8 ms·

the US system is ruthlessly hostile towards small business. politicians seem to talk about "small business" but do nothing, only use it as a political tool onl

by bnolsen 13y ago

the US system is ruthlessly hostile towards small business. politicians seem to talk about "small business" but do nothing, only use it as a political tool only.

tptacek 13y ago
Where by "ruthlessly hostile towards" you mean "unusually hospitable to", for instance by providing contract liability limitation that you can get over the Internet for less than 100 bucks, at-will employment in virtually every state, special income tax breaks for small business owners, a very straightforward bankruptcy mechanism, contract enforceability that is accessible enough for small accredited investors to fund companies with boilerplate documents, and so on?
- edj 13y ago
  On top of all that, most companies start out violating all sorts of laws and get away with it here in the US. Example: a friend of mine makes artisanal chocolates. When he started out he didn't have a licensed kitchen, any kind of food/health license, or sales tax collection. Nobody cared. Why? Because he got compliant before his company grew enough to be on anyone's radar. Here in the US you can launch first and worry about legal compliance later.* *Not for all industries or all definitions of "later".
  - tptacek 13y ago
    That's a good point, and while it sounds fuzzy, it actually has roots in a formal difference between the US and most other countries: our system is rooted in common law, which implies that most regulatory questions are punted to the courts. (There's a downside too; it can be trickier to find out what's lawful or not, since you might have to look up court precedents).
- walshemj 13y ago
  Having to deal with Federal, 52 states and local taxes certainty looks insane from outside compare the UK all a business needs to handle tax is deal with VAT (sales tax) NI (SS tax) and Income tax.
  - to3m 13y ago
    And corporation tax, you'd hope...
  - tptacek 13y ago
    Doesn't the UK have a mandatory 20% VAT? Isn't that strictly more onerous than anything you'd face in the US? Are UK taxes generally so simple that you'd recommend a business owner not retain an accountant?
    - to3m 13y ago
      VAT is a bit tiresome. Some goods are non-VATable, some are 0% rated, and there is also a 5% rate for certain types of fuel. You have a couple of options for how you deal with VAT, with one option allowing you to count any VAT on outgoings against the VAT payable - and there's a certain amount of record-keeping required if you want to take advantage of that. But I know one person who has done his own accounts (small company, 3 people I think, accounts included VAT and payroll) and he didn't seem to think it was too bothersome. The documentation provided by the UK tax authorities is actually generally pretty good. But the punchline to his story was that when he eventually hired an accountant, mainly to save time, it turned out he'd missed a number of opportunities to take advantage of this or that way of reducing tax payments. So it seems like the DIY approach might not get you in hot water, but a lack of relevant training and experience could still prove costly. Based on this story I signed up for an accountant from day 1 ;)
      - tptacek 13y ago
        My mental model here is that taxes in the US and UK are roughly equivalently complicated --- uncomplicated enough that many businesses forgo accountants, but complicated enough that most businesses shouldn't do that. Meanwhile, my model says that taxes in the UK are more onerous than those of the US. The UK has the NIH though; maybe in 10 years the Obamacare/Switzerland-Lite model will prove itself superior to the NIH, but it's not there yet.
        13y ago

by bnolsen 13y ago

the US system is ruthlessly hostile towards small business. politicians seem to talk about "small business" but do nothing, only use it as a political tool only.

tptacek 13y ago

Where by "ruthlessly hostile towards" you mean "unusually hospitable to", for instance by providing contract liability limitation that you can get over the Internet for less than 100 bucks, at-will employment in virtually every state, special income tax breaks for small business owners, a very straightforward bankruptcy mechanism, contract enforceability that is accessible enough for small accredited investors to fund companies with boilerplate documents, and so on?

edj 13y ago
On top of all that, most companies start out violating all sorts of laws and get away with it here in the US. Example: a friend of mine makes artisanal chocolates. When he started out he didn't have a licensed kitchen, any kind of food/health license, or sales tax collection. Nobody cared. Why? Because he got compliant before his company grew enough to be on anyone's radar. Here in the US you can launch first and worry about legal compliance later.* *Not for all industries or all definitions of "later".
- tptacek 13y ago
  That's a good point, and while it sounds fuzzy, it actually has roots in a formal difference between the US and most other countries: our system is rooted in common law, which implies that most regulatory questions are punted to the courts. (There's a downside too; it can be trickier to find out what's lawful or not, since you might have to look up court precedents).
walshemj 13y ago
Having to deal with Federal, 52 states and local taxes certainty looks insane from outside compare the UK all a business needs to handle tax is deal with VAT (sales tax) NI (SS tax) and Income tax.
- to3m 13y ago
  And corporation tax, you'd hope...
- tptacek 13y ago
  Doesn't the UK have a mandatory 20% VAT? Isn't that strictly more onerous than anything you'd face in the US? Are UK taxes generally so simple that you'd recommend a business owner not retain an accountant?
  - to3m 13y ago
    VAT is a bit tiresome. Some goods are non-VATable, some are 0% rated, and there is also a 5% rate for certain types of fuel. You have a couple of options for how you deal with VAT, with one option allowing you to count any VAT on outgoings against the VAT payable - and there's a certain amount of record-keeping required if you want to take advantage of that. But I know one person who has done his own accounts (small company, 3 people I think, accounts included VAT and payroll) and he didn't seem to think it was too bothersome. The documentation provided by the UK tax authorities is actually generally pretty good. But the punchline to his story was that when he eventually hired an accountant, mainly to save time, it turned out he'd missed a number of opportunities to take advantage of this or that way of reducing tax payments. So it seems like the DIY approach might not get you in hot water, but a lack of relevant training and experience could still prove costly. Based on this story I signed up for an accountant from day 1 ;)
    - tptacek 13y ago
      My mental model here is that taxes in the US and UK are roughly equivalently complicated --- uncomplicated enough that many businesses forgo accountants, but complicated enough that most businesses shouldn't do that. Meanwhile, my model says that taxes in the UK are more onerous than those of the US. The UK has the NIH though; maybe in 10 years the Obamacare/Switzerland-Lite model will prove itself superior to the NIH, but it's not there yet.
      - 13y ago