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When people say "overregulation hurts small business in California," here's an example. Imagine just wanting to sell people coffee and not knowing you need to w

by chomp 9y ago

When people say "overregulation hurts small business in California," here's an example. Imagine just wanting to sell people coffee and not knowing you need to warn people about cancer risks of all things! Imagine getting fined by this regulation, or the myriad of others of which you could possibly run afowl. Just yikes.

fapjacks 9y ago
Don't forget about the $800 Alternative Minimum Tax faced by every company registered in the state (or doing business in the state, or having workers in the state, or...). That's $800 even if you make zero dollars, or if you're a nonprofit, or if you lose money. California literally says "for the privilege of doing business" in the state. The ole small business assassination program.
- techsupporter 9y ago
  > California literally says "for the privilege of doing business" in the state. I'll start out by saying that I think that an $800 minimum is waaaay too high. But I continue by pointing out that it's not for "doing business," it's a tax for having the legal fiction of limited liability[0] enforced by the state. You only pay the minimum tax if you are a corporate entity (Inc or LLC). That's a subtle, but in my opinion important, difference. If you're willing to transact business in your own name as your own personal liability, the state--at least for this tax; I'm not conversant with the full roster of non-corporate business taxes in California--doesn't charge you for the privilege. If you want the shield of your personal assets separate from your corporate persona then, yes, the state charges you for that privilege. Every state has some sort of fee or tax. Some are very small (Wyoming is only $30 or $40, I believe) while some, like California's, are quite large on the minimum end. 0 - https://www.ftb.ca.gov/businesses/faq/712.shtml https://www.ftb.ca.gov/businesses/faq/712.shtml
  - fapjacks 9y ago
    So the state tax code literally says, "For the privilege of doing business in the state". [0] Their words, not mine. Whatever way you describe or justify it, the state defines it in this way specifically. Also, sole proprietorships can only be for-profit ventures in California. So if you wanted to start a non-profit, you're paying the AMT. [0]: http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-23455.html http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-se...
- dnomad 9y ago
  When people talk about California regulations driving away business it's always an immediate sign to me that they either watch too much Fox News or they're simply talking the book. First off, $800 is probably too low. It's in California's interest to drive away low margin businesses. If your business really struggles to pay $800 then you should move to Texas or Wyoming. $800 is unlikely to get you even a parking space. Second, all actual data, actual evidence, not handwavy whining about regulations, indicate California is still far and away the most dynamic economy in the US with the best business growth [1]. Now you might argue California's growth would be even more extraordinary with less regulations (though again, if people ever bother to open a book and learn from the past they'd see most deregulation efforts eg electricity have done more harm than good) but this is a far cry from what may be the most dynamic economy in the world hosting a "small business assassination program." [1] https://www.ocregister.com/2017/08/28/what-business-exodus-california-tops-in-u-s-for-company-creation/ https://www.ocregister.com/2017/08/28/what-business-exodus-c...
  - fapjacks 9y ago
    I ran a nonprofit for veterans for several years which moved about a thousand dollars a year. When I moved to California, I wanted to keep running this nonprofit, because it was actually really helping some folks out in ways that other charities don't have the granularity to know about. So here is one example of "actual data, actual evidence, not handwavy whining about regulations" -- classy! -- of a business that "couldn't even get a parking space" which the California AMT killed.
    - cge 9y ago
      So are you saying that your non-profit was not an exempt organization? Again, the tax you refer to does not apply to exempt non-profits, such as public charities and private foundations.
- raverbashing 9y ago
  Att the same time you can sell some new hipster fad and get the 800 pretty quickly I joke, but there's a reason why small business don't move to rural America, even if they would pay much less taxes and running costs.
- cge 9y ago
  No, the minimum franchise tax you refer to (not alternative minimum tax, a completely different tax) does not apply to every company in the state. In particular, it does not apply to non-profits with exempt organization status, which are what people generally think of when they think of non-profits. While my experience is with exempt organizations, my understanding is that the non-profits it applies to are non-exempt non-profits, such as homeowner's associations.
jlarocco 9y ago
I used to think along the same lines, but then over and over again companies demonstrate that they can't be trusted to do the right thing if doing the right thing will cut into their profits. This particular case is a little silly, but what's the alternative? "Use common sense," is too vague and easy to abuse, so this is what we get.

by chomp 9y ago

fapjacks 9y ago

Don't forget about the $800 Alternative Minimum Tax faced by every company registered in the state (or doing business in the state, or having workers in the state, or...). That's $800 even if you make zero dollars, or if you're a nonprofit, or if you lose money. California literally says "for the privilege of doing business" in the state. The ole small business assassination program.

techsupporter 9y ago
> California literally says "for the privilege of doing business" in the state. I'll start out by saying that I think that an $800 minimum is waaaay too high. But I continue by pointing out that it's not for "doing business," it's a tax for having the legal fiction of limited liability[0] enforced by the state. You only pay the minimum tax if you are a corporate entity (Inc or LLC). That's a subtle, but in my opinion important, difference. If you're willing to transact business in your own name as your own personal liability, the state--at least for this tax; I'm not conversant with the full roster of non-corporate business taxes in California--doesn't charge you for the privilege. If you want the shield of your personal assets separate from your corporate persona then, yes, the state charges you for that privilege. Every state has some sort of fee or tax. Some are very small (Wyoming is only $30 or $40, I believe) while some, like California's, are quite large on the minimum end. 0 - https://www.ftb.ca.gov/businesses/faq/712.shtml https://www.ftb.ca.gov/businesses/faq/712.shtml
- fapjacks 9y ago
  So the state tax code literally says, "For the privilege of doing business in the state". [0] Their words, not mine. Whatever way you describe or justify it, the state defines it in this way specifically. Also, sole proprietorships can only be for-profit ventures in California. So if you wanted to start a non-profit, you're paying the AMT. [0]: http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-23455.html http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-se...
dnomad 9y ago
When people talk about California regulations driving away business it's always an immediate sign to me that they either watch too much Fox News or they're simply talking the book. First off, $800 is probably too low. It's in California's interest to drive away low margin businesses. If your business really struggles to pay $800 then you should move to Texas or Wyoming. $800 is unlikely to get you even a parking space. Second, all actual data, actual evidence, not handwavy whining about regulations, indicate California is still far and away the most dynamic economy in the US with the best business growth [1]. Now you might argue California's growth would be even more extraordinary with less regulations (though again, if people ever bother to open a book and learn from the past they'd see most deregulation efforts eg electricity have done more harm than good) but this is a far cry from what may be the most dynamic economy in the world hosting a "small business assassination program." [1] https://www.ocregister.com/2017/08/28/what-business-exodus-california-tops-in-u-s-for-company-creation/ https://www.ocregister.com/2017/08/28/what-business-exodus-c...
- fapjacks 9y ago
  I ran a nonprofit for veterans for several years which moved about a thousand dollars a year. When I moved to California, I wanted to keep running this nonprofit, because it was actually really helping some folks out in ways that other charities don't have the granularity to know about. So here is one example of "actual data, actual evidence, not handwavy whining about regulations" -- classy! -- of a business that "couldn't even get a parking space" which the California AMT killed.
  - cge 9y ago
    So are you saying that your non-profit was not an exempt organization? Again, the tax you refer to does not apply to exempt non-profits, such as public charities and private foundations.
raverbashing 9y ago
Att the same time you can sell some new hipster fad and get the 800 pretty quickly I joke, but there's a reason why small business don't move to rural America, even if they would pay much less taxes and running costs.
cge 9y ago
No, the minimum franchise tax you refer to (not alternative minimum tax, a completely different tax) does not apply to every company in the state. In particular, it does not apply to non-profits with exempt organization status, which are what people generally think of when they think of non-profits. While my experience is with exempt organizations, my understanding is that the non-profits it applies to are non-exempt non-profits, such as homeowner's associations.

jlarocco 9y ago

I used to think along the same lines, but then over and over again companies demonstrate that they can't be trusted to do the right thing if doing the right thing will cut into their profits. This particular case is a little silly, but what's the alternative? "Use common sense," is too vague and easy to abuse, so this is what we get.