Getting a small business up and running seems like a dream career choice. For those who find the ‘9 to 5’ work culture boring and monotonous, opening a start-up appears to be the best option for them. However, the reality is far from what business aspirants often think it is. Starting with a new business venture takes a lot of legal procedures and plenty of paperwork.
There are legal attributes that entrepreneurs often don’t know about. Skipping those legal routes during the initial processing can lead to dangerous repercussions for both the business and the owner. This article will focus on 10 such areas of law that every business owner needs to understand to operate their businesses seamlessly.
Why Small Business Owners Need to Know the Importance of Business Law
Understanding legal areas involved in a business helps the business owner in various ways. Before getting into the list of business laws that entrepreneurs must know, here’s why it’s necessary to understand the importance of business law.
- Complying with federal and state rules enhances the business prospects.
- Business owners can attain a hassle-free taxation structure if they know the laws of businesses.
- Knowing local laws helps in getting licenses easily.
- Understanding business law helps the owner to manage employees in a comprehensive manner.
- Lawyers cannot always suggest the best things when it comes to business; the owner needs to know the tricky legal twists.
10 Areas of Law Every Business Owner Needs to Understand
- Licenses for Business Owners
The first thing to focus on for a business owner is to get a license to have the legal authentication to the business venture. And it marks the first step in understanding business law. Owners need to check whether or not to get a business license. If the business needs a local or zonal permit, then he/she will need to undergo both federal and state licensing procedures. For legal advice on business licensing, owners can refer to the US Small Business Administration.
- Employment Law
Talking about the importance of business laws, employment law comes second in the list. Employment law determines how a business owner will appoint and hire workers for his/her company. In today’s market, an owner should know about the employment laws even if the business has only one employee.
Fair Labor Standards Act determines the following parts of the employment process.
- Wage structure
- Overtime rules
- Child labor regulations
- Youth employment norms
Understanding FLSA will help the owner get the right wage structure and the right kinds of employees on board. For more on labor law, business owners can refer to the U. S. Labor Laws.
Family and Medical Leave Act is another branch of the employment law structure. It caters to the employees during childbirth or medical issues of any of their family members. From issuing holidays to structuring workers’ compensation and aids, owners can learn everything about FMLA from the U. S. Department of Labor.
Under Equal Employment Opportunities Act, owners cannot discriminate against anyone based on their religion, skin color, sex, race, and national origin. This law also states about equal wages for both men and women and secures individuals with disabilities.
- Tax Regulations
Tax regulations come third in the list of business laws. The process of tax filing involves the following attributes.
- Owners need to get the employer identification number to proceed into tax filing. He/she can learn about tax filing rules from the official website of the US Internal Revenue Service.
- The owner needs to pay the following taxes in order to run the business.
- Federal tax
- Sales tax
- Employment tax
- Income tax
- Marketing Laws
Marketing laws imply strict regulations on product endorsements. Business owners must be truthful and fair with their marketing and ad campaigns. If an advertisement claims something, especially for brand endorsements and baby products, the business owners must have enough evidence to justify the claim. Basically, any misleading information through marketing can face legal hazards.
- Laws For Online Businesses
Online stores require to comply with the regulations stated by the Federal Trade Commission.
If an online store has a physical address in any state of the US, like a manufacturing office, storefront, warehouse, or production unit must pay local sales tax. An entrepreneur must read all the guidelines to operate an online business legally.
If a business owner starts selling internationally through a website, the business is exposed to a global audience. There are norms and legal regulations on selling products overseas. Entrepreneurs must know these guidelines.
- Laws on Personal Information and Privacy
The online sales market often requires customers to share their personal information while purchasing products. Hence, business owners must protect all customer data with a solid security system. The Data Protection Act is one of the laws that affect businesses. To provide optimum consumer data security, online business owners can refer to the US State Privacy Legislation Tracker.
- Intellectual Property Protection Norms
If a business owner develops a unique product, it must have a patent for protecting intellectual rights. It is easily one of those must-know laws of businesses. Intellectual property includes the business name, logos, and symbols. Owners should set their protection with a trademark. For information about copyright protections, owners can refer to the US Patent and Trademark Office.
- Healthcare Regulations
In recent years, business industries have seen a lot of changes in healthcare laws. Especially during this COVID-19 pandemic, the business sectors have witnessed a whole paradigm shift in their healthcare norms. So, startups or existing business owners must know all the guidelines and the new healthcare policies. Business owners can learn about the new healthcare policies that could impact business structures, from the American Health Law Association.
- Laws in the Area of Financing
There might be situations when a business hits a possible financial roadblock. In such cases, the owner might face huge difficulty maintaining a proper cash flow and head towards bankruptcy. So, before filing for bankruptcy, the owner must know the finance laws and their guidelines. Here is the SBA guideline on financing.
- Workers Compensation
Business owners must purchase an insurance policy for their employees in case anything happens to them in the workplace. It is mandatory in the majority of the states in the USA. For more information about this law, owners can visit the Department Of Labor Law’s website.