To operate legally, businesses should comply with several state and federal requirements that guide the company’s operations, safety procedures, and labor practices. Apart from general laws applicable to all businesses, such as Fair Labor Standards Act and Franchise Tax laws, there are other compliance requirements affecting specific industries, such as HIPAA for healthcare institutions and PCI-DSS for retail businesses.
As an entrepreneur, you should learn various regulations concerning your business niche or industry. Broadly, compliance requirements are grouped into internal and external policies. Internal policies are a requirement by the state for specific business entities, such as corporations and LLCs.
For instance, every LLC should have a binding agreement highlighting the rights of each member. You can use this LLC operating agreement template as a guide. On the other hand, external compliance policies are imposed and enforced by state and federal agencies. Outlined below are important government regulations for all businesses.
Government regulations for small and established businesses often start from taxes. It is common knowledge that all operational businesses should pay federal taxes. Some businesses also pay state taxes, depending on applicable state laws. However, there’s more to know about taxes. Entrepreneurs should know which business taxes they should pay, when to make payments, and how to plan for future tax payments.
Business taxes owed to state and federal governments depend on how your business was established. For instance, sole proprietors pay taxes differently than corporations. Below are a few terms you should know about business tax.
- Income tax – Businesses should pay taxes on their earnings.
- Estimated income tax – It is an alternative to paying business income tax annually. Sole proprietorships, partnerships, and corporations should pay estimated income tax if they expect to pay $1000 or more when filing their tax returns.
- Employment tax – Businesses with employees should submit tax payments for their staff on payroll. These include Medicare taxes, Social Security, federal unemployment tax, and federal income withholding tax.
- Excise tax – The IRS determines excise tax on different products and services. Businesses indirectly pay an excise tax when they purchase taxed goods and services.
Not being tax compliant attracts penalties and other fines.
Entrepreneurs should also be wary of antitrust laws, which come into effect if they conspire with third-party vendors or competitors. These laws address the following issues:
- Price discrimination
- Conspiring to fix product prices in the market
- Conspiring to allocate customers or markets
- Conspiring to boycott
The federal trade commission regularly investigates and punishes companies and businesses that ignore these regulations.
Independent contractors and businesses with employees should also learn about various state and federal employment and labor laws. Common labor laws affecting businesses include:
- Wages – The FLSA outlines standards for employee wages and overtime compensation. Public and private employers should pay employees the minimum federal wage and overtime pay at regular rates.
- Equal opportunity – Businesses with more than 15 employees should comply with equal opportunity laws enforced by the EEOC. The EEOC outlines various practices used to guide the hiring process.
- Family and medical leave – Employers with more than 50 employees should provide 12 weeks of job-protected leave to employees to attend to family and medical issues as per the FMLA guidelines.
- Workplace safety and health – Under the OSHA act, employers should provide a safe working environment to all employees.
- Non-US citizen workers – Employers should verify that non-US citizen employees have legal permission to work in the country.
A good marketing strategy is crucial for all businesses. However, your marketing campaign should adhere to various government regulations. For instance, product details and claims shouldn’t be untruthful or deceptive. Using testimonials also comes with more regulations. Violating marketing laws attracts hefty fines and possible business closure. Businesses can adhere to advertising laws by:
- Complying with labeling laws for products. You should list all the ingredients in your products.
- Learn the rules for marketing specific products. Working with a lawyer can help you avoid legal setbacks.
- Learn the rules for marketing products online, through email, and over the phone.
Businesses with employees collect a lot of personal information, including their addresses, email, social security number, and phone number. These businesses should adhere to the rules and regulations that govern how employers should save and store confidential information. Businesses shouldn’t release their employees’ private information, be it social security numbers or medical data.
Employers are legally mandated to purchase insurance immediately when they make the first hire. Worker’s compensation insurance is a requirement in all states. Compensation insurance protects employers and employees from workplace accidents. In the event of an injury, the insurer compensates the employee for medical care and lost income. The insurance company also defrays the legal costs of lawsuits filed by injured workers.
All businesses should comply with government regulations to operate legally. Ignoring these requirements attracts hefty fines and can lead to business closure. Unfortunately, the sheer number of government, state, and local regulations makes it challenging for entrepreneurs to keep up. Working with professionals can ease compliance.