Not an idle question. The latest McKinsey Quarterly links to one of their old papers on the "informal" economy, i.e. business that's run under the table. They note that the proliferation of an informal economy can be detrimental to the economy as a whole for a variety of reasons, lost tax revenues, disrespect for laws, irregular wage payments, avoidance of licensing and regulatory compliance, illegal employment practices, worker safety, product defects, and undercutting legitimate businesses being among them.
They also note a number of indications of an "informal" business: underreporting of employment, avoidance of taxes, ignoring product quality and safety regulations, IP infringement, failing to register as a legal entity, etc. How many of these are an every-day occurrence here? All of them. How many people do I get in my office who are "behind on their taxes" because their bosses list them as "1099 employees?" There's no such thing. Either you're actually an independent contractor, or your boss is a cheap sleaze who's shifting his tax burdens to you. And then there are the businesses that send me brochures, and when I ask them where they got the photos and text, they tell me they just pulled them off the Internet. Oh yes, that's a plan, commercially using other peoples' property without their permission. And when I ask for a license, they hand me something in some other business's name. So what's your relationship to this business? "Oh, he just lets me use his license." Uh, wrong answer, and it's a crime. Not surprising, though, given that they typically haven't met any of the requirements for doing business, right down to registering the DBA they're operating under.
Every time I take the bench in small claims court, I end up having to admonish at least one small business owner that he/she is in fact in business and needs to get the paperwork straight, including licenses and contracts. Happened again last night. Folks, if you're in business, you're self-employed, and being self-employed is fundamentally different from being employed. It means you're ultimately responsible for the paperwork, and if you don't keep it straight, sooner or later you'll wake up wondering what fell on you. And when that happens, and you come to me to straighten it all out, don't start whining about how unfair everything is. My kids know better than that.