How Regulations Affect your Business

Your business may be small but it will need to comply with many federal, state and local regulations that govern its operation.  Trying to ignore the regulatory requirements may be the easy thing to do short term, but will come back to haunt you long term and make it difficult for your business to grow.  You will need to spend an equal amount of time learning the various regulations as you do studying your marketplace.

Next we will cover some of the more common regulatory requirements which could affect your business.  Regulations do vary as to the industry you’re in so don’t think that the list is all inclusive.  Just a couple examples to demonstrate would be restaurants need to deal with the health departments while environmental regulations also affect businesses that deal with solvents and chemicals.  You will need to research your industry and the regulations which affect it.  Ignorance is not an excuse and penalties could cause you legal jeopardy, penalties and legal expenses.

Licenses for Business

In order to legally run your business nearly every place will require a business license.  The location of your business will determine where you need to obtain your license.  A business in a city will require you to obtain a license from the city.  If the business is outside city limits you will need to turn to the county.  In either case you should contact the local office to determine the licensing requirements.

Business Structure

When you start a business there are many different legal structures which can be used.  Examples are Limited Liability Corporations, C and S Corporations, Sole Proprietorships and forms of Partnerships.  When choosing the structure of your business, you should consult with tax and legal counsel to determine what structure is best for your personal situation.

What is a Fictitious Business Name

When the owner of a business forms a company which is operated under a name other than the owners, the owner must register that fictitious business name with the county government.  There are exceptions to this rule for corporations that are operating under their corporate name and for partnerships that are practicing their chosen profession.

You May Need a Certificate of Occupancy

Some zoning agencies for local cities and counties will require a Certificate of Occupancy for a business that plans to occupy a new or existing building space.  To get more information on this you will need to contact your local city or county office.

Trademark, Patent or Copyright to Protect Your Concept

In some cases you may want to protect your business by filing for a Trademark, Patent or Copyright. 

A Trademark or Service mark can be either a name or even a symbol which are generally valid for 10 years and can be filed in your specific state or registered federally at the US Patent and Trademark Office.

In matters of thoughts or ideas Copyrights can be used for protection.  The owner of a Copyright should put notification on their works to hinder any un-authorized use.  To get additional information on Copyright you can contact the US Library of Congress.

If you have an invention you may need a patent and when it comes to patent procedures an attorney is highly recommended.  The process is generally complex and a patent search is completed to make sure the idea has not been previously patented.  You can find additional information at the US Patent and Trademark Office.

Tax Withholding

The law requires that any employer must deduct income taxes from any wages which are earned by employees.  Those taxes include Social Security, State and Federal income taxes.

A business is also required to pay income taxes on its own earnings and in some cases send in quarterly payments based on estimates for State and Federal taxes.  In addition, a self employment tax is assessed to the owners for their Social Security contributions. 

A good source for additional information is the Internal Revenue Service website.

Insurance

There are many kinds of insurance to protect your business against loss.  You should discuss you business and its insurance needs with your licensed insurance agent.  Some of the types of insurance coverage for businesses are listed below.

• Business insurance protects your businesses contents from losses due to theft, fire or other means.
• Property insurance comes in a variety of types to protect your business from damage or the need to rebuild.
• Liability Insurance covers things like product liability or injuries to customers on your property.
• Key Man insurance should be considered when a single key employee is so vital to the business that loss or incapacitation of that person could cause your business to cease operations.
• Interruption of business insurance is used to cover the fixed business expenses should it cease operations due to damage or destruction.
• Automobile insurance will provide coverage for any costs stemming from liability or repair and replacement costs due to damage.
• Officer Insurance provides coverage for any actions of office or director should they be held personally liable.
• Home office coverage will insure any office equipment used in a home office environment as most standard home policies do not provide coverage.

Sales Tax

A state sales tax number is needed to conduct business as nearly every tangible asset that can be sold is subject to a sales and use tax.  The number is used when reporting and remitting taxes to the state.  For more information on getting your sales tax number you should contact the government in your state.

Miscellaneous Items of Note

State and Federal agencies have set up regulations for to protect the rights and safety of employees.  Some of these are listed below with more information available from your local and state governmental agencies.  Federal information is available at the US Department of Labor.

• Unemployment taxes are required from businesses for the coverage of its employees.
• Employers must verify the employment eligibility of any person hired per the Federal Immigration Reform and Control Act of 1986.
• The Federal Occupational Safety and Health Administration was established to protect workers from unsafe work environments.
• Workers compensation must be carried by businesses employing more than 3 employees to protect workers injured on the job.
• Federal minimum wages affect nearly all businesses to establish rules for overtime, minimum age requirements and minimum wage requirements.
• Many businesses require bar coding to be placed on the packaged products they offer. GS1 US assigns an ID code for this purpose.