What Are Some Government Regulations For Businesses?
All businesses are required to follow federal, state and local statutes as well as regulations. Different government regulations apply on your business depending on the industry, legislative body and regulatory agency. For example, some may be related to tax and others may be about waste disposal.
Whether you're a new business or an experienced business owner thinking about the number of regulations that may apply can be overwhelming and confusing. But it is not as bad as it seems. Knowing what to look for and where to look for it can make a world of difference. We have made a list that breaks down the most common kinds of regulations for businesses to help you reach relevant authorities properly.
1. Tax Code
The first government regulation that any business owner comes across is tax. But of course, there's more to tax than just paying it. You should know which tax to pay as well as when and how to minimize the amount of stress that surrounds paying taxes.
Every business registered in America has to pay federal taxes. Depending on the state you may have to pay state tax. It’s inevitable to not pay them and it comes at a heavy price. With heavy fines and a possibility of jail time. It is vital that small businesses keep these taxes in mind while planning their budget or applying for small business loans.
Keep in mind that equipment leasing and property leasing may allow you to expense the full payment from pre-tax income, whereas if you purchase equipment or a building, you may only be able to take the depreciation credit. It’s recommended to consult with your local tax professional to determine if your lease or finance purchase qualifies for what tax exemptions. There are also helpful articles on the IRS’ website that clearly lay out rules and regulations regarding the Tax Cut and Jobs Act of 2018. Specifically, there are also certain types of equipment purchases that qualify for temporary 100 percent expensing (first year bonus depreciation) should the piece of equipment be placed into service Sept. 27, 2017, and before Jan. 1, 2023.
Depending on how you have set up your business will change the kind of taxes you will pay. For example, corporations pay taxes differently than sole proprietorships.
Here is a list of the different kinds of taxes that may apply to you and your business:
- Income Tax: All businesses have to pay income tax and then file a tax return at the end of the year
- Estimated Tax: This is a substitute for paying income tax throughout the year as your company earns money and company shareholders usually pay this tax if they expect to owe more than $1000 once they file their return
- Employment Tax: Companies with permanent employees are expected to pay taxes for staff on their payroll
- Excise Taxes: This tax is paid when your business buys a specific good and usually the tax is included in the price
- Sales Tax: Businesses that sell physical goods have to collect sales tax from customers and submit them directly to their state’s revenue department
2. Employment And Labor Law
Many federal and state laws are there to regulate businesses that employ workers and contractors. Different laws apply to businesses depending on the type of employees they hire whether W2 workers or 1099 contractors. You can read more about them here. But the most common labor laws that business owners come across are regarding:
- Health and Safety
- Equal Opportunity Hiring
- Foreign Workers
- Employee Benefit
- Labor Unions
- Family and Medical Leave
3. Antitrust Laws
To protect customers from conspiracies between market competitors there are antitrust laws. The antitrust laws cover the following areas:
- Fixing Market Prices: Making deals with competitors to affect the prices of goods and services
- Price Discrimination: Selling the same products to customers at different rates depending on certain attributes
- Conspiring To Boycott: Purposefully conducting a boycott against a competitor or supplier
- Allocating Markets Or Customers: Creating agreements between competitors to divide up customers, territories or markets
- Monopolization: Preserving a monopoly position by buying out competitors and purposely excluding competitors from the given market or controlling the market prices
Businesses that are exploiting any of these laws will face severe consequences after the federal trade commission contacts them.
While advertising may be a great way to expand your customer base the government regulations dictate how you are advertising. For example, one requirement is that all the claims in your ads cannot be untruthful or deliberately deceptive. Additionally, the mode or manner in which you communicate with prospects and customers may be subject to regulation on a Federal, state or local level. For example, unsolicited advertising via facsimile (fax) or text messaging (SMS) without a proper consent or opt-in may risk Federal sanctioning via the Telephone Consumer Protection Law (TCPA) and/or liable in civil court for violation of the TCPA statute where your business may risk a class-action lawsuit. Consult with an attorney in your state to determine if your advertising or messaging is in compliance with Federal, state and local laws.
Here are ways you can comply with this regulation and avoid misleading customers:
- Follow the labeling laws that are related to your product and business
- Know the rules that apply on the internet for selling and advertising products
- Talk to a lawyer about the regulations surrounding the product you are marketing to know and understand them
- Do the same for the rules for marketing over the phone, text messages, email and facsimile (fax)
“Different local and federal departments can help you and your business stay on the right side of the law”
The Purpose Of Government Regulation Of Business
The government is expected to protect the rights of its citizens which includes employees, customers, and entrepreneurs. Businesses are kept in check and held accountable for their actions with these regulations in place.
Businesses can enter the market on equal grounds and maintain fair market competition since all businesses are held to the same standards and must fulfill the same requirements.
Does Government Regulation Hurt Or Help Your Business?
According to the World Bank, the USA is the seventh best in terms of ease of doing business. But even then, some people feel there are too many regulations surrounding businesses. On one hand, too many regulations can hinder business growth and development. As well as delay businesses from helping the economy and creating jobs. On the other hand, without government regulation customers would not receive any protection from malpractice from the businesses. Moreover, these regulations ensure fair trade among competitors.
It is crucial the business owners are always up to date on the regulations affecting your business.
The Bottom Line
Government regulations can be a lot for new business owners to digest – God knows, it is tough enough for seasoned business owners to cope with them too. However, it may be comforting to know that you are not alone in trying to understand these government regulations. Different local and federal departments can help you and your business stay on the right side of the law. Setting up a meeting with your local SBA office may be the best choice for you if you need more guidance. Additionally, consulting with an attorney with experience in marketing regulations at the Federal, state and local levels may prove invaluable.