Wednesday, January 27, 2010

Why is Small Business Not Hiring?

By: Bill Watson

I am in business for myself. My number one goal, besides making
a profit, is not having employees. I wonder how many other small
business owners feel the same way? It's no surprise that the
unemployment rate hangs above 10%. The government is smothering
small business. Too bad Obama only hires Ivy League academics
with big business buddies for advisers.

I used to have employees. My business was providing marketing
research, sales consulting, and sales services to small
technology companies. All my employees worked from home and were
located in several states. The work was all on computers and
phones. It seemed so simple.

Enter the IRS. They have rules. You can buy the 20 volume "US
Code of Federal Regulations" written by the IRS from the
Government Printing Office for $974. This does not include
around 100 volumes of the court tax cases nor individual state
tax laws. If a business has employees they are required to know
the latest tax rules and pay federal taxes, state taxes, social
security taxes, and employment security taxes for each employee.
If you happen to make a mistake you could face interest, fines,
and imprisonment.

I had one employee in Oklahoma who I had to let go due to tax
issues. Oklahoma could not agree on how to classify my business,
so they were going to charge a tax on my services. It is really
important to know which box to check on these government

Deductions are another wild ride on the IRS train. I guess it is
made complicated by all the big shots paying for legislators to
give them loopholes. I spend a lot of time looking for
loopholes. For example, take the vehicle deduction. Everyone I
know uses the per mile formula for getting their deduction. It
is certainly easy. Did you know there is another way to deduct
your car? It is called the Actual Method. You deduct all
expenses of the vehicle including depreciation. It is
complicated to do, but you will have a much larger deduction.
IRS = time and money. Good for lawyers and accountants, bad for
small business.

Enter the Obama administration. They were elected on the
promises of higher taxes, nationalized healthcare, and Cap and
Trade. All the stimulus money given to Wall Street and state
governments are just late additions to the power game. All of
this spells death to the small business. Thank goodness we are
still a capitalist economy with the hope of large profits to
cover massive government intrusions.

Now that the banks have been saved, everyone wonders why people
are not lining up to borrow money. I can answer that - small
business owners are scared to death! Why would they take a risk
and borrow money knowing they will have to adjust their business
to every whim of this gigantic government?

If I need help now, I pay independent contractors. A 1099 form
for each contractor at the end of the year and it's done. It's
not the best way to do business, but it's safe. Nationwide, this
is not good for the economy.

Small business is not looking for a government handout or
bailout. We just need the government to get out. If the
government really wants people working and the economy to grow,
look to small business. Reduce the tax burden, relax the rules
on employment, and stop protecting big business.

About the author:
Bill does online marketing for small business. Check out his
political blog at

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