GUERILLA CAPITALISM 101. THE ART of HIDING YOUR BUSINESS FROM CITY, STATE AND FEDERAL TAX SUCKERS
We don't care that you need food, housing, childcare! What, you want a medal for starting a small business? Who cares if it isn't doing well yet? We get our cut off the top, you whiney baby you! Licenses, Sales tax, City taxes, State taxes, Federal taxes, Licensing Bureaus. Income taxes and if you retire and work we tax your senior income too! And we can take that out of your social security check! And we tax your 401k 33% and until your death you'll pay l0% on everything you buy...
QUESTION: I want to start multiple cottage industries but don't want to get in legal/financial trouble. People are paranoid about someone suing them and there's the question of if one should have insurance or not, or if being a self proprietor is dangerous.
What's does one need to do legally to start cottage industries? PAY SALES TAX. Everything you put in a client's hands where money is exchanged. And you have to have a retail license. And SELL LEGAL STUFF. I recoil at the memory of the Raw-some Food Club raid here in L.A. They took his merchandise and store! Jailed him. I'm not too worried about being able to run a business - marketing, and all that. But should I get an attorney and accountant if I'm going to start up small businesses? Seems pretty criminal to me that you need both of those in order to run any businesses these days.
ANSWER: Give any money to the FEDS they will kill babies and mothers in Iraq and Afghanistan. (Vietnam, Grenada, Panama, Nicaragua etc.) They will pay military contractors a 50 thousand dollar a day salary per man. Killers earning good? HEY! Save the planet from such grief. Make a stand. GUERILLA CAPITALISM IS HOLY, the only HOLY WAY to earn your money and keep it out of the hands of killers.
As for hiring an attorney, CPA ---Small time entrepreneurs eventually grow into big businesses if left alone. Those two experts CPA / ATTY. coming in with you at the beginning are a great idea a.) if your Dad left you a million bucks, b.) if you know these guys personally and can promise to pay them cash later, when you're big, or c.) if you're starting a very visible business, the kind that needs your DIPLOMA on the wall where folks can SUE you for malpractice if you do that root canal wrong and impale their jaw.
Among my circle of acquaintances, the core of the business only required their presence, their advertising efforts, their product or service. No bonding, no personal CERTIFICATE of verification. My chums all started at home businesses, with not even RENT paid out monthly to a landlord in a commercial zone.
One Senior gal I know has a Bakery in her home kitchen. She transports her product to a public venue for sale so when the GOV REGS say that the BOARD OF HEALTH must inspect the kitchen for two sinks, hot water, double flooring, she got a baker. at a local Cuban cafe to SWEAR that my chum makes her cookies and pies there. She doesn't of course. But for 50$ a month, they cover for her. Her at-home kitchen, gorgeous, big, clean is where she makes the sweets she sells at the POSH BEVERLY HILLS FARMERS' MARKET each week.
Gov inspectors can look at her baked goods and see her license of inspection. They do not report her to Governor Brown saying "LOOK she sells fifty pies a week..." Cuz each inspection bureau is specialized and the food inspection HEALTH DEPT, A city bureau, does not report to STATE, and seemingly not even to the LA TAX FRANCHISE bureau.
A few days of intensive baking a month and my pal, a senior, pays rent, food, car insurance and hospital visits to her impaired daughter and is able to bring gifts to the girl. This wily coyote gal used to have a landscaping business. She got her resale number for free telling the GOV BUREAU that she didn't have any clients YET. But she was hoping. Once that thing was in her hands she could buy at wholesale nurseries.
Other friends run odd job corporations. One has a wedding photo biz, another has a baby portrait biz. Another chum has a "SHAREWARE " biz that features used SOFTWARE for sale online. He even has a web site. One fellow I know, a guerilla contractor who does carpentry, electrical and plumbing DOES NOT. But he's booked full time so doesn't need one.
Many newage Entrepreneurs DO have web sites, blogs, do Craigs List ads which tells us that they aren't being googled by the FED cuz nobody has ever come after them. THE INTERNET IS HUGE. Even if you google 'home made fudge' or go to E-BAY and see 'Texas Pecan Fruit cakes for 25$ each, or Fudge, or Taffy, or caramels, 12$ a box, YOU WILL FIND YOUR CHEAP CANDY, the GOV WILL NOT FIND THE CANDY MAKER. And it's a sweet deal all round.
But, I do believe city inspectors check all home repair, plumbing, electrical, construction ads to make certain the guy has a city license. And drive a truck with tools and park it in the street, if no license number is on it, they cops pounce.
Most of my entrepreneurial friends do their own merchandising on line and lots of it. (SEE MERCHANDISING SECRETS) They all have email client lists, can do an HTM ad with graphics at the drop of an email. They have stationery and after years of success, nobody bothers them. Nobody asks for taxes. THEY do not declare a cent of earnings as their businesses the first decade or two. They just pay rent, school books for kids, food, occas. dentist visits. Now, not all businesses can put their web site up and their Craigs list ads UP unless they word them right. I know a guerilla contractor, no license, gives bids, remodels homes, he can only advertise as a 'talented handyman', which he is. A bigtime DECORATOR lady with thousands of contacts keeps him hopping busy. Her clients are thrilled to get a kitchen remodel, granite installed at these low prices. But if he flashes 'kitchen remodel' on Craigs list, some city inspector will phone him up with an arrest warrant.
I know three separate gals who run Bed and Breakfasts or mini HOTELS. One in Palm Springs near Los Angeles, has a pool, many rooms, you get a massage from this beauty daily. Another woman here in Hollywood, California --whom I know very well, opened a bed and breakfast. She advertised on Craigs List in Europe, Latin America, all the posh cities of Brazil, Malaysia, Asia, Japan --everywhere, just a little advertisement online and soon her mansion was full of happy foreign clients, as l00$ a night is cheap for hotels in our glitzy California city. To boot, Breakfast there was free! And all this in the posh mid Wilshire area. Near our famed ART MUSEUM. ONE DAY she was doing so very well that she did her DBA for her Bed and Breakfast 'hotel' in our daily newspaper ( an ad that reads " I am DBA (doing business as,) POSH CITY SUITES) and now she was entitled to get a business bank account that allowed folks to write CHECKS TO THE POSH CITY BUSINESS name, not to her name personally, (as before). She then was able to get a credit card processing machine! BTW that is not hotel's name.
Well, the city of LA immediately SPOTTED HER! Asked her how long she'd been in biz. THE DUMMIE told them! Now they want 15% of her ingresses for last decade or so. 750,000$ She sent in her friend the builder who'd dealt with city hands out, licensing tickets for decades. He talked them down to $3,500. SOmething about it being a HERITAGE home, 100 years old, pride of the community. Don't know HOW he did it.
End of story, her start up years went fairly untaxed, after that scare. Mind you, those were her lean years. She wasn't earning like she is now! No business starts fast. First year I started doing astrology I had one client for 35$ A license would have cost ten times that amount. So I deduce from this three things: The Gov can impede entrepreneurs from opening up shot as the second you go legal, the state or city wants in. That means you must absolutely postpone doing it. And if anyone asks you when you started the biz say YESTERDAY. Or don't go legal AT ALL. Build your biz. When clientele is there and your product/ service is high ranked, When it's BIG, THEN get a credit card taker machine, THEN do a DBA. Why should YOU slave for years to build a business every second of the way carrying the big ole TRIPLE GOVERNMENT on your back? And your landlord. It's enough the WEBHOST wants 80$ a year if you're feeding small children that's a month of their food!
My hotel running pal was frugal. She didn't even have insurance, that's how careful she was the first decade. Sure, somebody could have fallen in her 'hotel', slipped on a loose rug on a stair tread, (she has a beautiful Scarlett O'Hara staircase) they could have claimed HER negligence on over waxing floors but she didn't insure herself as its' so damn unlikely that people who knew how to come from far away countries on an airplane could break a leg in her posh, elegant home. An accident never happened. Business was terrific but I wouldn't say that she made a dime more than she spent paying off mortgage, taking care of her grandchildren. Putting a great grandchild thru private schools. You might argue, a lack of liability could incur the 'taking of her home' but now the only person threatening her home/ hotel is city of Hell-A asking her for 750 thousand bucks!! We thought that her Lawyer costs would be huge. probably fifty grand or something. Wrong. Her pal the contractor talked to the city agency and talked them down to $3500 for her entire back taxes.
So, the point is, start in the GUERILLA CAPITALISM MODE. UNDERGROUND ECONOMY. You will be invisible to the city taxmen for years and years. FOREVER maybe. But get a DBA in newspaper? Get a credit card machine, your anonymous days are OVER! My friend James did six years of business, as RAWESOME Cheese, milk and ice cream, dairy products. Then they got him.
SIX YEARS of business before the LA cops stepped in. I knew James Stewart, early member of 3HO, American Sikhs, guy tied a turban was vegan.. Knew him in the sixties. He was always in the food selling biz. Well, count those years as happy ones for James. It took the city of L.A. more like 45 yrs to catch up. He and the dairy had time and profits to go legal, get equipment, refridgerators, all the things that HE needed for a Posh West Los Angeles business. James had time to scope out the inspector issues. I do not know how the final 'bust' happened. I will be looking for him to return to RAWESOME so that I can interview him and again, put it all here.
My advice is, Take the underground economy 101 course now, it's online, a click away, it's totally free as a seminar. Tip the writer if you want, paypal astrology at earthlink dot net. Use it to stay semi-submerged and feed your family first. Pay those inflationary food prices, rents, gas prices. If and when you are ahead of the game, go legal. Just never declare the back history. Remember the sentence, "I OPENED THIS BUSINESS YESTERDAY!"
Tamales, eight to a package, Steamed this morning, will feed eight persons for 8$. Try feeding a family of eight for less money. Pork, Beef, Chicken, all hotter than blazes. With Chiles I mean. Want cheaper? Come back at noon if there are any left it'll be 7$ for 8. I can hand deliver to your house if you're within a mile of here. Put you on my route! Nice thing on Sundays, a bundle of great Mexican food.
THERE IS A SOLID and quite New underground economy
The Key indicator: Avoidance of bank accounts.
Now, WHEN YOU ARE IN THE ABOVE GROUND ECONOMY, you are a gerbil on a treadmill for the IRS and Military. Read about POOR STUPID HERMAN GOLDMAN He worked til he was 101 years old. The GOV has been taxing his social security check for nearly forty years as he 'earned on the side.'
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By Richard W. Rahn
The underground or "black" economy is rapidly rising, and the fault is
mainly due to government policies.
Here is the evidence. The Federal Deposit Insurance Corp. (FDIC) released a
report last week concluding that 7.7 percent of U.S. households, containing
at least 17 million adults, are unbanked (i.e. those who do not have bank
accounts), and an "estimated 17.9 percent of U.S. households, roughly 21
million, are underbanked" (i.e., those who rely heavily on nonbank
institutions, such as check cashing and money transmitting services). As an
economy becomes richer and incomes rise, the normal expectation is that the
proportion of the unbanked population falls and does not rise as is now
happening in the United States.
Tax revenues are falling far more rapidly at the federal, state and local
level than would be expected by the small drop in real gross domestic
product (GDP) and changes in tax law that have occurred since the recession
began. The currency in circulation outside the U.S. Treasury, Federal
Reserve banks and the vaults of depository institutions - that is, the
currency held by individuals and businesses - has grown by 13.3 percent in
the last two years, while real nominal (not inflation-adjusted) GDP has not
grown at all, and real (inflation-adjusted) GDP incomes have fallen by more
than 3 percent. With the growth of electronic means of payment and financial
service providers, it would be expected that the currency component of GDP
would fall, not rise.
The underground economy refers to both legal activities, such as often found
in construction and services industries where taxes are not withheld and
paid, and illegal activities, such as drug dealing and prostitution.
Countries such as the United States, Switzerland and Japan historically have
had relatively small, nonreporting and/or illegal sectors, a typical
estimate being 13 percent of GDP.
Most European countries have had somewhat larger underground sectors
(typically 20 percent or so) in part because of the desire to escape higher
tax rates. Italy and some of the other Southern European countries are
believed to have underground sectors that account for 30 percent or more of
all economic activity.
I recall an Italian finance minister telling a few of us at a meeting a
couple of decades ago that, for policy purposes, he assumed that "the
economy was 40 percent larger than what was reported." In some developing
countries and/or highly corrupt countries, underground or "off the books"
activities are estimated to be as high as 70 percent of all economic
The FDIC report about the size of the unbanked or underbanked sector in the
U.S. should be of concern because those who do not use the banking system
often have to pay higher fees to cash checks, pay bills (e.g., money orders,
etc.), or transmit funds.
People who keep their savings in cash at home rather than in banks make
themselves easier prey for criminals and are more likely to lose their money
to fire, flood, or just neglect. Not surprisingly, a majority (71 percent)
of the unbanked have household incomes of less than $30,000 per year.
There are many reasons people do not have bank accounts. Banks, because of
the "know your customer" and other anti-money laundering regulations, make
it difficult for nonestablished people, such as the young and transient, as
well as legal and illegal immigrants, to open bank accounts.
Also, many of these same regulations are responsible for the rise in bank
fees, which are a particular burden for low-income people. You can be sure
that every time Congress passes some new law or the IRS implements some new
regulation to "get tax cheats," much of the real burden of these compliance
costs will fall on those least able to afford it, while those intent on
finding their way around it will do so.
People also avoid having bank accounts because they are vulnerable to asset
seizure, judgments, levies, etc. Increasingly, bankers and others who
provide financial services are forced by governments to spy and snitch on
their own customers, and this is a real turnoff for many people, which
causes them to find other ways of maintaining financial privacy.
Many studies have shown that when people believe the taxes they are required
to pay are reasonable and the political leaders tend to spend their tax
dollars wisely, tax compliance rises, and vice versa. In the United States,
there is increased evidence that many tax dollars are not being spent wisely
and are often used to pay off political cronies.
Over the past year in particular, the public has become aware that many in
Washington who advocate higher taxes and argue that everyone has a
responsibility to pay taxes are themselves not complying with the tax laws
When you have a secretary of the Treasury and the chairman of the House Ways
and Means Committee (the tax writing committee) accused of cheating on their
taxes, it greatly undermines the moral authority of the tax collectors,
making the common citizens feel like chumps and, hence, much more willing to
try to legally avoid or illegally evade taxes themselves.
The evidence is unambiguous; governments cannot increase tax compliance and
decrease the size of the underground economy by ever increasing and more
It is no accident that those governments that allow their citizens a high
degree of personal and financial liberty, including financial privacy, and
spend taxpayer dollars wisely, honestly and competently, have much smaller
underground sectors than corrupt and oppressive governments. Washington,
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the
Institute for Global Economic Growth.
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