I just heard last night about a California state proposal to begin to require companies to withhold three percent of all monies paid to 1099 independent contractors.  MANY organizations are opposing this for the following reasons:

• Extra costs for local governments to enforce the withholding
• Extra costs for businesses to administer the withholding
• This is not incremental revenue for the state…just accelerated revenue

These are some good reasons…but I have a few more that impact me personally…

• I use subcontractors and pay at least 10 subcontractor invoices each year…I would need to do accounting/reporting/payment on each of those to the state (monthly? quarterly?)
• This is a double-hit since I would be receiving three percent less on all of my own project invoices, even though I’m already required to pay 70% of my estimated state taxes by June 30th for at least the next two years

Any of you who are independent contractors and 1) pay estimated taxes and/or 2) hire subcontractors/1099 resources will also be impacted.

The California Chamber of Commerce, California Special Districts Association, and others are encouraging anyone in opposition to this proposal to write letters to your California Senators and Assemblyman.  See this link to get the info you need to identify who to write to, including their mailing address.  See a sample letter/template to inspire your creativity (you’ll need to ‘make it your own’ since this is a template for businesses/CEOs to send).

Hearing about this proposal makes me realize that I need to stay much more informed about legislative issues that impact my business…good sources of information for small businesses and independent contractors: California Chamber of Commerce, National Association for the Self-Employed, and National Association of Women Business Owners.   We all need to stay informed!

By: Jen Berkley Jackson