These past years, millions of people have decided to give entrepreneurship a shot and start their own business. This requires dedication, commitment and legal requirements. However, many business owners overlook the legal requirements aspect. The most common reason being that small business owners want to run their activity and focus on its growth and not so much as the “behind the scenes aspect”. Usually, they are not fond of administrative procedures and don’t take the time to check the applicable laws and regulations, including the state or federal laws.
However, as it will be outlined in this article, the knowledge of the state and federal laws when becoming a small business owner is fundamental. It might not be the best part of the activity but remains a must for all.
The saying “the ignorance of the law is no excuse.” is true on many counts. The violation of an applicable legal provision will seldom be excused by the ignorance of the rule. It is thus essential for small business owners to know the state’s and federal laws and abide by them.
The United States of America is a federal state. A federal state is one in which several partially self-governing states are united under a central government. In this type of configuration, the status of the self-governing states, as well as the powers vested in the central authority, are outlined in the constitution. As a result, each party knows the extent of its jurisdiction and must act within the confines of it.
Federal laws apply throughout the United States. They include immigration law, bankruptcy law, Social Security and Supplemental Security Income (SSI) laws, Federal anti-discrimination and civil rights laws that protect against racial, age, gender and disability discrimination; patent and copyright laws, and Federal criminal laws, such as laws against tax fraud and the counterfeiting of money.
Each State has its legislative body, and the applicable laws may differ from one to another. Their scope of competence includes criminal matters, divorce, family matters, welfare, public assistance, wills and inheritances, real estate and other property, business contracts, personal injuries, and workers compensation. In Dallas, Texas, the state laws are straightforward and easy to comply with and therefore makes it easier for small business owners to stay in compliance without the need to hire outside experts.
It is important to point out the specific laws every small business owner should know and abide by. No one wants a lawsuit. Therefore, it’s always better to be informed. The following are five areas every small business owner should know regarding state and federal laws.
The first area is trademark law. As a business owner, choosing a name, a logo and may be a slogan for the business, is not a trivial task. It will be a part of the business’ identity. After going through the brainstorming process, it is important to make sure the chosen name is available; that means not already used by an existing corporation. This checking can be done at the State’s registry or website. Once it is established that the potential name is available, it is advised to file a DBA Form (Doing Business As) in the county or state where the business is set to operate. This is a mandatory step for all entrepreneurs unless the business carries his/her full name.
Secondly, it is vital to be aware of Employment Laws. Applicable laws on employment can vary from one state to another. A good working force is essential to a business. It doesn’t matter if the business owner hires employees to run the business or for its expansion. It is advisable to seek counsel from a professional to know about the applicable employment laws and regulations in this area. This comes along with rules on discrimination, OSHA regulations, workers compensation, etc. The breach of any of these could lead to a lawsuit.
Tax law is another area business’ owners should consider. Filing tax reports is certainly not the most pleasurable part of the activity, but failure to do so, or doing it the wrong way can be sanctioned by high penalties. It is therefore vital to get information on the tax regulations and adequate process to file taxes with the IRS.
Also, business owners need to have knowledge of the licensing and permit requirements in the area in which they operate. The requirements are of various kind and nature depending on the area. Some business areas require more authorizations than others. These rules often differ from one state to another. An online research should help find out what is needed.
Finally, there is a necessity to determine what type of legal entity a business owner wants the business to be. The choice to operate your business under a certain form affects tax and liability towards the company’s debts. Seek advice before choosing to avoid bad surprises.
Please note that this article does not constitute legal advice and is meant to inform business owners on the areas of the law they should be vigilant about only