of people don't wanna have a 1040 focus firm, which I understand now that we're living it, but we've worked very hard to automate a lot of the processes. And we use a secure portal that has a chat function and there's followups and it's automated and I have videos. So it seems like you're talking to me, but it's all automated. And then everyone can get a 10 minute call with me at some point if they take me up on it. And I can just, some days I have 25 calls and I just knock them all out, but everyone feels like they talked to me and that justifies the whole experience and then they're happy about it. Then separately, we have clients who work with us on a monthly subscription basis. It's really a retainer, but we call it a subscription because everyone's. or familiar with it, especially now. And that basically includes everything. So you're basically financing all of your tax services with us for the year. So that's your 1040 or 1120S, your payroll, your bookkeeping, your LLC renewal, your tax planning, meeting with a financial planner, calculating your salary and your SEP. And then also kind of puts me in your back pocket if you want like a VIP, top tier white glove experience. So if you're about to buy a car, you can call me on the spot and I can help you work through that. If you're about to buy a house, clients are calling just for like random questions. So I think if you're a high earner, just the access is powerful. But yeah, for bookkeeping, I mean, people are paying out all kinds of money to their manager, they're paying contractors and they wanna make estimated tax payments. So they're usually keeping everything in a spreadsheet otherwise, but if you're making 125 grand a month, you really need to be in QuickBooks and it's worth it for you to have a little bit of bookkeeping done. Yeah, yeah, I guess I think I was just thinking of it as like an individual person, but that's not even the case anymore, right? I guess some of these are like full teams and like full like businesses in themselves, yeah. It's still individuals, they'll have like, an assistant, they'll do collabs with someone, but it's much more intricate than just, a person and their ring light and an iPhone, like there's stuff going on. But most people are keeping their expenses in a spreadsheet and then maybe we do a cleanup for them for a few hours when they come in for tax prep. Yeah, that's interesting. You seem like you've got a really kind of savvy way of kind of running this. And I think even just the idea of like going after this as like such an underserved market and becoming such a specialist in it is great. Where did you learn to run a firm? Like you mentioned you had a family member who was in that space or like, were there any resources that you really leaned on heavily for that or just kind of go by feel? I networked aggressively when I was working at the coffee shop. I was only there to network. The other, you know, other baristas come in, they don't have an agenda. The morning rush, I had my cards ready, Catherine Sudley, out to live, whatever that means to you within your moral compass. And I would just set up coffees with anyone who would meet with me. And if I wanted to meet with you, you would trip over me. I would literally like stalk you to your car until you sat down with me. And people who got it actually respected it. And I would just take notes on everything. And some person would give me one lead, you know, that I watched 10 YouTube videos on that. I didn't even know what an engagement letter was. I didn't know what an NDA was. I had no idea how any of this worked. So yeah, just calling everyone I know, being annoying until you'd go to lunch with me, taking notes on it. And then I watched a lot of YouTube videos, listened to a lot of podcasts and plus my own intuition, which I lean on a little bit too. So, you know, I feel like I have like the full data set. I would ask 10 people what they would do in this scenario, rate that, digest it, and then do what I think is best. And that's how I've moved. I had two calls this morning. I already did that today. I'm still doing that. Nice. Any specific podcast? For marketing, initially Gary V. Gary V can at least point you in the right direction on where to start on things. I listened to Neil Patel. I think he has one like marketing for the now. Not so much like about running a firm. There's a couple other tax ones I learned about, but I'm mostly worried about the marketing. And then which shows I'm not an operations girl. I'm not a systems girl. Well, you say that again. You're talking about, oh yeah, you know, we automated this, we have all of our secure portals and whatnot. So, I mean, you're not not, but yeah. I guess. I'm becoming, I'm becoming. And tech, network security, it's a whole thing as well that we've had to get into. But I enjoy every day being different. I enjoy learning about all kinds of things, tax included, even if it makes me a little bit sad. But yeah, I love being an entrepreneur and running a business. Happy to learn more. Cool. Well, this is awesome. I really appreciate you coming on to share your story. You know, unique, but maybe not quite as unique. Like, you know, you're running a firm, you're helping people. It sounds like, you know, you're running into mostly a lot of the same other problems other than maybe some vendors being a little bit more difficult to work with. But yeah, thank you so much for coming on, Catherine. And I'll make sure I link your contact information. It sounds like you do maybe have some hiring plans coming up in the future. So for listeners who want to check that out, definitely do get in touch. And if you just want to follow along the journey, it sounds like you've really got the kind of marketing part figured out, especially to kind of the younger demographic. Yes, that's my passion. But yeah, thank you so much for having me, guys. Give me a follow. I am always looking for smart, cool people. So please reach out. ♪♪♪ ♪♪♪