8 Things to Know About USA Business Legislation in 2021
Did you know there are over 30 million small businesses in the United States employing almost 60 million people? If you own a business, you know it's a lot more complicated than setting up a website or shop and doing business.
The US has many laws and regulations governing businesses and those laws are always changing. If you're in business, part of your job is to know the business laws!
The United States has a consistent economy with a GDP in the trillions of dollars, and it's a great place to do business. Be sure to acquaint yourself with the laws before you get started.
Keep reading for some important information about business laws that affect your business.
1. Business Licensing and Permits
The World Bank ranks the United States 55th when it comes to starting a business. That means starting a business in the U.S. is relatively easy. If you're starting a business, the rules and regulations vary by state and even city.
Do your research for the city and state you live in and make sure you abide by all the registration rules. You'll need an EIN number. This is an employer identification number that the Internal Revenue Service (IRS) provides to identify your business.
Decide how you want your business structured. There are some options:
Each of these business structures has tax and legal ramifications so make sure you take your time figuring out what works best for you. For instance, an LLC is good for individuals. It offers some legal protections while conferring certain tax benefits.
Contact your city's small business association for guidance with registering your business with the state.
- Sole proprietorship
- S corporation
- Limited Liability Company (LLC)
2. Federal and State Taxes
The tax structure in the US is complex and sometimes undergoes significant changes with a new presidential administration. The current administration under Joe Biden is focusing on raising corporate tax rates. The Democrats don't have a majority in the Senate so corporate tax hikes aren't a given.
No matter who is in office, it's important you understand and abide by business tax rules. You need to do more than pay your business taxes. You need to know which taxes to pay and when they're due.
Every business pays federal taxes. Most businesses, but not all, pay state taxes too. Don't avoid paying your taxes or you could end up paying huge penalties or even going to jail.
3. Labor and Employment Laws
There are many federal labor laws. There are also state laws involving hiring employees and independent contractors.
Are you new to hiring? There are government resources to help employers understand which laws apply.
You'll need to know specific small business laws about record-keeping, reporting, and what laws you must make visible to your employees. Acquaint yourself with some common labor laws including:
You must provide your workers with a safe workplace free of serious, recognized hazards. The Occupational Safety and Health Administration (OSHA) enforces these laws through investigations and workplace inspections.
The Department of Labor regulates standards for wages and overtime pay. Make sure you know which employees fall under these laws and who is exempt.
The Equal Employment Opportunity Commission (EEOC) enforces hiring practices that don't discriminate on the basis of gender, race, religion, age, and other elements.
- Workplace health and safety
- Wages and hours
- Equal opportunity employment
- Employee benefit security
- Non-US citizen workers
- Family and medical leave laws
4. Environmental Laws and Regulations
Depending on the type of business, you may need to understand the environmental regulations. It's crucial you understand both federal and state law when it comes to the environment.
If you make claims that your products are organic or eco-friendly, make sure you know the rules about such claims.
5. Antitrust Laws
Even small businesses sometimes run afoul of antitrust laws. You can't conspire with your competitors or third-party vendors when it comes to pricing. You also can't secure favorable prices for products from buyers when other companies can't.
Are you thinking about asking other businesses to boycott a competitor or supplier? Don't do it or you could be breaking antitrust laws.
You can't enter into agreements with competitors to divide up territory, customers, or markets. You also can't preserve a monopoly position by buying up your competitors.
6. Advertising Laws
All businesses market and advertise in one way or another. It's important when advertising that you don't intentionally mislead potential customers.
There are also industry-specific rules for advertising, such as with alcoholic beverages. It's a good idea to talk to a lawyer in your industry so you understand the regulations before you advertise.
7. Email Advertising and Marketing Laws
Email marketing and advertising comes with its own specific rules and regulations. Before you think about sending out an email campaign, take a look at the CAN-SPAM Act. Violating this act can cost your company a lot of money.
It's unlawful to use misleading or deceptive headers or email subject lines, and you must identify your message as an ad. Always include an obvious way for recipients to opt out of the emails and honor opt-out requests quickly.
8. Insurance Laws
Hiring employees comes with an obligation to buy workers' compensation insurance. Texas is the only state that doesn't require this insurance.
Workers' comp insurance protects you and the employee in the event of an on-the-job accident. The insurance covers an injured employee and helps you with any lawsuit-associated costs filed by the employee.
You may need other types of insurance as well depending on the type of business in which you engage. For instance, some government contractors must show proof of business insurance.
Understand the Business Laws for Your Industry
There are both state and federal business laws you need to know if you're starting a business or already have one. There's a lot to know but understanding the basics can keep you out of trouble. Check with your local Small Business Association for more information.
Another great resource is your local chamber of commerce. They have resources and information to help you get started and succeed in your business.
Are you in Allen, Texas? Contact the local chamber of commerce for more information.