Politics vs. Bureaucracy and how both impact your Small Business – Small Business Show 86

The Small Business show, episode number 86 for Wednesday, September 28, 2016. Greetings, folks, and welcome to the Small Business show here at BusinessShow Co, the show by, for and about small business owners Here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. You'll growl in your voice there when you started. I like that.

Yeah, you know, we. So we're. We decided we're going to talk politics today, folks. So I figured a little growl might be a good idea because I have no idea where that's going to go.

Yeah, that's true. That's true. This is kind of an unscripted show. Well, not that they're really scripted anyway, but not a lot of notes. I just thought about it, you know, with so much political theater going on. That's a good word for it.

Yeah. Yeah.

You know, I, I started thinking of, you know, how does it, you know, how do politics really impact us as small business owners? And I thought it was worth, you know, taking a little bit of time or all of our time today and talk about it.

And this is to be fair and just to keep our listeners informed. This is a conversation I don't think you and I have ever had.

I don't think so.

No. I typically don't talk politics with people, largely because I think I'm insane. And I'll just say that right out of the gate. So here's. We should preface this, and I'll just say this. I am a very logical person. I'm typically a very logical thinker. So I think in my own mind.

I am a logical thinker.

Right?

Yes.

And so I have read a lot about our political system, and I've examined it and I pay attention to it. But Occam's Razor is something that carries strongly with me. The simplest answer to the question generally is right. And for me, with our political system, I want to paint a picture for you. It's a very small picture. How could it possibly be that. That someone who is in charge or the people who are in charge of either the world or the world's greatest power, would let the will of the people, the great unwashed, impact their ability to maintain that power every four years? And I just don't think that that's what happens. You know, I agree, if you want to call it a shadow government or anything, I mean, you know, I do love my tinfoil hat. I emotionally support all conspiracy theories, but I don't intellectually support all of them, of course. But this one, I Feel like we're in the middle of a presidential election thing. And I actually, I think there are some important things that happen because of who's president. But I really don't think it changes how the world is ruled. And I think it really is entertainment for the rest of us. Political theater is a great term. I've never thought of that or heard that before. But I think it mostly keeps the rest of us occupied while the people that are in power stay in power.

Yeah. And I actually think that.

So now we've abandoned all of our listeners have left. Cause I think I'm insane.

No, no. I think a lot of people even not on a conspiracy level. I always tell my kids we talk a lot of politics or teenagers and like my daughter, this will be her first presidential election. And so we talk a lot about it. And I said, you know, the, it's critically important, register to vote, you know, get your voice heard. But your to your point of how it impacts your life. I also believe that the presidential election really could, it could have the least impact on it out of all of the other things. But between your state politicians and, and your local politicians, very. And you know, impactful on your day to day life. Certainly president, you know, Supreme Court picks this kind of stuff. Yes. But there's so many checks and balances in place with a president. I'm not sure other than political theater and how we're viewed by the rest of the world, I don't think it impacts us very much.

Yeah, yeah. And that's the way I feel too. I will say this though. I think whoever is president in that role as figurehead really defines what our children, especially our young children see, you know, and how they perceive the world to be. And I think that's, I think that's actually really important as you know, a father of two kids. But I think that's, you know, that's probably to me the most impact that person has is on kind of the national discussion.

Yeah. And we talk a lot about when we talk politics to look behind the message and who's sending the message. You know, I always make the comment that, you know, the folks that want to, you know, require us to use a special light bulb typically live in, you know, houses that are three or four times the size of us and burn way more energy or you know, are flying around the country or the world in jets and limousines and would like us all to drive in a self driving, you know, battery operated little car.

Sure.

You know, so you got to look behind, you know, where, where's that?

All the money.

Yeah. Where, where what, what do they have to gain? You know, there is a, there's a purpose, you know, to, to, to all of that. So we, we talk a lot about that and, and I, and I too believe that like you said, setting the tone of, of things and, and keeping, and keeping. It's very important for me to have an optimist, you know, in, in politics to where you're like, hey, you know, if things, even if things aren't as good as they can be, we're going to make them better and we're going to do this, we're going to do that.

That's interesting. I never, I never thought about it that way. That.

Yeah.

Huh. I never. Huh.

Because don't you want to get, you know, don't you want, I mean everybody wants everything, things to be better or people have it. Well, I guess you could look at the flip side too. There is a, a certain portion of the, the public that have things just the way they want them and they don't want them to change. And then there's a portion of the population that doesn't have things the way they want them and wants them to be, quote, better, whatever that, whatever that is, whatever that is. So I'm going to vote for X because they're going to make it better, you know, for me. And if you do any political reading, you know, you'll see that oftentimes, you know, you know, authors, you know, publishing articles in online or in magazines, whatever, will often phrase it as well. If, if your life is like this and you're happy with this, well, this is the candidate that you would be happy with. And if you're not, then this is the candidate, you know, so, but, but having an, an optimistic outlook I think is a really powerful message to send because like again, go back to my kids, you know, there's a lot of negativity in the world and the way things are going to be and how it's this and all that. And I made a comment to Skyler, I said, hey, don't ever let anyone tell you that the world is not going to be better for you when you grow up, when you become an adult. That is ridiculous because that's a cop out. It's up to you. It's a cop out. And she believes very different things than I believe. But you know, I'm an old man and I said I would be, I would be disappointed as an 18 year old, you know, very smart young woman if you agreed with Everything that I agreed in. It wouldn't make any sense.

No, that doesn't make sense. Yeah. Right.

It wouldn't make any sense.

So. And it wouldn't be true. She would just be doing it because she felt like she couldn't disagree with you.

Yeah. She'd be mimicking it to make me happy.

Right.

Which, you know, hey, that might be great for a little while, but not. Look how small.

Somebody that thinks exactly the way I do. That's actually awful. Yeah, it is awful. That's right.

That's right. Yeah. So, you know, from a, from a business standpoint, I think it's the same thing. I don't think the, the who's the president is going to impact your small business very much. I believe far more applicable. What's going to happen is your state.

Yeah.

And local politicians and laws that are going to impact you all the time.

I totally agree. Ye. No, I don't. There is so little that can happen at the national level that's really going to impact a small business. Although I will say this, the health care thing has.

That did impact us.

Impact it. Well, yeah, it depends on where you draw the line for small business. Because technically it did not impact small business. Right. Under 50 employees. And you don't have to, you don't have to do that. Right. But. But now, what's this new. This new thing with, with minimum wage versus salaried employees. Right.

Yeah.

You have to pay your salaried employees a minimum of what, 60 grand a year if they're exempt from overtime, Is that right?

I think so. That's right. Yeah. So it really changes the, the definition of that. So maybe that's, That's a good thing to point out. That's Federal labor laws certainly would impact you.

Right.

And whether the, whether the, where that comes from, whether it's a congressional thing or, you know, that kind of thing, or a Supreme Court thing. So. Yeah. That's going to impact how you classify your employees, whether they're exempt. And it used to be. Well, if you were a supervisor and you managed, I believe it was two or more people, you could be considered an exempt employee.

Right, right.

And it was pretty simple.

And this is exempt from getting overtime pay is what exempt means.

Yes, yes. And. But on the flip side, you were also kind of exempted from. You didn't have to keep track of your time.

That too. Correct.

So that was the benefit. It's like, hey, you need to go to your kids thing or you have to leave early today. No problem. We just expect you to make it up and get your job done and produce your, you're rated on what your output is, whatever that, how whatever measurement is used. Sales or, you know, whatever production, that's what you really measured on. Not that, oh, hey, you left it half an hour early. Did you clock out or you had a doctor's appointment in the morning and came in two hours late. Did you put that on your timesheet or your time card? Yeah, we're not going to pay. You don't do.

That's right.

Yeah. You don't do that. So I think it's going to be a shock to some people because they will get reclassified and, you know, anytime there's money involved, the business is going to decide, well, we just can't afford more overtime.

Right, right.

Because it's, you know, time and a half. So if you got a guy that's, you know, making 20 bucks an hour, as an example, you're going to pay him 30.

Right.

And so you're going to be very, you're going to watch that carefully. And that person then will also have to regulate their time a little bit more.

That's right.

So they become like an hour.

This is interesting because, and I was wrong, it's not 60, it's 47,000. It's $48,000.

Okay.

47. 47 6. That's the number. 47,476 is the right way to say that. And as of the ruling came out in May, and by December 1st of this year, all exempt employees must be paid more than $47,000 a year. 47,476. And otherwise you have to, you have to either raise their salary to that or you have to turn them into an hourly employee that is capable of earning overtime.

Overtime.

Yeah. And so that is something at the federal level that impacts us. And I'm trying to think I need to look this from the standpoint of commissioned people, too.

I'm sure there's some, there's got to be definitely some, you know, regulations related to that as well and how you handle that.

Yeah.

For commission salespeople, because they're loose as well. Right. Their time is this and that and they're maybe.

But they do have, well, I mean, at my business, our commission salespeople have a base pay and then they earn their commission on top of that. So. Yeah, yeah. So that's an interesting thing. And here's the, here's your tangent that makes listening to our political drivel worthwhile. Pay attention to that because you don't want to get whacked. I'm sure there's some penalty if you don't adhere to that.

Right. And you can find a lot of these rules and things at the Small Business Administration website. We'll post a link in the notes. And, you know, I'm a huge fan of asking forgiveness instead of asking permission, but in the case of labor law and, and tax and payroll and Social Security, this kind of stuff, that's not one of those cases where you want to ask forgiveness later because it's going to cost you money to do that. So you want to know up front and you want to be sure that, you know, you're operating within the, you know, the boundary of what the law is. And that's why it's important to have a good relationship with whoever, an hr, you know, a labor attorney that you ask questions about a company that provides HR services for you. You know, Zenefits is a company that does that. Although, although they just got in trouble, you know, recently for not following some of these own, you know, some of these type of laws. But they're, they're restructuring and, you know, those kinds of companies, there's, there's lots of them out there. Yeah, but you definitely, you definitely want someone you can turn to, to ask these questions because it's not easy. It's like, I mean, if your taxes are, you know, very simple when you're younger and that kind of thing, great, you do them yourself as you get, you know, especially if you're in business and you. Multiple businesses and you have this and that, trying to do them yourself is a nightmare because it's like a maze of opportunity or pitfalls. And you want someone, your accountant, that can maneuver you along and say, oh, look at this, there's a new thing that just came out this year that allows us to do this and, or, oh, we have to be careful because they, they scratched that law and it's no longer applicable.

Yeah.

You know, so get some advice on that one.

Your point about there being no such thing as forgiveness is one that I learned multiple times that you can't use the ostrich syndrome. And it's very tempting as a small business owner, especially as you're getting started, to say, oh, yeah, screw that. Dave was right. Nothing happens at the federal level that is going to impact me. I'll just ignore it. And you can for a little while. And then one day you will get a letter that it tells you what you owe and what part of that is penalties and all of this. In fact, I just got. We made. We. We did this. Right. So with the state of California, if you have nexus there, any sort of presence, you. You owe franchise. You have to file a franchise tax return. And in California, as I'm sure you know, Shannon, but as someone who operates a business from clear across the country, I don't really know this stuff until I'm told there is a minimum franchise tax payment of 800 bucks per year.

800 bucks?

Yep.

No matter what period, whether you made money, anything, it's just 800 bucks to.

The.

Benefit of doing business in California.

Right. So I have. And I've mentioned this on the show, I have this employee in California, and because of that, we at the Mac observer are liable for this to file a franchise tax return, which of course then means we have to pay the 800 bucks. And we didn't know that, and we didn't really pay. We didn't ask. I mean, it's our fault. It's fine. And so we started getting letters saying, ah, you owe for whatever, 2010. Like, okay. And this is like 2013. When we get this letter, it's like, great. So we go through the thing and we file for 2010, and we have to pay the 800 bucks plus interest and penalties and fees and blah, blah, blah. And we called them and they negotiated a little bit of that, but not very much, to be quite honest. And so we paid it. And then from that point forward, whenever this was 2013, 2014, and now 2015, when we filed all that, we paid our 800 bucks because it's better to just pay the 800 than to pay fees. But they keep going back and finding these previous years and they found another one of those this year and said, you owe X. It was like, okay. And for whatever reason, I had a lot going on. I ignored the bill.

Oh, I've never done that.

Yeah, yeah. I mean, it wasn't a bill. It was a bill, but it wasn't like, you know, it's not like a bill that you. That you pay attention to. You know, it's like, oh, yeah, I got to deal another one of those crap. And so I didn't file my response to them in time. You have a deadline by which you need to file a response, and I didn't do that. And so that instantly incurs, like, some penalty or whatever. And I was like, oh, crap. Oh, I guess we didn't file. They said, you don't have a return on file, so, you know, you have to file this return. I'm like, yeah, no, I'm not going to do that. And I knew I was going to do it eventually. It just had a lot going on. And then I got a bill from them or I got the reminder that's like, okay, now you've incurred a penalty and we're going to file your return for you. So it was like, oh, crap. Okay, so let's file the return. So we put it all together. We file it. It shows that we owe nothing, which means we owe 800 bucks. And then we know that there's going to be penalties and all that stuff. So we send the return in, and I get a letter. This was right before we went on vacation back in July. And the letter says, you owe $14,000 or something like that. Sure. And it's like, okay. Whoa. What the. Okay, great. Awesome. And so I call him up because I'm literally leaving the next day, and I say, okay, you say that I owe you 14 grand, but really, we know that it's more in, like the. Somewhere between 800 and 1000 range. And I said, it sounds like you sent this bill to me before you processed my return. And they said, oh, yeah, we sent another bill out after that one because we found your return here and we processed that. So now the number is whatever $913 or something, you know that it is. I'm like, okay, great, I haven't gotten that bill yet. And I'm leaving for two weeks. When's that one due? And they're like, well, that's due in, you know, 10 days from the day that we sent it.

Yes.

Okay. So I'm not going to get that in time because I'm not going to be here. And so I just got the number from them, and then I went and paid it online before we left. But. But yeah, you can't. You can ignore these things if you want. It's like the wheels of justice. Things move very, very slowly, but they move you. They. It will not go away.

That's right. And so I guess the. The. We'll preface the thing is, I think presidential politics may not impact your small business that much.

No.

But federal law certainly will impact your business dramatically all the way down. And your state. I mean, if you're in California, most of the laws are already, you know, far beyond what the federal laws are and changes. I mean, we always hear about this stuff on the news, and I say, well, wait, you know, it's been this way in California for 10 years, you know.

Sure.

I mean, even the gun laws, you know, they talk about oh, you can go and buy a gun at a show or something like that without a background check. I'm like, oh, this hasn't been that way here for like 20 years.

Sure.

So there's, they're always pushing things out, so you definitely want to pay attention to those things. And even to the point, like your local laws that I think impact you a lot, like sales tax, you need to keep track not only, well, what should I be charging sales tax on? If you're selling products and, or even bundling services, because there's all kinds of rules about how you do it. If you're installing home theater equipment and you're bundling things together. Well, there's some, there's some tricky things to figure out. And if you're traveling from county to county, you know, you've got to collect different sales tax depending upon where that sale takes place. And when you file your sales tax return, there is spots on that. You know, I do it quarterly. Well, we do it monthly here. And so there's 30 or 40 counties that would like to have a little bit of your money.

That's right.

And they all have their own little, you know, finger in the pie and they would like a little bit of it and you need to keep track of it.

And I don't miss that at all. Yeah, we have, we don't have sales tax here in New Hampshire, so. But we had it in Connecticut and I had to deal with that, especially because I was running a consulting business where I was crossing county lines all the time, you know. Yeah, Yeah, I don't miss that.

Yeah. And you also, for every city that you operate in, they would like you to have a business license for each, in every city. So, you know, in California, where things are close together, I mean, I drive through two cities just to get to my office, and it's a, it's a five minute drive to work, you know.

Right.

Maybe 10 minutes. So if, you know, you, you need to have, if you're, if you have guys out in the field and you're operating in certain parts of the area, you know, every, each city wants a little bit, they want that little check. And, and you know, many of these business licenses here, you've got to give a percentage of your revenue, so you do it at the end of the year. And those audits, whether it's sales tax, one of the worst audits I've ever been through, or, you know, even a business license audit, the, you know, when revenues go down and they get less money, they want you to Prove that that's okay. You know, when we had the recession in 2008, 2009, and revenues dropped across the board, we had to justify it. They wanted this. The city wanted to see, hey, how come you're not sending us a, you know, seriously, a big check. Yeah. So we had an audit for our business license revenue, and that one was pretty straightforward. The sales tax one.

What an awful thing. We don't trust that you made less money. So now that you might actually be in a position where you're making less money, you now need to spend time with us.

We want to see your p. L. We want to see your balance sheet. Normally it's just a form you fill.

Out just a form and they trust that you've not lied on the form. Yeah.

How much inventory you have and all this kind of thing. And again, these local laws can really impact you dramatically, Whether it's the type of sign that. The type of sign you have out in front of your building. I mean, we've gotten fined for that as well. And I'm not, you know, like, see.

That kind of stuff, you can, you can have an impact there, right?

Yes, you can.

Like with the stuff in California, I can't impact that. In fact, I actually can't. I have to pay, but I don't get to vote. It's taxation without representation, Right?

That's right.

It's time for a tea party. But. But like, locally, if you don't like them yelling at you about the type of sign that you have up, you can, like, go and fight that with a chance of changing the law.

Yeah. And. Or changing the politicians that enforce the law.

Well, yes. That true. That too. That's right. Yeah.

Yeah. Because like, I just drove past the sign. We're having, you know, elections out here in November as well. And.

No, no kidding.

Well, federal, but local, you know, all the local races and everything as well. Yeah, but there's actually, you know, I saw a sign for a local politician that said, you know, supports business friendly sign ordinance. You know, so they're. They're pitching themselves to the local businesses that want to have a sign out in front of their business, maybe or a sidewalk sign or a flag or something like that. And, you know, you want to support those people that align with what you, you know, you believe. And that being able to vote in and out is awesome. What really, what I can't stand, and we could conspiracy theory this for a long time, is the kind of faceless bureaucrats that really have an impact on our lives. Small business or otherwise that are not elected and they're not held accountable. And if you get somebody, that's good. We've talked about this before, dealing with the irs. If you don't get someone on the phone that sounds like you know they're going to be good to deal with, hang up and try again later, even if they're assigned to you, call, and if you miss them a few times, you can request to get. Get another agent. And you want to do that because you don't want to get someone that's been in that sitting behind a desk for 30 years that perhaps may be a little cynical and just putting their time in. That's not the advocate or that's not the person that's going to be an advocate for you. You want someone that you can really talk to, pitch your side of the story and somebody who can really help you. Because I've been in this position where you. And like you said, you get a letter and it's like a tremendous amount of money and you really, in addition to your attorney and all this other stuff and your accountant, you want somebody at the IRS or at the. Out here, it's the State Board of Equalization.

I've talked to them.

You want someone that can at least a little bit be an advocate for you, be on your side. And if you don't get that sense when you're talking to them on the phone, just hang up or just say, okay, great, thanks, I'll call back. And try to maneuver your way to a different person.

Yeah. Because the nice people exist. And actually they do. All of my dealings with the California State Board of Equalization have been pleasant. I mean, I don't like the rules under which they operate, but the people there understand that I don't like those rules and have actually worked fairly well and, like I said, waived some of the fees and, you know, that kind of stuff. I mean, it's one of those, listen, you know, if you're a small business owner, you've already learned or it's time to learn that you won't get anything you don't ask for. So it never hurts to say, hey, you know, can you make some of that go away? And sometimes they can, especially if you ask nicely. You know, they do have.

Yeah, absolutely.

Sometimes they have a little discretion. Yeah, yeah. But you're right. Those are the faceless bureaucrats or the unelected. They're not faceless at that moment, but they're certainly unelected. Yeah, yeah, yeah.

And it's not much you can do you know, dealing with. We just went through a pretty significant issue with the U.S. customs, you know, importing some product. And, and it just reminded me of how frustrating it can be when you're dealing with someone that, you know, we, we always say here on the small business show that every business is the customer service business. Well, when you're in a bureaucracy and you're got your job and you know, you're not in the customer service business, you're there doing your job, which you feel is the most important thing, whatever. And maybe you deal with people on a daily basis that are trying to scam the system or something, so it makes you react a certain way, but those folks can be very challenging. And we ran into a customs agent that just was not easy to deal with. And we eventually facilitated it, but not before we went above their head and got someone else involved that could look at things a little objectively. And I, I take credit for, you know, pissing this guy off because I was so frustrated with how he was and, or, or how he was not handling it. And we finally had to, you know, go above their head, get their supervisor involved, and then it, we got transferred to somebody else and then it went fine. It was okay. It wasn't.

You can, you can piss the wrong person off and have it really be a problem for you. Yeah, yeah, that's right. Yeah. And, and it happens. And they're used to people that are gonna piss him off. I mean, it, it, it's, that's how it works. Right? They, they and they look, you know, it's a whole different mindset. Right. You're coming at it from being the small business owner who's used to being a little bit of a maverick perhaps, you know, in maybe somebody else's term. But, but you know, you're used to kind of doing what you do and.

Maybe not, not a rule, maybe not a rule follower.

Stretching the rules. Yeah. And you get this person who is paid, you know, an hourly salary to make sure the rules are followed and they don't give a crap. And in some ways, and it sounds like in this scenario, maybe this person had a little resentment towards people like.

You, you know, can happen. That's right.

And you fed that more than you should have, and now you've created a fire. Yeah, yeah.

It was a perfect storm of a very high dollar product and a product that is often counterfeited. And there's a lot of authenticity issues. However, we are a known. This, this other business that I'm in, you know, we've been doing this for over a decade, and we're a known entity, and we've had dealings with them, you know, importing things for years. And this one person decided to just step in and kind of throw everything. A monkey wrench and everything. And I was very stressed because it was a large amount of money as well.

Yeah. And I know sitting there that you can't sell, you've stuck it, you can't collect it. That's right.

Yeah. And the first thing this person said, hey, this is going to take a month. We can hold this product for a month. So you can count on a month. And I just, like, in the back of my head, I'm thinking, okay, you know, how am I going to do this? And I. And I did everything I shouldn't do, and I talked nice and calm on the show here about, you know, how to be friendly and how not to do this and this. And I let myself get angry and, you know, was like, I did not use my people skills to, you know, make. Make it work. So we, you know, we went around the backside of it and got it to, you know, made it happen, but you got to do it. And, you know, if you've got stories that. Where you've worked with a government agency or you've had a law that's been a nightmare and you've helped get it changed and things, we would love to hear about it. You know, reach out to us. Feedbackusinessshow. Co. Or jump over to our Facebook page@facebook.com businessshow co. How those reviews coming, Dave?

The reviews are. We've gotten a couple in, but we need more itunes reviews, folks. Yeah, please.

What's the easiest way for them to leave a review?

BusinessShow co. ITunes. That's where you go.

Yeah, it really helps us, folks. You know, we're another small business here. This is a labor of love for us to give back to the business community. Go up and leave us a review on itunes and help out a fellow small business owner.

Thanks so much for listening. Thanks for putting up with our craziness. Hopefully we, we. We. We did justice to this conversation and really highlighted kind of the difference between politics and bureaucracy because one. One you get to control and one you don't. Yeah. All right, we will. We'll see you next week.

Take it easy, everybody. It.