Small and medium-sized businesses make up the backbone of the American economy. Being an entrepreneur is something that requires a lot of determination and grit, but is also something that can yield much higher rewards than a steady desk job.
However, that still means you need to put in a lot of effort. You need to prep carefully before you launch a business. That means creating a business plan and finding enough capital to make it happen are top priorities. But another priority that should be on every entrepreneur’s to-do list is to learn about several basic business laws.
Basic Business Laws Entrepreneurs Should Know
Of course, understanding the laws that apply to your business requires a lot of research. You need to have a clear idea of how you want to do business and the laws that govern the industry or type of business you want to engage in. However, certain basic business laws stay the same, whether you’re running a tech startup or a staffing agency. It is advisable that employers must consult the best employment law firm NYC to have adequate knowledge about business laws and to ensure that their company has updated policies in accordance with the labor law. Here is a list of such laws that can help make your research easier:
- Business License
- Fair Labor Standards Act
- Family and Medical Leave Act
- Federal Equal Opportunity Laws
- Workers’ Compensation
- Occupational Safety and Health Act
- At-Will Work Laws
- IRS Employer Identification Numbers
- Employee Hiring Regulations
- Tax Requirements
Let’s examine these in more detail below.
Every business in the United States of America needs a business license to operate legally. This is the most basic piece of law entrepreneurs need to know. Reaching out to your local government for a business license is a logical first step. Certain businesses, however, may not require a specific license, so make sure you check it out thoroughly. At the same time, ask about any zoning rules or restrictions that may apply to your chosen business. You can check out federal and state licensing information at the Small Business Administration.
Fair Labor Standards Act
This act is concerned with ensuring that businesses maintain fair working standards at all times. It guarantees a minimum wage, rules for overtime, and regulations for keeping labor records. The act also lays down a complete ban on all types of child labor.
Family and Medical Leave Act
The Family and Medical Leave Act or FMLA deals with paid leaves for employees. It lays down rules for employers to follow in case an employee deals with a medical or family problem. Consult the act for more information on compensation and time-off guaranteed under it.
Federal Equal Opportunity Laws
The equal opportunity regulations in place in the United States call for equal pay regardless of gender. It also prohibits discrimination based on factors like religion, race, national origin, or color. These laws also offer protection to workers who suffer from disabilities.
The workers’ compensation policies differ from state to state. Some states require employers to purchase insurance policies to help compensate workers who are injured or fall sick due to workplace exposure. The Department of Labor has detailed resources on workers’ compensations and employer responsibilities, as well as on the compensation that sick or injured workers are entitled to.
Occupational Safety and Health Act
Occupational Safety and Health laws deal with maintaining safe and sanitary working conditions for employees. The act requires employers to take all necessary steps to make their workplace free from recognized hazards.
At-Will Work Laws
The At-Will employment doctrine is in place in all states except Montana. This allows employers to fire employees for any legal reason at any time. At the same time, it allows employees to quit their jobs at any time they want.
IRS Employer Identification Numbers
Your business will likely generate profit, and where there is profit, local, state, and federal governments will tax you for it. Obtaining an employer identification number from the IRS is a crucial step in setting up a business. This allows you to properly file all due business taxes.
Employee Hiring Regulations
Each employee you hire as an impact on your business taxes. The amount of time an employee works for your business is also very crucial from a tax perspective. It also pays to understand how a W-2 employee differs from a 1099 employee because they have different tax ramifications.
Whether you have nearly 500 employees or just 1, the government will expect you to pay taxes accordingly. There are different tax requirements based on federal laws, social security, and federal unemployment requirements. State taxes also apply to most businesses so you want to check that out.
In addition, different types of taxes apply to different businesses such as a financial staffing solutions firm and a local fine eatery. Make sure you understand all tax requirements that apply to your business. Speaking to a tax accountant may be a good idea at this stage.