Small businesses will now be required by the Employee Development Department to submit electronic employment tax returns, wage reports, and payroll tax deposits as of January 1st, 2018.
While this requirement was rolled out to business with 10 or more employees for the 2017 year, it is now being forced to any and all California businesses for the upcoming year.
The penalties for not filing electronically are fairly steep — if you don’t pay through the new system, then you will be charged an addition 15% of the payment due. That’s hefty. Also, there are per wage item and per return fees that would stack up very quickly if you had a few employees!
If you know someone running a small business who isn’t likely to be able to file electronically, there is a form they can fill out for a waiver that extends their freedom to pay the government through old fashioned post office services for another year. It can be found here and needs to be mailed or faxed to:
Employment Development Department
Document and Information Management Center
PO Box 989779
West Sacramento, CA 95798-9779
The goal with this new system is to improve data collection and security, reduce overheads, and eliminate lost mail issues. It also speeds up the payment process. While I’m all for efficiency and speed, mandating immediate changes and micromanaging small business owners with potentially thousands of dollars in fees seems to be fairly intense overreaching, in my opinion.
Grandma’s corner book store with its three part time college student employees could be put out of business with a pile up of fees because she didn’t get her waiver approved in time.
I would love to see small businesses prosper, but if our state keeps demanding more and more from our business owners and entrepreneurs, it’s going to get increasingly more difficult to make a go of a start up.
Hopefully, this change doesn’t cause some of our elderly owners to throw their hands up and surrender their family business.
For the rest of us, it may be a breath of fresh air to not deal with the stacks of paper, but for them it could be the final straw.