Small business is a beautiful experience one could imagine undertaking, but it has numerous legal obligations. Hnehmen reported that multiple laws and regulations involve an entrepreneur while establishing their business to run a legal business. It is, therefore, essential to acquaint oneself with these legal provisions so that business people avoid falling into pitfalls that could have been easily avoided. This article is a general guide to assist any business owner regarding Small Business Law; the areas covered include the legal structure of businesses, legal agreements, patents, employment laws, and taxes, among others.
- Choosing the Right Business Structure
“Picking the correct lawful organization is one of the most vital business choices you will make at the initial stage of your business. The business structure you decide on will significantly impact your taxation, legal responsibility, and business operations. They are easy to organize and run, including sole trader and partnership business forms, but personalities are exposed to business risks. While it is essential to note that LLCs and corporations shield the owner’s personality, they come with more cumbersome legal procedures,” says Justin Carpenter, franchise owner of Modern Maids Phoenix. Each structure is beneficial in some ways and can be disadvantageous in other ways. As such, one should seek legal advice or consultancy from an accountant to identify the best structure for his business. So, please make the right decision first to avoid legal or financial issues, especially when starting a business.
- Understanding Contracts and Agreements
“In any business deal, contracts are the building blocks for any business activity; as such, anyone in entrepreneurship must understand how to draft, assess, and implement the contracts. The legal forms of agreements that should be protected when entering agreements with suppliers, customers, and employees are well-drafted contracts that ensure the business side. The type and extent of activities to be done, the method of compensation, issues to do with nondisclosure, and rules of airing out differences are prime tenets to address. Terms of the contract should be written and not ambiguous, and when the contract is signed, all parties are bound to adhere to the terms set out in the contract. Regardless of the nature of a particular contract, I would like to ask you for legal advice, which you always recommend before putting in your signatures. Signature contracts protect your company and enhance the credibility of your business in the eyes of your business counterparts and clients by outlining the terms of the agreements,” says Mark McShane, Digital PR Agency Owner of Cupid PR.
- Protecting Your Intellectual Property
“Intellectual Property, or IP, is still among companies and tiny businesses’ most crucial fixed or non-fixed assets. It can be a trademark, copyright, patent, and trade secret. It would be best to protect your IP because people out there are waiting to exploit your brand, products, or ideas. The business people should ensure they acquire and document the trademarks, patents, and copyrights from the concerned departments and ensure sufficient measures are taken to protect trade secrets. For instance, a trademark protects your brand name; conversely, a patent protects new inventions and ways of doing things,” says Tal Holtzer, CEO of VPS Server. Furthermore, regularly monitoring the market, evaluating the infringement cases, and acting accordingly is also vital. One cannot protect one’s inventions, which implies that the business may lose lots of money and, at the same time, damage the company.
- Navigating Employment Law
“The business growth may require you to hire employees; thus, by the law, you must accommodate some responsibilities. Employment law is relevant for one to know to not break the law on hiring employees or employees about wages, benefits, safety at workplace measures, and lawful nondiscrimination. For example, FLSA is the law that regulates wages and the number of hours the employees must work without any more pay, and OSHA is the law of safe working people. It is also essential to make the business aware of anti-discrimination laws. These are useful when defending employees against discrimination based on their color, gender, and age, among other things,” Michael Hurwitz, Chief Executive Officer (CEO) of Careers in Government. A couple of primary legal safeguards for businesses whose employment heritages are fading are written contracts and the establishment of workplace relations.
- Complying with Tax Obligations
Small business owners are aware of the fact that they have stringent obligations on tax compliance. Various laws and legal structures govern every type of business, and tax laws are among them; it means that knowing your responsibility is crucial. Business owners must understand the federal income tax, state income tax, payroll tax, sales and use tax, and Self Employment Tax as a starting point for the taxes. For instance, an LLC may enjoy pass-through taxation, while a corporation may be taxed twice. They maintain a good record of money transactions, prepare and submit tax returns, and pay the right amount of taxes at the right time to help prevent legal consequences,” says Lauren Taylor, Marketing Manager at Emergency First Aid At Work Course. For instance, it’s a good idea to seek the services of a tax attorney so that they can guide you on matters related to business taxation and direct you to the available tax benefits you could be entitled to.
- Securing Licenses and Permits
Tristan Dupont, COO of CROWN HEIGHTS, says, “Depending on the type of business you are involved in, you will discover that several licenses may be needed to engage in the legal business. This may include business permits, zoning permits, health department permits, etc. Although the requirements for licenses and permits vary, one has to ensure one gets the right one. Such penalties may include fines, legal action against you and your company, or closing your business for failing to acquire the proper licenses and permits. Business people should ensure that all the legal formalities regarding paperwork must be completed before registering a business and shop”. They should ensure they scour any vital document to determine whether it has been due for renewal. Licensing depicts that one is a law-abiding citizen, and Many clients will consider doing business with you rather than a competitor who is not licensed.
- Understanding Consumer Protection Laws
“It is also essential for the entrepreneurial population to be aware of consumer laws, especially considering that in their operations, they directly or indirectly interact with consumers to supply them with the goods or services they require. Some of the legal fields that involve consumer protection are the protection of consumer products, consumer protection- of advertisements, and consumer protection- of personal data. For instance, the Federal Trade Commission is associated with deceptive ad laws. At the same time, the Consumer Product Safety Commission is related to the laws regarding products sold in the market. Following these laws minimizes the likelihood of facing the law and simultaneously getting customers. There is always a need to watch the trends concerning these laws and regulations in consumer rights, and the required changes on your side must be implemented,” says Youssef Hodaigui, Founder of Mindflow Marketing. Hence, customers should be guarded to boost the number of consumers. This method will help promote the interests of the business in the long run.
- Preparing for Legal Disputes
“You will likely encounter a legal dispute even if you try to be legal in all your undertakings. Sometimes, it is a contractual issue; other times, an employee or customer – to address some form of legal problem as an entrepreneur is inevitable. This is why having a solid connection with a particular attorney and a basic idea of your industry is always helpful. Finally, having a detailed record of a business and all communication issues is relevant when defending the company in case of conflict. It also agreed that an end-to-end transparent process for dispute resolution, like mediation or arbitration, tends to resolve conflicts more efficiently and economically than litigation,” says Andy Fryer, Co-Founder of Easy Signs.
- Maintaining Compliance with Environmental Regulations
“As environmental issues become more sensitive, businesses must ensure they cater to ecological requirements. These regulations regulate your business depending on industry type, location, and factors such as waste management, emissions, and resource consumption. This means that if you fail to meet these regulations, the law will consider legal action, and the reputation of your business will also be dragged through the mud. Entrepreneurs should know the environmental laws that govern the firms, and appropriate measures should be put in place to reduce the effect on the environment. Hiring an environmental compliance consultant is also helpful in meeting all legal obligations while promoting sustainability in the company’s operations,” says Timothy Allen, Director at Oberheiden P.C.
- Managing Data Privacy and Cybersecurity
“Because the world is already experiencing a digital transformation, data privacy and its security or protection are significant concerns of organizations today, including small companies. Any business owner should know data protection principles, including the European General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). These laws demand companies to safeguard customer information and provide customer data and utilization information. Data privacy regulations can be very stringent, and the breach attracts severe penalties and loss of customers,” says Gerrid Smith, Chief Marketing Officer at Joy Organics. Furthermore, your business should incorporate appropriate measures to ensure you do not fall victim to a cybercrime. Organizations also need to provide secure IT technologies, educate their employees on safety measures to adhere to, and ensure they are conversant with trends and the laws surrounding cybersecurity.
Conclusion
Small business law is a fundamental legal concept for any enterprise, yet it could sometimes be more apparent. In business structure, contracts, intellectual property, employment, taxes, and many other concerns, knowledge of the legal issues will help entrepreneurs avert mishaps that could interfere with long-term success formulas. When expanding, it is highly advisable to consult a legal attorney to meet all the legal requirements. With the correct information and understanding, you will always be able to handle issues in the small business law to empower entrepreneurs.