Guide To Running A Business

2. Small Business Laws: Staying Legally Compliant

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Running A Business

Small Business Laws: Staying Legally Compliant

Feb 24, 2023 • 10 min read
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      There are many legal requirements that small businesses must comply with to operate within state and federal regulations. Both internal and external compliance requirements are important to maintaining a legal operation, as well as a successful business. From tax obligations to employment rights, it’s important for you to know the small business laws that apply to your organization.

      Initial and ongoing filing requirements.

      When you start a business, you will have to file necessary documents with your state government and register with the federal government. This ensures you are complying with state tax departments, the IRS, and other government agencies.

      State filing requirements.

      Every state has filing requirements that small businesses must meet. However, the specific actions you must take will vary depending on your location. Some of the common filing requirements you should be aware of include: 

      • Annual reporting or biennial statements
      • Statement filing fees
      • Franchise and quarterly taxes
      • Initial incorporation reports
      • Updated Articles of Amendment
      • State licensing, permits, and certificates
      Federal filing requirements.

      The federal government also has filing requirements for small businesses. If you fail to meet any of these mandatory filings, you may face significant penalties or other fees. Federal filing requirements include: 

      • Annual or quarterly taxes
      • Health coverage reporting (per the Affordable Care Act)
      • Federal licenses, permits, and certificates
      • Reporting of income, social security, and Medicare taxes
      • Small business registration documents

      State and local licenses, permits, and certifications.

      Many states, cities, and counties require businesses to obtain licenses, permits, and certifications to operate. Depending on the goods or services you will be providing, this process may be complicated. 

      For example, most restaurants must routinely renew health and safety certificates. This often requires inspections by a local health department, as well as training for all employees who handle food. Failure to meet these requirements can result in your food business being shut down. 

      Establishments that sell tobacco, alcohol, and CBD or marijuana products are highly regulated. Oftentimes, they must be located a certain distance away from schools and daycares. They must obtain initial licenses and renew those at least annually. 

      Professional services like nursing, electrical, and plumbing require certification from third-party boards to keep licenses. Individual employees must also comply with educational and training requirements. 

      When you open a small business in a specific industry, you should be aware of the state and local agencies and boards that you will have to deal with.

      Employment business regulations and labor laws.

      There are state and federal labor laws that small businesses must comply with, as well. The Fair Labor Standards Act (FLSA) outlines how businesses must treat employees, including setting a federal minimum wage. However, many states have set a higher minimum wage that must be paid. 

      Labor laws and regulations made by the Occupational Safety and Health Administration (OSHA) ensure employees have a safe working environment that is free from danger and hazards. Workplaces in certain industries are regularly inspected by OSHA representatives to determine compliance. 

      Other employment regulations include requirements regarding employee benefits, employment of non-citizens, equal opportunity practices, union interactions, and more.

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      About the author
      Brandy Abalos

      Brandy Abalos is a licensed attorney, content strategist, and marketing consultant for small businesses. She uses SEO tools to develop strong digital content for audiences who are learning how to navigate complex topics in law and business. When she is not writing, she seeks adventures with her three children, partner, and two corgis in Ohio.

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