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Re: California Assembly Bill 5 - Upwork Comment

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Active Member
DJ B Member Since: Feb 23, 2018
31 of 84

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.

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Community Guru
Preston H Member Since: Nov 24, 2014
32 of 84

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"

 

Screen Shot 2019-12-27 at 3.32.32 PM.png

 

 

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.

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Active Member
DJ B Member Since: Feb 23, 2018
33 of 84

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!

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Rene K Member Since: Jul 10, 2014
34 of 84

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
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Community Guru
Jennifer M Member Since: May 17, 2015
35 of 84

my god $800 to form an LLC? lol

 

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

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Rene K Member Since: Jul 10, 2014
36 of 84

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
Community Guru
Preston H Member Since: Nov 24, 2014
37 of 84

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.

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Community Guru
Jennifer M Member Since: May 17, 2015
38 of 84

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.

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Community Guru
Miriam H Member Since: May 16, 2017
39 of 84

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.   Smiley Happy

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Community Guru
Jennifer M Member Since: May 17, 2015
40 of 84

Miriam H wrote:


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


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.

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