New employee on the block

   The accountant had spoken. Because of a complicated set of tax circumstances, it would be necessary to change the status of my company from a Sub Chapter "S" corporation to a regular "C" corporation.
   This was a big deal. The "S" corp gives you the protection of a corporate umbrella, but the profits or losses flow directly to the shareholderís personal returns. In other words, in my case it is a sole proprietorship with teeth.
   The regular old "C" corp is simply your standard corporate entity. The corporation pays the tax, and any cash remaining after the government washes its greedy little hands can be doled out to the shareholders in the form of dividends, which are then taxed again on the personal return.
   As a working shareholder, I can avoid this double taxation by drawing a salary and, with luck, bonuses, which are a pre-tax expense to the corporation.
   So Iím going back on the payroll, just like I was 14 years ago before I started my own business. Practically speaking, it may not mean much. But psychologically, it can take a toll.
   On the other hand, itís done wonders for the morale of my office. When I told Ms. Ferguson, my loyal office manager, that it would be necessary for me to become an employee of the company, she initially didnít have much of a reaction.
   I should have known better. The next morning she came into my office and plopped an employee folder, a W-4 form and an Employment Eligibility Verification (Form I-9) on my desk.
   "Fill these out," she demanded.
   I looked at the stack of papers. "You forgot the employment application."
   "I took the liberty of assuming youíve already been hired," she replied. "Now I just want to make sure youíre legitimate." She gave me her best "Dirty Harry" look, which was pretty pathetic. "Besides, itís the law."
   I sighed, knowing my sense of individual freedom was fading by the milliseconds. I quickly filled out the W-4, citing 27 dependents (who knows how many children a man really has?) until Ms. Ferguson mentioned the IRS seems to have a pretty good idea of my output.
   After signing the W-4 (with a more realistic withholding allowance), I turned to the I-9, the Employment Eligibility Verification. "I really have to fill this out?" I asked.
   "Yes, you do," said Ms. Ferguson. "Every employee must show proof they are eligible to work in the United States. The I-9 must be on file in our office and shown to the Immigration and Naturalization Service agents when they raid us."
   "Iím an American!" I cried. "Born and raised in San Francisco, California, U.S. of A."
   She glanced nervously out the window, perhaps looking for INS agents lurking in the shadows. "Prove it."
   I pulled my driverís license out of my wallet and pointed to my shining face and my address. "Satisfied?"
   Ms. Ferguson studied my license and actually scoffed. "It also says your hair is blond. Who are you trying to kid?"
   My hair was blond, 20 years ago.
   "Well, my eyes are still blue. And Iím still an American."
   She shoved the form under my nose. "A driverís license alone wonít do it. Do you have a passport?"
   "It expired last year."
   She sighed. "Thatís unfortunate. However, it says right on the form you can show me a birth certificate or an original Social Security card. Why donít you just hand me one of those and weíll be done with it."
   I was starting to sweat. "I, uh, donít seem to have either of those. My God, give me a break. No one carries their birth certificate around, and I havenít seen my Society Security card since my college days."
   "Thatís too bad," said Ms. Ferguson, getting up to leave. "You had best call the Social Security office and have them issue you a new card. Until then, Iíll have to classify you as an illegal alien ineligible for employment."
   "I am not an illegal alien!" I cried. "Iím an American and I have the right to work at my own company!"
   Ms. Ferguson was unimpressed. "Tell that to the INS agents when they raid our office and take you away for improper documentation."
   After she left, I decided she was right. I was no different from any other employee. I had to have proof.
    My days of complete independence were over. I was an employee of a company, no more, no less. Feeling a little low, I had no choice but to give myself a raise. Iíll need the cash when Ms. Ferguson has me deported.



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