Here is a (half-baked) idea to stimulate the economy and help people move from lower class poverty to middle class. It addresses the barriers of intimidating red tape & authority, and the dis-incentive of letting go of disability, unemployment, and other forms of marginal income that people cling to.
As things stand now, being a “Sole Proprietor” is the worst choice of business structure, for liability reasons. It is the opposite of “incorporation” where you set up a legal entity called a corporation, and sets up a fire wall between your assets and those of the business. As Sole Proprietor, you get all the blame and few of the tax advantages.
The idea is to create a sort of indemnity or exemption that makes it more attractive for lower-income folks to become Sole Proprietors of their own businesses.
To qualify, they would have to meet these criteria:
- Be operating as a Sole Proprietor, with no corporate fire wall.
- Have no employees, only employing others as contractors unless they are family.
- Have a gross revenue of less than $100,000 and profit less than $50,000 per year.
The benefits to offer these budding entrepreneurs would be
- Exempt from all local licensing and permit requirements and fees (though they must remain legal as regards fire and health codes and such, or they can still be shut down). They still can be inspected if they set up premises outside their home, but are not required to get themselves inspected before they open for business.
- Exempt from all tax filings and similar requirements as long as they remain small enough to qualify.
- They would not have to (or be allowed to) collect sales tax.
- Exempt from zoning unless the neighbors complain.
- Be given some grace period to comply with situations that are identified due to growth.
What do you think? Would it make the world a better place?