May 4, 2009

Government Intrustion 101

Today's Denver Post featured this story about a couple of young entrepreneurs in Salida, Colorado. These kids, nine and ten respectilvey, spent their winter building bird houses to sell in the spring. The enterprise was encouraged by their father.

Hunter's dad, Eric Beem, dreamed up the idea for his son's birdhouse business as a way to teach him things like self-reliance and money management.

"It's hard for parents," he said. "When kids want something, it's easier to shell out money" than to figure out how to teach them how how to leverage their talents for pocket change.

Sounds quintessentially American. Unfortunately, the long arm of government stepped in, which is also becoming quintessentially American.

It all stopped when the code enforcer told them they could get a ticket for peddling products without the proper paperwork.

Then she handed them a business card with a number at city hall to call for information about the license and how much it would cost.

For now, the kids are shut down. The Salida City Council is considering and ordinance change. Wow. Responsive government in action.

Of course, that's just the beginning of the lesson. Soon, the kids will learn that they need to register their business with the State of Colorado. As part of that process, they'll need to get an Employer Identification Number from both the IRS and the State. They must also call the Colorado Department of Labor and Employment and get a separate UI number.

As a seasonal business, they'll need to determine their filing status and likely file form 941 on a quarterly basis. Failure to file can result in penalties, interest and criminal charges. At the same time, they need to file form 1000-100 with the State on a quarterly basis for state withholding. In addition, they must file and pay the Quarterly Unemployment Wage Report on the first $10,000 of income per annum based on a rate provided by the state. This must be paid by the business and cannot be withheld from employee's paychecks, and no one is exempt. At year end, send all employees a W2 and all contractors a 1099. Then, send form W3 to the IRS, Social Security Administration, and the State Department of Revenue. Be sure to file on time to avoid penalties and interest.

They also must not forget to obtain worker's compensation insurance as mandated by the State. As business owners, they can exempt themselves from coverage, but must file the appropriate affidavit. Appropriate notifications and posters must be posted in a conspicuous location so that all employees can see their rights regarding unemployment and worker's compensation. Failure to do so can result in fines. They must also select a state-approved healthcare provider for all worker's comp injury examinations and claims.

It's not a bad idea for them to look into a general business liability umbrella policy as well. Should one of the wires holding the bird house break and the house hit someone on the head, there could be signficant business liability.

The bird houses were almost certainly made using saws, so OSHA has oversight regarding workplace safety. The fire marshall is also entitled to inspect the premises annually, without notice. Failure to comply with any related regulation can result in closing the business and fines.

The bird houses probably were painted or varnished to protect against the weather. OSHA can determine whether or not adequate ventilation and personal protective gear is available. If not, see above regarding business closure and fines. EPA and state agencies have oversight regarding the disposal of the empty paint/varnish containers and paint brushes. They must be disposed of in approved locations.

Because bird houses are often handled by kids, the houses must be tested and certified as lead-free. Any inventory that has not been tested must be disposed of as directed by EPA.

There you go, kids - have fun! Learn what America, the Land of Opportunity, is all about. Of course, you might consider a lemonade stand, but then we'd have to get the health department involved...

We're from the government, and here to help. Posted by Boulder Refugee at May 4, 2009 10:51 AM

Awesome post. Many people don't connect with the abstract freedom I talk about. This is what a government managed economy looks like.

Posted by: jk at May 4, 2009 4:25 PM


Thank you for this. I can't help but think this is one of the best posts I have seen on this site.

Well done.

Posted by: T. Greer at May 4, 2009 5:24 PM

I blush...

Posted by: Boulder Refugee at May 4, 2009 5:55 PM | What do you think? [3]