I recently set up my business to have “legitimate” employees and instituted payroll. I have had employees for a while, but I’ve been paying them their wages and simply 1099ing them at the end of the year. Basically, I was paying them as contractors, rather then employees, because, well, it’s just easier that way. Since my girls have been working with me for a while now, I figure I better legitimize the whole employee thing, since we are going to be hiring more employees soon.
After going through this process, I totally understand and AGREE with why every big company in the USA is outsourcing overseas.
In order to be able to legally pay someone to work for you, you need to apply for an EIN (Employer Identification Number) with the federal government. Then you need to apply for an EDD (Employment Development Department) account with the state (California in my case). Both the government and the state then send you piles of shit to read and forms to fill out, which you need about a week to read through and a college degree in Human Resources to understand.
Then, of course, comes the taxes. Which is the only real reason why you are required to “register” with the government and the state.
I ran my first payroll last week and paid $1368 in wages to my employees. I then had to turn around and hand an additional $486 in taxes to the government and to the state. So I have to pay almost $1000 a month to pay employees $2800. Does that seem right to you? I get fined (taxed) for creating jobs in the state of California. Great fucking plan, America.
So this brings me to my point: Everyone wants a piece of my pie.
- Just being self employed incurs an additional 15% Self Employment Tax from the government. This is on top of the everyday taxes that everyone pays.
- You have to pay the County Recorder to register a business name.
- You have to pay the city annually for a business license AND they require that you pay them a percentage of sales (WTF?!).
- You have to pay the government and the state in order to employ people.
The list of “taxes” keeps growing as my business grows and it’s really annoying. The business keeps grows but I keep making less money. Nonsensical…