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7 Important Government Regulations on Business You Must Know

Meredith Wood

Meredith Wood

Editor-in-Chief at Fundera
Meredith is Editor-in-Chief at Fundera. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.
Meredith Wood

America is a great place to be an entrepreneur. But, still, many business owners will tell you that they experience no shortage of government regulations on business. Some regulations impact the ways in which businesses report income and pay taxes; others regulate how they dispose of their excess materials or waste. For just about any kind of industry and transaction within it, there’s a government regulation on business to go alongside it.

The sheer volume of government regulations on business can make your head spin, whether or not you’re just starting out or are a seasoned small business professional. And even finding the locations of these regulations can seem overwhelming. But despite the high volume of government regulations on business, understanding the general rules of the road isn’t 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’re looking for. There are several places for entrepreneurs to go depending on what kind of regulatory information they need. Here’s a breakdown of the common kinds of government relations on business, as well as where you can go to find help understanding them.

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1. Tax Code

For most small business owners, government regulation questions almost always begin with taxes. But there’s 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.

Every company registered within the United States has to pay federal taxes. Most companies will 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’ll pay depends on how you formed your business. In this regard, not all businesses are treated the same. Sole proprietorships pay taxes differently than, say, S-corporations. Here’s a full rundown of the different taxes for business structures to help you determine what your business needs to file. Despite the differences between each kind of business, there are a few general terms you sould know:

  • 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.

  • 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 required to make estimated tax payments if expect to make more than $500 or more in income.

  • Employment tax: Companies that have employees are expected to 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, see the IRS page on Employment Taxes for Small Businesses.

  • 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 may be under certain excise tax law if you manufacture or sell certain 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.

2. Employment and Labor Law

You’ll need to know the vast array of federal and state labor laws if your business is going to hire employees or independent contractors. Thankfully, if you’re just starting out, you can take advantage of the Department of Labor’s FirstStep Employment Law Advisor. This resource helps employers determine which major federal employment laws apply to their business or organization, the record keeping and reporting requirements required, and which on-site posters they need to hang in their office or work site.

Here are the most common labor laws:

  • Wages and hours: According to the Department of Labor, the Fair Labor Standards Act (FLSA) prescribes standards for wages and overtime pay. This act affects 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).

  • Workplace safety and health: The Occupational Safety and Health Administration (OSHA) requires that employers, under the OSH Act, “provide their employees with work and a workplace free from recognized, serious hazards.” The OSH Act is enforced through workplace inspections and investigations.

  • Equal opportunity: 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.

  • Non-US citizen workers: The federal government mandates that employers must verify that their employees have permission to work legally in the United States. There are several employment categories, each with different requirements, conditions, and authorized periods of stay (for employees who are not legal residents or citizens).

  • Employee benefit security: 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.

  • Unions: If your business has union employees, you may need to file certain reports and handle relations with union members in specific ways. See the Office of Labor Management Standards’ website for more information.

  • Family and medical leave: 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 or adoption of a child, or for the serious illness of the employee or a spouse, child, or parent.

  • Posters: Some Department of Labor states require notices to be shared or posted in the workplace for employees’ view (for example, alcohol warnings and hand-washing reminders). Fortunately, the elaws 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.

3. Antitrust Laws

Any time a company conspires with its competitors, third-party vendors, or other relevant parties, it may run afoul of antitrust laws. You can easily familiarize yourself with the SBA’s handy list of issues that antitrust laws strive to address, such as the following:

  • Conspiring to fix market prices: Discussing prices with competitors—even if it affects a small marketplace.

  • Price discrimination: Securing favorable product prices from buyers when other companies can’t.

  • Conspiring to boycott: Conversations with other businesses regarding the potential boycott of another competitor or supplier.
  • Conspiring to allocate markets or customers: Agreements between competitors to divide up customers, territories, or markets are illegal. This provision applies even when the competitors do not dominate the particular market or industry.

  • Monopolization: Preserving a monopoly position through the acquisition of competitors, the exclusion of competitors to the given market, or the control of market prices.

4. Advertising

A good advertising strategy can do wonders for your business. But before you dive in, you’ll need to make sure that you’re playing by the rules. For example, you have to make sure the claims in your ads are not untruthful or purposely deceptive. 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:

  • Comply with labeling laws for consumer products, meaning that you list out ingredients and chemicals within 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’ll be specific to your industry, and where working with a lawyer who knows the rules around your business will really benefit you.

  • Understand the rules for marketing and advertising over the phone or via email.

  • Learn the rules for making environmentally friendly or “green” claims in advertising. More on that below.

5. Environmental Regulations

You might need to acquaint yourself with various environmental protection laws, depending on your industry or business. This is especially pertinent if you’re marketing, say, cleaning products, food, or anything with claims to be natural, organic, or eco-friendly. You’ll find dozens of environmental rules and regulations that might affect your small business, both at the federal and state level.

Here’s a sample of compliance measures you may need to take for your business. Note that you may also need to consult your state environmental protection agency to make sure you meet their requirements as well.The EPA Small Business Gateway is a great resource to make sure your business is in compliance with environmental law.

6. Privacy

Businesses with staff and employees wind up amassing a ton of sensitive personal information about their employees. As a result, there are a variety of rules and regulations about how employers must save and secure this data.

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.

Although employees have clear and specific rights to privacy in the workplace, the rights are balanced against the employers’ privileges to monitor their business operations. It’s important to understand what rights you have as a business to monitor employees, and to be clear and transparent about that monitoring to your employees.

7. State Licensing

We’ve focused on federal laws and government regulations on business so far, but that doesn’t meant that there aren’t ample state regulations to consider for your small business. Many state and local governments have their own requirements for businesses, and they’re just as important to understand as their federal counterparts. Here’s a breakdown of the most common state licenses and laws, but check out our State-by-State Guide to Business Licenses and Permits to see what else your state might require.

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There’s a lot for small business owners to digest as far as government regulations are concerned. The good news is that you’re not alone in making sure that your business is compliant and on the right side of the law. The best thing you can do is check in with your local SBA office, and as the need arises, set up legal representation for your business in the event that you need additional counseling.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Meredith Wood

Meredith Wood

Editor-in-Chief at Fundera
Meredith is Editor-in-Chief at Fundera. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.
Meredith Wood

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