All essential government regulations on businesses require companies to comply with federal, state and local statues and regulations administered by legislative bodies and carried out by regulatory agencies in the U.S. Some regulations impact the ways in which businesses report income and pay taxes, while others regulate how they dispose of their excess materials or waste.
For just about any kind of industry and transaction, there are a couple of important government regulations on business that all business owners as well as start-ups must know. The sheer volume of government regulations on business can make your head turn round and round faster, whether or not you are just starting out or are a seasoned small business professional. And even finding the locations of these regulations can seem overwhelming.
But in spite of the high volume of government regulations on business, understanding the general rules of the road is not actually as scary as it sounds. The secret to understanding government regulations on business is knowing where to look, and what kind of laws you are looking for.
There are several places for entrepreneurs and start-ups to go depending on what kind of regulatory information they need. Here is a breakdown of the most common types of government regulations on businesses, as well as where you can go to find help understanding them.
Generally, the federal business laws and government regulations fall into eleven basic categories. Note that each can not affect your business the same way—entire categories might not be a huge concern for your business, depending on your industry. However, you will want to make sure your company is in compliance with all of them with the same level of importance and attention. In addition, your business lawyer can help you figure out what exactly applies to you.
Below is a rundown of the eleven important types of government regulations on businesses in the U.S.:
There are, in fact, several government regulations on businesses that employ workers and independent contractors in the form of federal and state labour laws. So, if you are just starting out, you can take advantage of the “Department of Labor’s FirstStep Employment Law Advisor”.
This resource assists employers determine which major federal employment laws apply to their business or organisation, the record keeping and reporting requirements required, and which on-site posters they need to hang in their office or work site.
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According to the Department of Labour, the Fair Labour Standards Act (FLSA) prescribes standards for wages and overtime pay. This act influences most private and public employment, and requires employers to pay covered employees at least the federal minimum wage and overtime pay of one-and-one-half-times the regular rate of pay (unless they are exempt employees).
The Occupational Safety and Health Administration (OSHA) requires that employers, under the OSH Act, “provide their employees with work and a workplace free from recognised, serious hazards.” The OSH Act is enforced through workplace inspections and investigations.
Most employers with at least 15 employees must comply with equal opportunity laws enforced by the Equal Employment Opportunity Commission (EEOC). The EEOC mandates that certain hiring practices, such as gender, race, religion, age, disability and other elements are not allowed to influence hiring practices.
The federal government mandates that employers must verify that their employees have permission to work legally in the United States. There are numerous employment categories are available, each with different requirements, conditions and authorised periods of stay (for employees who are not legal residents or citizens).
If your company offers pension or welfare benefit plans, you may be subject to a wide range of fiduciary, disclosure and reporting requirements under the Employee Retirement Income Security Act.
If your business has union employees, you may need to file certain reports and handle relations with union members in specific ways. Additionally, you may visit the Office of Labour Management Standards’ website for more information.
The Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to provide 12 weeks of unpaid, job-protected leave to eligible employees for the birth of a child, or for the serious illness of the employee or a spouse, child, or parent.
Some Department of Labour states require notices to be shared or posted in the workplace for employees’ view (for example, alcohol warnings and hand-washing reminders). Fortunately, the e-laws Poster Advisor is an easy way to determine which posters you need and you can use it to get free electronic and printed copies in multiple languages.
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We have focused on federal laws and government regulations on business so far, but that does not meant that there are not ample state regulations to consider for your small business. Many state and local governments have their own Legal requirements for businesses and they are just as important to understand as their federal counterparts.
You must be wondering that, “Do I really need a business license?” The answer is, indeed. In many states and localities, you do need a business license to operate. This can be particularly important for businesses in heavily regulated industries, such as childcare or health. Without having or the assurance of proper licenses, states can fine your business or even revoke your authority to operate.
Among several government regulations, you might also need to acquaint yourself with various environmental protection laws, depending on your industry or business.
This is especially pertinent if you are marketing, say, cleaning products, food, or anything with claims to be natural, organic, or Eco-friendly. You will find dozens of environmental rules and regulations that might affect your small business, both at the federal and state level.
The EPA Small Business Gateway is a great resource to ensure that your business is compliance with environmental law. Note that you can also have a need to consult your state environmental protection agency to make sure you fulfill their requirements as well.
If, at any given time, a company conspires with its competitors, third-party vendors, or other relevant parties, it may run afoul of anti-trust laws. These are the issues the antitrust laws strive to address, such as the following:
(i) Conspiring to fix market prices: This refers to discussing prices with competitors, even if it affects a small marketplace.
(ii) Price discrimination: This refers to securing favorable product prices from buyers when other companies cannot.
(iii) Conspiring to boycott: This refers to conversations with other businesses regarding the potential boycott of another competitor or supplier.
(iv) Conspiring to allocate markets or customers: This refers to the agreements between competitors to divide up customers, territories, or markets of being illegal. This provision is enforced even when the competitors do not dominate the particular market or industry.
(v) Monopolization: This refers to preserving a monopoly position through the acquisition of competitors, the exclusion of competitors to the given market, or the control of market prices.
Thus, if your company runs afoul of any of these regulations mentioned above, then the federal trade commission might contact you and take legal actions against you.
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Many businesses with staff and employees usually wind up amassing a ton of sensitive personal information about their employees. As a result, there are a variety of rules and regulations are made about how employers must save and secure this confidential data.
Thus, if your business discloses an employee’s private information, including Social Security number, address, name, health conditions, credit card, bank numbers, or personal history, not only do various laws exist to keep businesses from spreading this information, but employees can sue for disclosing sensitive information. For instance, the Health Insurance Portability and Accountability Act (HIPAA) prohibits the release of health data without a patient’s permission.
Even though the employees have clear and specific rights to privacy in the workplace, the rights are balanced against the employers’ privileges to monitor their business operations or activities they are doing in the company. It’s important to understand or realize what rights you have as a business to monitor your employees activities and to be clear and transparent about that monitoring to your employees.
When running a business, as soon as you hire your first employee, you are legally obligated to purchase workers’ compensation insurance. All states, with the exception of Texas, require businesses with employees to purchase workers comp insurance. Workers’ compensation insurance protects both you and your employee in the case of an accident on the job. The employee will receive medical care and compensation for some of the income they lose while injured, while the insurance company will defray the costs of any lawsuit filed by the injured worker.
Other types of insurance generally are not required, but it depends on the circumstances. For example, if your business contracts with the government or gets a government-guaranteed loan, then you will need to show proof of certain types of business insurance.
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If you employ more than a hundred people (or more than 50, if you are a federal contractor), then you are required to provide a report on how much you pay each of them, broken down by race/ethnicity, job category and gender, to the Equal Employment Opportunity Commission each year.
This is to ensure that you are complying with federal non-discrimination laws, which means that you are not paying a woman significantly less than a man with exactly the same job title and responsibilities.
The report, which is known as the EEO-1 form, has to be submitted by the end of each May.
It is worth mentioning that having a good advertising strategy can do wonders for your business. However, before you dive in, you will need to make sure that you are playing by the rules and government regulations. For example, you have to make sure the claims in your ads are not untruthful or purposely deceptive.
Using testimonials in your ads comes with additional rules and regulations. As such, violating these rules can result in fines, which defeats the purpose of your advertising in the first place.
Here’s how you can avoid misleading customers:
E-mail marketing is no different than advertising. If your business engages in e-mail marketing, there are separate regulations which you will need to comply with under the CAN-SPAM Act.
There are several things that this Act regulates, but some of the main components are as follows:
Each separate e-mail violation is subject to hefty fines, so make sure you know the ins and outs of this law before you set up your e-mail marketing strategy.
According to the most small business owners, government regulation questions almost always begin with taxes. But there is more to taxes than merely paying them—knowing which business taxes to pay, when to pay them and how to set up your business to account for future tax payments can spare you a ton of headaches when it comes time to write the government a check.
In the United States every registered company has to pay federal taxes. Many companies or businesses also have to pay state taxes, depending on the state in which the company is registered. These are unavoidable. Avoiding taxes, or deciding not to pay them outright, comes with hefty penalties and potential jail time.
But the kinds of taxes you will pay depends on how you formed your business. In this way, not all businesses are treated the same. Sole proprietorship pay taxes differently than, say, S-corporations.
Here is a full rundown of the different taxes for business structures to help you determine what your business needs to file. In spite of differences between each kind of business,
(a) Income tax: Most businesses file an annual income tax return. Businesses must pay income tax as they earn and receive income, and then file a tax return at the end of the year.
(b) Estimated tax: Estimated tax payments offer an alternative to paying income tax throughout the year as your company earns money. Sole proprietors, partners and S-corporation shareholders must usually make estimated tax payments if they expect to owe $1,000 or more once they file their return. Note that corporations are usually needs to make estimated tax payments if expect to make more than $500 or more in income.
(c) Employment tax: Companies that have employees pay taxes related to having staff on their payroll. These include Social Security and Medicare taxes, federal income tax withholding and federal unemployment tax. For more information, visit the IRS website on Employment Taxes for Small Businesses.
(d) Excise taxes: Excise taxes are paid when your business makes purchases on specific goods and are often included in the price of the product. One common example of excise tax is the purchase of gasoline, where applicable taxes are baked into the price per gallon rather than as a tally at the end of the transaction. You can be under certain excise tax law if you sell certain manufactured goods, use various kinds of equipment, receive payment for certain kinds of services and much more. For additional information, refer to the IRS guide on Excise Taxes on their website.
Most businesses that sell physical goods must collect sales tax from customers and submit the tax to their state’s revenue department. A few states do not collect sales tax. Generally, the law defines that a business must collect sales tax in any state with which it has a physical connection (known, in legal terms, as a “nexus”). That nexus may mean a physical retail shop, or hiring employees in the state. Even online sellers might have to collect sales tax in any state that they sell to. If your business has a nexus, then you will need to collect sales tax.
If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, you do not need to collect sales tax anyway, as these states do not have sales tax. Depending on what you are selling, you might be exempt to begin with.
There are opinions on all sides about whether having government regulation helps businesses or not. The World Bank ranks the U.S. as the seventh country in terms of ease of doing business, but some people think there is still too much regulation. On the one hand, laws and regulations Protect consumers and ensures that all businesses are contributing their fair share to the society.
However, having too many regulations could also stifle businesses and prevent them from creating jobs and contributing to the economy. The amount of laws and government regulations certainly changes from time to time, as the political tide changes. But, it is always wise to stay up to date on the regulations affecting your industry. If you need help keeping up with rules and regulations, we suggesting consulting a business lawyer.
There is a lot for small business owners to digest as far as government regulations are concerned. The good news is that you are not alone in making sure that your business is compliant and on the right side of the law.
However, the best thing you can do is check in with your local Small Business Association (SBA) office, and as the need arises, set up legal representation for your business in the event that you need additional counselling.