Learning About the PROAct

Last Update: March 15, 2021

I haven't been on much lately here at WA, so I apologize if this has been covered already. I am not trying to be political here. But the PROAct will affect many of our businesses or livelihoods. Whether you are pro or con, you should be aware of what is happening.

If you are a freelancer or rely on freelancing for your business, Congress has already passed a version of the PROAct. If you aren't familiar with what that is, it essentially could classify freelancers as employees under certain conditions.

A similar act was passed in California and many freelancers feel it killed their businesses completely. Business owners that used to rely on freelancers stopped using them completely because of the least resistance rule. In other words, instead of taking a chance trying to guess what constitutes (or should constitute) an employee vs a freelancer, employers take the road that will lead to the least chances of getting in trouble with the law, which is not to use freelancers at all.

The issue is way too complicated to describe in a short post such as this. But if you believe that you need to take some action to try and stop or keep this legislation, depending on your perspective, then now is probably a good time to get involved.

A Facebook page that I recently joined has been covering many of the issues associated with the legislation. It's called Fight for Freelancers USA. It's easy to find and I am sure they will accept you if you ask.

My purpose for writing this isn't even to tell you whether to support or fight against this legislature. It's mostly to make everyone aware and you can do your research as you see fit. You can then take whatever measures you feel are necessary to protect or support your business or livelihood.

Best Regards,

Jim

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drjec Premium
Thanks, Jim. I did not realize that we might be impacted by this legislation. At least now, I know to look into it.
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GeoffreyC1 Premium
Thanks Jim for the update.
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terry13z Premium
Hi Jim, I live in CA. and have felt the effects of PROact for the last couple of years. They have backed off with some freelance work; like musicians. But it has an impact on picking up work as a freelancer. One alternative to the PROact, is to create a company and bill for your services through your company. This gives you the advantage of working for yourself and keeps the company/organization hiring you in compliance with the state reporting agencies.
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techhound Premium
Hey Terry, I remember when I first started computer consulting back in the 1990s. My accountant convinced me to go the route you suggested (for me it was setting up a S corp) and that worked out fine. Some people that I've read seem to feel that creating a corporation won't work, but they were sketchy on their details as to why (or why not). I agree that should circumvent the problem.

If it gets to that point, I'll run it by my accountant to see what he thinks. A corporation is helpful for this situation but is a POA for filing taxes and paperwork. Intuit and other companies have services to help but it adds a little to the cost, etc. Not much, though compared to the self-employment taxes that you pay if you aren't a corporation.

Thanks for your insight. I like to hear from peoples' experience (both pro and con). It helps to gain some persepective on issues.

Best Regards,
Jim
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terry13z Premium
Hi Jim
It can be an S or C Corp. It can be an LLC or an LLP. What these organizations have in common is they generate and EIN number to report earning to Uncle Sam.
Unless the law has changed you can be a sole proprietorship too. You can have a dba (doing business as) company. All you need to do is run a classified in your local paper announcing that you as a individual will be "doing business as"...
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AlexEvans Premium
Hi, Jim, good to see you and thank you for the heads up.

It is becoming a global issue.

I think at the heart of it is that many legislators the world over don't actually get the online marketing world and view it from a bricks and mortar perspective.

Headwinds are building everywhere.

Thank you for sharing.

Alex
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techhound Premium
Hey Alex, good to hear from you too. Good points about it being a global issue.
Best Regards, Jim
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AlexEvans Premium
Some politicians have this fear of missing out on tax; the thing is online marketing is global and the more that marketers make the more that they pay in tax, unlike the mega-platforms that tend to spread their obligations around.

My only hope in all these changes is that common sense prevails.
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