Re: California Assembly Bill 5 - Upwork Comment

DJ B · Dec 27, 2019 11:42:26 AM

This is the biggest concern for me. Employers are going to be confused by the law and default to either hiring as W-2 or simply avoiding Caifornia-based freelancers altogether.

I don't particularly mind being paid as a W-2 employee as long as I keep my independent status (i.e.; not report to an office or be subjected to annual reviews if that's not what I want). A previous commenter mentioned being paid less because taxes are taken out as a W-2 employee. This is true, but in reality you still pay those taxes when you file, as self-emplyment tax (sometimes more). So you don't really get paid less as a W-2, it's just taken out in advance of filing your taxes.

Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year. Other states are easier to do business in that way. It's tempting to leave!

I believe that after January, the CA legislature will be meeting again to discuss AB5 and hopefully correct what's wrong with it. It originated from Uber drivers who were concerned they didn't have union representation or benefits, but they didn't think through the repercussions and how many people (who actually want to be independent) would be adversely affected.

Preston H · Dec 27, 2019 02:24:46 PM

re: "It's tempting to leave!"

You have read the news. You know that lots of people and businesses have already left.

Not just for this reason. Number one cause of people leaving California is cost of housing and rent. I was raised in California. I would not move back there. The numbers don't add up.

Any freelancer can "get a raise" just by leaving California.

From "States with the highest and lowest taxes"

re: "Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year."

It costs $150 in Wyoming.

In Arizona you do not need to pay annual renewal fees.

DJ B · Dec 27, 2019 05:09:34 PM

I hear you. I grew up in Arizona, it's a much better state for business in general. The only wrinkle is that I've built a custom screen printing business here, so if we move to another state we could lose a lot of our customer base. It's a conundrum!

Rene K · Dec 30, 2019 09:48:23 AM

Preston H wrote:

re: "Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year."

It costs $150 in Wyoming.

No, it's $50 in Wy.

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"Where darkness shines like dazzling light" —William Ashbless

Jennifer M · Dec 30, 2019 10:20:40 AM

my god $800 to form an LLC? lol

I would love to live in Commiefornia for the weather, but those laws, mang.

Rene K · Dec 30, 2019 12:01:11 PM

Jennifer M wrote:
my god $800 to form an LLC? lol

Not only to form it, but to maintain it every year...

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"Where darkness shines like dazzling light" —William Ashbless

Preston H · Dec 30, 2019 11:49:42 AM

About Wyoming:

I think it is $50 to form LLC, plus an annual $50, plus whatever fee you are charged by a service provider (not required, but more convenient). You can do the whole thing online conveniently through a few places for $150.

That doesn't mean everybody SHOULD form an LLC in Wyoming, but if you need an LLC, and location does not matter, it is a more affordable option than going elsewhere.

Jennifer M · Dec 28, 2019 09:06:52 AM

DJ B wrote:
This is the biggest concern for me. Employers are going to be confused by the law and default to either hiring as W-2 or simply avoiding Caifornia-based freelancers altogether.

I don't particularly mind being paid as a W-2 employee as long as I keep my independent status (i.e.; not report to an office or be subjected to annual reviews if that's not what I want). A previous commenter mentioned being paid less because taxes are taken out as a W-2 employee. This is true, but in reality you still pay those taxes when you file, as self-emplyment tax (sometimes more). So you don't really get paid less as a W-2, it's just taken out in advance of filing your taxes.

Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year. Other states are easier to do business in that way. It's tempting to leave!

I believe that after January, the CA legislature will be meeting again to discuss AB5 and hopefully correct what's wrong with it. It originated from Uber drivers who were concerned they didn't have union representation or benefits, but they didn't think through the repercussions and how many people (who actually want to be independent) would be adversely affected.

The problem with them taking more taxes is that in a w-2 job you almost always get ridiculous amounts of money back from the IRS and this is *bad.* You're just giving the government money and trusting they will give it back. lol You want to cut even ideally in April or at the worst owe a little bit and pay them. When I was w-2, I'd get like $4000 back from the IRS (Bad) now that I'm 1099, I can control it and basically cut even. Last year I got $300 back.

Miriam H · Dec 28, 2019 10:15:32 AM

Jennifer M wrote:
The problem with them taking more taxes is that in a w-2 job you almost always get ridiculous amounts of money back from the IRS and this is *bad.* You're just giving the government money and trusting they will give it back. lol You want to cut even ideally in April or at the worst owe a little bit and pay them. When I was w-2, I'd get like $4000 back from the IRS (Bad) now that I'm 1099, I can control it and basically cut even. Last year I got $300 back.

That actually sounds like a withholding issue - not a W-2 issue.

Jennifer M · Dec 28, 2019 10:32:17 AM

Miriam H wrote:
That actually sounds like a withholding issue - not a W-2 issue.

yeah, I know you can claim like 5 dependents lol. But I always just claimed 1 like normal and would get thousands back.It started when I owned a home rather than renting.