99.9% of all companies in the United States are small businesses. There are 30.2 million businesses employing 47.5% of all US workers.
Small business owners wear many hats. They may handle their marketing, accounting, and sales all in the same day. Especially when there’s not enough in the budget to hire a professional to do the work.
But no matter how busy you are or how many hats you wear, there are certain types of laws every business person needs to abide by. Most business owners don’t bother to become well versed in small business law, but they should.
If you want to protect yourself, your business, and your employees, keep reading. We’re sharing with you fives types of small business laws you need to know.
1. Types of Laws Regarding Employment
Most people can’t run a business by themselves. There’s too much work involved and no one is an expert at everything.
This means you need to hire people to perform the work for you. There are a lot of laws regarding employees, so before you hire anyone, brush up on these laws to ensure you don’t violate any of them.
Independent Contractor vs Employee
While there are many similarities between an independent contractor and an employee, there are also marked differences. Especially in how each one is taxed.
Workplace Safety and Health
The OSH Act (Occupational Safety and Health) ensures that all employees have a right to work in an environment free from recognized, serious hazards.
If you own a business with 15 employees or more, you must comply with laws enforced by the Equal Employment Opportunity Commission (EEOC).
You cannot discriminate against someone because of their race, religion, gender, age, or disability. Even during the hiring process.
While hiring a non-US citizen may mean you can save a few dollars, it can also get you in trouble. Per a federal government mandate, you must verify all employees can legally work in the US.
2. Advertising and the Law
Every business uses some form of marketing and/or advertising to let their customers know they’re open for business. But there are laws that regulate what language you use to promote your products and services.
The FTC (Federal Trade Commission) oversees marketing and advertising law. Their laws state that every business must be, “truthful, not misleading, and when appropriate, backed by scientific evidence.”
If you sell a product, you need to list its ingredients and any chemicals on the label.
Many businesses use email marketing because of its high ROI (return on investment) rate. But if you’re using email marketing, you must comply with the CAN-SPAM Act.
Some of the regulations in this act are making sure your physical address is in the email and allowing recipients to opt out or unsubscribe.
There are also laws for marketing to customers using the telephone businesses must follow.
3. Licenses and Permits
Small business law dictates that many companies must obtain a license or permit(s) to operate legally. And if you’re caught without the right paperwork, you may face hefty fines or having your business shut down until you file the proper paperwork.
You may need a general business operation license or a sales tax license if you’re selling products. There may be zoning and land use permits to deal with, especially if you own the property your business is located at.
Depending on the field your business is in, you may need occupational or health department permits.
Check your local and state laws to ensure you have the required licenses and permits necessary for you to run your business.
4. Tax Laws
Tax laws are notoriously confusing. It’s a smart idea to have a good accountant and lawyer to help you stay within the laws while paying the least amount in taxes.
Most businesses commonly file an annual income tax return. You must pay any income tax you earn and file in April unless you get an extension.
Most companies find it easier to pay estimated quarterly taxes rather than saving up to pay it all at once in April.
S-corporations usually pay quarterly taxes if they earn over $500. For all other businesses, the amount is set at $1,000.
There are many types of small business, but if you have employees, you must pay taxes. These taxes include Social Security, federal income tax, federal unemployment tax, and Medicare taxes.
Protect Yourself, Your Beneficiaries, and Your Business
There are certain types of law that help business owners protect their company and their finances should anything bad happen to them.
It’s a smart idea to set up contingency plans for emergency situations. That way, if you can’t work or pass away, your business goes to the person you chose and not a stranger or competitor.
One easy way to protect your family is to get a will. But you may also want to consider getting more than just a will so your beneficiaries avoid problems if you pass. This blog can help you figure out how to avoid probate.
5. Antitrust Laws
Before you start running your business, get familiar with small business law such as the antitrust laws. Knowing these laws will help you stay out of trouble.
Here are a few antitrust laws you need to know before you open your business.
It’s not legal to secure favorable product prices from buyers and vendors when other companies can’t. Every company has the right to receive the same pricing structure.
Conspiring to Fix Market Prices
Many business owners don’t realize it’s against the law to discuss prices with their competitors, even when those prices only affect a small marketplace.
You can’t control market prices or preserve your position through the acquisition of your competitors. While there are both negatives and positives to monopolies, they’re illegal.
Conspiring to Boycott
You can’t collude with other businesses to boycott a competitor or supplier.
Conspiring to Allocate Markets or Customers
It’s illegal to make an agreement with your competition to divide up your customers, territories, or markets. And this provision applies even when competitors aren’t dominating a specific market or industry.
It’s impossible to know everything about business and the types of laws you need to follow. It’s helpful to have a good accountant and lawyer to ensure you’re always following the laws properly.
And keep learning. The more you learn, the fewer mistakes you’ll make.
We want to help you get started the right way. Click here to learn eight things you need to know before you start your business.