Drowning in Law

[Bowfinger]

Here's a good one that's I'm currently contending with.

A small company I worked for a number of years back approached me recently about fixing some of their software that has had some growing pains. I've met with them a couple of times, done some research into replacements, and put together a presentation explaining my solution. Everything looks great, other than the fact that regulation is getting in the way of me simply going in and doing the work.

They're running into a headcount problem. As soon as a company has 50 employees there's a lot of additional regulation that kicks in, which means additional expense for the company. Since I'd only be coming on for a single project and then leaving, it hardly makes sense to go to that trouble for the 9 to 12 months I'd be there. If the company has to absorb the cost of compliance and top of what they actually pay me to do the job, the ROI simply isn't there.

Well, then the next obvious solution is for me to do the work as an independent contractor, right? Not so fast. Their accountant quickly put the smack down on that idea. Due to the nature of the project, my work for them would fail most of the 20 Questions. If you're not familiar with the 20 Questions, go look them up. They're the rules that the IRS uses to determine if someones position actually qualifies as an independent contractor or not. For various reasons such as security, proximity to data, collaboration with their developers, etc. the IRS, should it choose to investigate, would probably classify me as an employee and levy fines against the company for mis-classifying me. Be aware that Obama has increased the number of positions for tracking down mis-classified employees, so the IRS is on the warpath. Now I'm sure these rules were done with the good intention of preventing some sleazebag from paying people $6/hr and calling them contractors so they don't have to provide benefits. In this particular case though, the IRS is protecting me from billing $65/hr. Oh, the horror.

So while we hash out our options and try to figure out a simple thing like me doing some work and the company paying me, I'll just continue to draw unemployment instead.

Now that's good regulation.

Sorry, that sounds unlikely to me. I'd bet their accountant doesn't know what he's talking about if you're truly looking at a relatively short-term contract for a specific project requiring special expertise (though I agree anything longer than six months raises a flag). Nonetheless, assuming the accountant is simply being reasonably cautious, there are all sorts of contracting companies out there that exist largely for situations like yours. You become an employee of the contracting company; they in turn contract you to your client. At the end of your contract, your employment is over and the IRS is happy as a clam. The contracting company gets a cut, of course, but that's the way capitalism works.

It is a good regulation, much as it complicates my life at times. It arose during the tech boom, when there were countless companies who abused the "contractor" status to save themselves money and to allow their de facto employees to under-report income and misuse Schedule C business deductions. These "contracts" often ran for years, with the "contractors" being treated exactly like the rest of the employees ... except on payday. It was being abused and it was reasonable to shut it down.

 

[Turin39789]

Kids, this is your brain on drugs.

Really?

http://en.wikipedia.org/wiki/The_One_on_the_Right_Is_on_the_Left

 

[BoberFett]

Sorry, that sounds unlikely to me. I'd bet their accountant doesn't know what he's talking about if you're truly looking at a relatively short-term contract for a specific project requiring special expertise (though I agree anything longer than six months raises a flag). Nonetheless, assuming the accountant is simply being reasonably cautious, there are all sorts of contracting companies out there that exist largely for situations like yours. You become an employee of the contracting company; they in turn contract you to your client. At the end of your contract, your employment is over and the IRS is happy as a clam. The contracting company gets a cut, of course, but that's the way capitalism works.

It is a good regulation, much as it complicates my life at times. It arose during the tech boom, when there were countless companies who abused the "contractor" status to save themselves money and to allow their de facto employees to under-report income and misuse Schedule C business deductions. These "contracts" often ran for years, with the "contractors" being treated exactly like the rest of the employees ... except on payday. It was being abused and it was reasonable to shut it down.

I understand about the past abuse of the contractor status, but with new rules about reporting 1099s shouldn't it be that much harder to cheat the system? As long as pay all my own taxes, who gives a damn who and how I work? Isn't that between me and my employer?

And if I work for a consulting company, then the people who are actually hiring me have to pay 30% over what they had budgeted for the project. So rather than being able to work for myself as any free man in a free country should be allowed to do, government regulation is forcing me to work for somebody else who can skim off my labor. I find that abhorrent. It's sad that you don't. And it's not capitalism, it's corporatism. Using the law to coerce an individual to make a company wealthier.

Again, this is simply regulation where it isn't needed. The reason we need these regulations? Because other regulations (in this case, tax code) are too goddamn difficult to follow. We need to begin figuring out how to simplify government. If anyone hasn't seen the movie Brazil, rent it sometime. That's where we're heading.

 

[Slew Foot]

Its very obvious who in this thread actually runs a business.

 

[BoberFett]

The true irony is that he is so blinded by his hatred of all things corporate/Republican that he doesn't realize that the nonsense he got caught up in with his well publicized troubles in Georgia is just another symptom of the very topic of this thread.

Yup, but Dave isn't the brightest bulb. I wouldn't expect him to make that connection.

 

[PJABBER]

Its very obvious who in this thread actually runs a business.

Hmmm. Kind of late into the thread, but I added an anonymous poll asking that very question.

I have and do.

 

[shira]

Hellooooo shira.

Welcome to the Internets.

This is your computer.

This is your keyboard.

Type in Google.

Type in "U.S. excessive regulation examples."

Countless examples appear.

It will seem like magic to a Phd physicist like you!



An excellent read in the entirety, full of examples -



A specific case not related to orchids -


I am sure that you, too, with a little effort, can find thousands of examples, learned commentaries and well crafted research on the topic.

Now if you would only try to do so yourself, before you post and before you criticize everyone else for, gasp! not doing it for you.

You're such a moron, you don't even understand the topic of your own thread. One can only conclude that your brain damage has interfered with your short term memory, so I'll re-post the highlight of your nonsensical OP:

In prior times such as this there was always one option to change the course of dependency on charity - go out on your own and do something, anything to make it. Once it was something as simple as selling apples from a push cart, it was homesteading, it was writing computer code.

The small businesses of America and entrepreneurship were always the way out of economic distress.

But, maybe, these are no longer a viable option. The sheer crush of law and regulation, the product of the busybee lawyers that constitute our government, has reached a critical mass, a mass that now stops initiative cold. It stops entrepreneurship and it stops the structural changes that distinguished America from its competitors.

YOUR so-called point is that regulation is strangling entrepreneurship in America. Of course, if you wish to back-peddle and abandon that ridiculous assertion, I'll let you (yet again) take your foot out of your mouth.

:awe:

 

[PJABBER]

You're such a moron, you don't even understand the topic of your own thread. One can only conclude that your brain damage has interfered with your short term memory, so I'll re-post the highlight of your nonsensical OP:

YOUR so-called point is that regulation is strangling entrepreneurship in America. Of course, if you wish to back-peddle and abandon that ridiculous assertion, I'll let you (yet again) take your foot out of your mouth.

No matter what you post, I hear crickets.

Why is that?

 

[Bowfinger]

No matter what you post, I hear crickets.

Why is that?

Because you're a partisan troll who consistently turns to evasion and flippant dismissal whenever you're corned in your own duplicity or inability to support your position with cogent, well-reasoned arguments.

 

[PJABBER]

Because you're a partisan troll who consistently turns to evasion and flippant dismissal whenever you're corned in your own duplicity or inability to support your position with cogent, well-reasoned arguments.

Link?

 

[Bowfinger]

I understand about the past abuse of the contractor status, but with new rules about reporting 1099s shouldn't it be that much harder to cheat the system? As long as pay all my own taxes, who gives a damn who and how I work? Isn't that between me and my employer?

Yes, it should certainly help with contractors under-reporting their incomes. It wouldn't help with de facto employees abusing business deductions, however. The IRS could compensate for that by stepping up its review and enforcement of Schedule C deductions, but that would then create its own burden on legitimate small businesses. If someone is really working like an employee, they should be treated as one.

And if I work for a consulting company, then the people who are actually hiring me have to pay 30% over what they had budgeted for the project. So rather than being able to work for myself as any free man in a free country should be allowed to do, government regulation is forcing me to work for somebody else who can skim off my labor.

You are still free to work for yourself as a free man. The issue is the company you want to work for decided that their requirements are for an employee. They could potentially structure your arrangement so you don't run afoul of the 20 Questions, but that would require them to grant you a degree of independence they're apparently not comfortable with. If the nature of the work is such that you simply cannot perform it without acting like as employee, well sorry, but they need stop trying to evade the law and hire you as an employee.

I find that abhorrent. It's sad that you don't.

If you say so. I'm afraid my outrage trigger is far less sensitive than yours. Hundreds of thousands of small businesses live with and even thrive with those rules. Why can't this company? Why should it be special?

And it's not capitalism, it's corporatism. Using the law to coerce an individual to make a company wealthier.

Indeed, that's what I've been saying for years. The system is rigged so the rich get richer. Somehow the righties think that's a good thing ... except when they can get political points by attacking the problems it creates.

Again, this is simply regulation where it isn't needed. The reason we need these regulations? Because other regulations (in this case, tax code) are too goddamn difficult to follow. We need to begin figuring out how to simplify government. If anyone hasn't seen the movie Brazil, rent it sometime. That's where we're heading.

To be pedantic, I don't think the issue here is the tax code. It's the other government reporting requirements and regulations businesses have to follow once they reach a certain size. While I agree it's more expensive and can be damned inconvenient, there are plenty of businesses who somehow work through it and still make a nice profit. I certainly agree government should be simplified, but that's like saying we should cut the budget. Sure, but what ... specifically? The devil is always in the details.

 

[Bowfinger]

Because you're a partisan troll who consistently turns to evasion and flippant dismissal whenever you're corned in your own duplicity or inability to support your position with cogent, well-reasoned arguments.

Link?

Sure.

 

[PJABBER]

Sure.

LOL!