All government business regulations require businesses to comply with federal, state, and local statutes and regulations administered by legislative bodies and enforced by regulatory agencies. Some regulations affect the way companies report income and pay taxes; others regulate how they dispose of their leftover materials or waste. For virtually every type of industry and transaction, there are government regulations on how to do business.
The sheer volume of government regulations on business can make your head spin, whether you're just starting out or a seasoned small business professional. And even finding the locations of these regulations can seem complicated. But despite the myriad of government regulations on business, understanding the general rules of the road isn't as daunting as it sounds.
The key to understanding government business regulations is knowing where to look and what type of laws you are looking for. There are a number of places employers can go, depending on the type of regulatory information they need. Here's a breakdown of common types of government business regulations, as well as where you can find help understanding them.
Top 11 Government Business Regulations
Federal business laws and government regulations fall into eleven basic categories. Keep in mind that each one may not affect your business in the same way – full categories may not be a big concern for your business depending on your industry.
But you'll want to make sure your business honors all of them with the same level of importance and care. Theirbusiness lawyercan help you figure out what, exactly, applies to you.
Here is a summary of the different types of government regulations on business:
1. Tax Code
For most small business owners, government regulation problems almost always start with taxes. But taxes are about more than just paying them: knowing which onesbusiness taxespay, when to pay them, and how to set up your business to account for future tax payments can save you a lot of headache when it comes time to write a check to the government.
Every business registered in the United States must pay federal taxes. Most businesses will also have to pay state taxes, depending on the state in which the business is registered. These are unavoidable. Avoiding taxes, or choosing not to pay them right away, carries heavy penalties and possible jail time.
But the types of taxes you'll pay depend on how you formed your business. In this sense, not all companies receive the same treatment.sole proprietorshipspay taxes differently than, say,S-corporations🇧🇷 Here is a full overview of the differenttaxes for commercial structuresto help you determine what your business needs to archive. Despite the differences between each type of business, there are some general terms to keep in mind:
- Income tax:Most businesses file an annual income tax return. Businesses must pay income tax as they earn and receive income, then file a tax return at the end of the year.
- Estimated tax:Estimated tax payments offer an alternative to paying income taxes throughout the year as your business earns money. S corporation sole proprietors, partners and shareholders generally must make estimated tax payments if they expect to owe $1,000 or more when they file their tax return. Keep in mind that businesses are generally required to make estimated tax payments if they expect to earn more than $500 or more in income.
- labor tax:Businesses that have employees are expected to pay taxes related to having employees on their payroll. This includes Social Security and Medicare taxes, federal income tax withholding, and federal unemployment tax. For more information, see the IRS page at Employment Taxes for Small Businesses.
- Excise taxes:Excise duties are paid when your company purchases specific goods and are generally included in the price of the product. A common example of an excise tax is the purchase of gasoline, where applicable taxes are included in the price per gallon instead of counted at the end of the transaction. You may be subject to certain excise laws if you make or sell certain goods, use various types of equipment, receive payments for certain types of services, and much more. For additional information, see theIRS Guide to Excise Taxes.
Some businesses also need to collect sales tax, which we'll talk about later.
2. Employment and Labor Law
There are also many government regulations regarding businesses that employ freelancers and contractors, in the form of federal and state employment laws.
Fortunately, if you're just starting out, you can take advantage of the Department of LaborFirstStep Employment Law Consultant🇧🇷 This resource helps employers determine which important federal employment laws apply to their business or organization, necessary record-keeping and reporting requirements, and which on-site signs they should hang in their office or location of work.
These are the most common labor laws:
- Salary and hours:According to the Ministry of Labor, theFair Labor Standards Act(FLSA)prescribes standards for wages and overtime pay. This law affects most public and private jobs and requires employers to pay covered employees at least the federal minimum wage and overtime pay at one and one-half times the standard rate of pay (unless they are otherwiseexempt employees).
- Security and health at work:o Occupational Safety and Health Administration(OSHA)requires employers, under the Lei de SST, “provide its employees with work and a workplace free from serious and recognized risks”. The OSH Act is enforced through workplace inspections and investigations.
- Equal opportunities:Most employers with at least 15 employees must comply with equal opportunity laws imposed by the Equal Employment Opportunity Commission(EEOC)🇧🇷 The EEOC requires that certain hiring practices, such as gender, race, religion, age, disability, and other elements, cannot influence hiring practices.
- Non-US Workers:The federal government requires employers to verify that their employees have legal permission to work in the United States. There are many job categories, each with different requirements, conditions, and authorized periods of stay (for employees who are not legal residents or citizens).
- Employee Benefits Security:If your company offers pensions or pension benefit plans, you may be subject to a wide range of fiduciary, disclosure and reporting requirements under the Employee Retirement Income Security Act.
- Unions:If your business has unionized employees, you may be required to file certain reports and handle relations with union members in specific ways. Watch theOffice of Labor Management Standards' website for more information.
- Family and Medical Leave:oFamily and Medical Leave Law(FMLA)Requires employers with 50 or more employees to provide 12 weeks of unpaid job-protected leave to qualified employees due to the birth or adoption of a child or serious illness of the employee or their spouse, child, or parent.
- posters:Some Department of Labor states require notices to be shared or posted in the workplace for employees to see (for example, alcohol warnings and handwashing reminders). Fortunately, the elaws poster consultantit's an easy way to determine which posters you need, and you can use it to get free electronic and print copies in many languages.
3. Antitrust Laws
Any time a company colludes with its competitors, third-party vendors, or other relevant parties, it can run afoul of antitrust laws. These are the questionsantitrust lawstry to address, such as the following:
- Conspiracy to fix market prices:Discuss prices with competitors, even if it affects a small market.
- Price drop:Securing favorable product prices for buyers when other companies cannot.
- Conspiracy to boycott:Discussions with other companies about the possible boycott of another competitor or supplier.
- Conspiring to assign markets or customers:Agreements between competitors to divide customers, territories or markets are illegal. This provision applies even when competitors do not dominate the particular market or industry.
- Monopolization:Preserving a monopoly position by acquiring competitors, excluding competitors from a given market, or controlling market prices.
If your business violates any of these regulations, the Federal Trade Commission may contact you.
A good advertising strategy can do wonders for your business. But before you take the plunge, you need to make sure that you are following the government's rules and regulations. For example, you need to make sure that the claims in your ads are not false or intentionally misleading. Wearingtestimonials in your adsit comes with additional regulations. Violation of these rules can result in fines, which defeats the purpose of your advertising in the first place.
Here's how you can avoid cheating customers:
- Comply with consumer product labeling laws, which means you list the ingredients and chemicals in your products.
- Know the specific rules for advertising and selling products over the Internet.
- Understand the rules for advertising specific products, whether it be alcoholic beverages or 900 numbers. This will be specific to your industry and working with a lawyer who knows the rules of your business will really benefit you.
- Understand the rules of marketing and advertising by phone or email.
- Learn the rules for making ecological or “green” claims in advertising. More on that below.
5. Email Marketing
Closely related to advertising is email marketing. If your business engages in email marketing, there are separate regulations that you will need to comply with under theLei CAN-SPAM.
There are several things that this law regulates, but some of the main components are the following:
- Do not use false or misleading headers
- Don't use misleading titles
- Indicate that the message is an advertisement
- Include your business name and address
- Show the customer how to unsubscribe from emails and fulfill unsubscribe requests immediately
Each separate email violation is subject to hefty fines, so make sure you know the ins and outs of this law before setting up your email marketing strategy.
6. Environmental Regulations
You may need to familiarize yourself with various environmental protection laws, depending on your industry or business. This is especially pertinent if you sell, for example, cleaning products, food, or anything that claims to be natural, organic, or eco-friendly. You'll find dozens of environmental rules and regulations that can affect your small business, both at the federal and state levels.
oEPA Small Business Portalis a great resource for ensuring your business is compliant with environmental legislation. Keep in mind that you may also need to check with your state's environmental protection agency to make sure it meets the requirements as well.
Companies with employees and employees end up accumulating a ton of sensitive personal information about their employees. As a result, there are a variety of rules and regulations on how employers must store and protect this data.
If your company discloses an employee's private information, including Social Security number, address, name, health status, credit card, bank numbers, or personal history, there are not only numerous laws to prevent companies disclose this information, but employees can sue you for disclosing confidential information. For example, himHealth Insurance Portability and Accountability Act (HIPAA)prohibits the disclosure of health data without the permission of the patient.
While employees have clear and specific rights to privacy in the workplace, those rights are balanced by employers' privileges to monitor their business operations. It is important to understand what rights you have as a company to monitor employees and to be clear and transparent about this monitoring to your employees.
8. Licenses and permits
So far, we've focused on federal laws and government business regulations, but that doesn't mean there aren't extensive state regulations to consider for your small business. Many state and local governments have their own requirements for businesses, and these are just as important to understand as their federal counterparts.
You may be wondering, "Do I need a business license?" In fact, in many states and localities, youit doesThey need a business license to operate. This can be particularly important for companies in highly regulated industries like child care or healthcare. Without the proper licenses, states can fine your business or even revoke your authorization to operate.
As soon as you hire your first employee, you are legally required to purchase workers' compensation insurance. All states except Texas require businesses with employees to purchase workers' compensation insurance.
Workers' Compensation Insurance protects you and your employee in the event of an accident at work. The employee will receive medical care and compensation for part of the income lost while injured, while the insurance company will bear the costs of any legal action brought by the injured worker.
Other types of insurance are not normally necessary, but it depends on the circumstances. For example, if your business contracts with the government or obtains a government-backed loan, you will need to provide proof of certain types of business insurance.
10. Payment data report
If you employ more than 100 people (or more than 50 if you are a federal contractor), you must report how much you pay each of them, broken down by race/ethnicity, job category, and gender, to the Equal Employment Opportunity Commission at Employment for each year
This is to make sure you're complying with federal anti-discrimination laws (meaning you're not paying a woman significantly less than a man for exactly the same job title and responsibilities). The report, known asForm EEO-1, must be submitted at the end of each month of May.
11. Sales Tax Collection
Most businesses that sell physical goods must collectsales taxcustomers and remit the tax to your state department of revenue. Some states do not charge sales tax.
In general, the law specifies 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 could mean a physical retail store or hiring employees in the state. Even online sellers may have to collect sales tax in whatever state they sell to.
If your business is nexus, you will need to collect sales tax. If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, you don't have to collect sales tax anyway; those states have no sales tax. Depending on what you're selling, you might be exempt to begin with.
Does government regulation hurt or help your business?
Opinions are on all sides about whether government regulation hurts or helps businesses. The World Bank ranks the US as the seventh best country in terms of ease of doing business, but some people feel there is still too much regulation.
On the one hand, regulation protects consumers and ensures that all companies are treated equally and contribute their fair share to society. On the other hand, too much regulation can stifle companies and prevent them from creating jobs and contributing to the economy. The amount of regulation certainly changes as the political tide turns, but it's always good to stay up to date on regulations that affect your industry. If you need help complying with regulations, we suggest consulting a corporate attorney.
Small business owners have a lot to digest when it comes to government regulations. The good news is that you are not the only one making sure that your business complies with the law and is on the right side. The best thing to do is contact your local SBA office and, as necessary, set up legal representation for your business should you need further advice.
- World Atlas. with. 🇧🇷The best countries for business-friendly regulations“
What are the most important questions a business should answer? ›
- What problem does your business solve?
- How does your business generate income?
- Which parts of your business are not profitable?
- Is your cash flow positive each month?
- What is your pricing strategy and why?
- How effectively do employees generate revenue?
- Value-Creation. Discovering what people need, want, or could be encouraged to want, then creating it.
- Marketing. ...
- Sales. ...
- Value-Delivery. ...
Basic and financial information: name of company, contact info, location, industrial activities and classification codes, number of employees, board of management, some financial data etc.What are the 3 key things needed before starting a business? ›
- Take a business or entrepreneur training class. Take a business class or workshop before you start a business. ...
- Create a business plan. Yes, you really do need a business plan. ...
- Conduct real research. ...
- Let's review:
- Take the next step.
No matter how bold or ambitious your plans are to grow your business, the key to your business's success lies in three critical, interdependent components: operational excellence, customer relations/communications and financial management.