Small business laws and mistakes every entrepreneur should be aware of

Starting up a business can be exciting. But you are bound to follow the business laws while running the business. Some small business owners initially start great but falter in the midway.

If you’re unable to take care of your business legalities, then it will bring you potential problems in the future. Thus, before you prepare to start your business, you must ask the hiring authorities legal questions and get aware of the business laws. Thus you’ll be able to avoid mistakes to run your business smoothly.

Read on to know some important business laws and common mistakes that you must avoid while running a small business.

Important business laws an entrepreneur should be aware of

• To start a business legally, licensing is a must. Contact your local city government to know about zoning rules. Visit Small Business Administration website to know about federal and state licensing.
• If your business gets cash flow problems and head towards bankruptcy, then you should be aware of Antitrust Law and Bankruptcy Law to do proper paperwork.
• To protect the business name, symbol and logos, you need to apply for a trademark. Get more information here: United States Patent and Trademark Office.
• Copyright your books, movies, digital work, and musical pieces for protection. Contact The United States Copyright Office to file the correct paperwork.
• If you are offering healthcare policies to your employees and that can be accessed online, then get a security plan to protect the data.
• Health care laws have changed in the last few years. You must be aware of the new Affordable Care Act while starting the business.
• You can sell products internationally through a website. But, you have to follow FTC guidelines for shipping, various taxes, and customs while opening the business to the new audience.
• If you sell products by Emailing, phone or online, follow the telemarketing rules conducted by the FTC. According to this rule, the product must ship within 30 days. Providing notification is a must if the order gets delayed. Refunding should be done if the order can't reach on time.
• You need to have an employer identification number to file the business taxes. Check out the IRS website to fill out the necessary forms to get the number.
• You have to pay taxes, no matter how small your business is. As a business owner, you have to be aware of the federal tax, social security, Medicare, and federal unemployment tax requirements. Also, check out the IRs tax breakdown. You can also take help of an accountant for taking further steps.
• Before hiring an employee, you must be aware of the difference between a W-2 employee and a 1099 employee, because it affects your taxes significantly.
• The Fair Labor Standards Act regulates overtime, federal minimum wage, and child labor bans. A new business owner must be aware of this act.
• A small business owner should follow the Federal Equal Employment Opportunity laws. These laws restrict discrimination on sex, color, race, etc. They also provide wage equality for both men and women along with disability protection benefits.

Read more: Small business regulation: Too many laws deter new entrepreneurs

Mistakes an entrepreneur should avoid while running a business

A business requires a lawyer to manage the legal matters. When you hire a lawyer, you must make sure whether or not he is experienced and well focused in his work. An inexperienced lawyer may focus on wrong things and may also neglect the important legal issues that a small business owner must focus.

Few business people think that the person with whom they are making their business deal is trustworthy. Hence, they don’t even care to keep a written document of the business deals. You mustn’t make this mistake. Write down every detail of your agreement and get it signed by the other party. This way you can prevent your business from getting scammed by your clients.

Read more: Ways to manage your business smartly and reduce money worries

A 50-50 partnership business may seem to be enticing for you when you start your business. But at the time of making decisions, you won’t be able to do it alone. You have to depend on your partner to make major decisions. If your partner doesn’t agree with your decisions, then your investment will suffer and can be ruinous for your business.

While you’re running a business, you must protect your business secrets.

For example:

If you have a restaurant business, then you need to protect your trade secrets. Prepare a non-disclosure agreement and get it signed by your employees. This way you’ll be able to prevent them legally not to work for your competitors or start their own business using your trade secrets. Also, check the background and agreements with the previous employer while hiring a new employee.

It is important for you to collaborate with the like-minded small business owners. The internet has advanced a lot, and social media has become one of the most popular means of sharing your ideas and promoting your business as well. You may also be able to get the like-minded people from different online communities and forums. So, you can start using the social media to find out such people who can help you in managing and developing your small business enterprise.

You will also be able to get help from the various networking sites like Twitter, Facebook, LinkedIn, and so on. LinkedIn provides you with the ability to build a professional network in the virtual world. You not only will be able to get the required help, but you may also be able to get increased prospective clients for your business products or services. On the other hand, Twitter offers you the option to connect with tons of people at the same time.

You must try to maintain the finances on a regular basis so that you have no pending work. If you let your money take care of itself, you can be sure that you’re going to be in a mess where your money will take control on you. To better understand where your commercial funds are going and where they’re coming from, you must maintain your records regularly so that you can avoid any debt discrepancies in the future.

Instead of playing a double role of a business owner and a bookkeeper, hire a person to manage it. Thus, you won’t have to manage the day-to-day payments of invoices, debts, records and cash management. He/she will also keep a close watch on the new rules and regulations, and this way you can remain free to concentrate on the big picture.

There is software that can help you do the needful without having to do it manually. It’s just like the personal budgeting software that can make a budget for you without having to manually calculate your income and expenses. You can even get help from business accounting software to easily stay an edge over others. With a flawless accounting chart, you can easily control the commercial debts and keep them at bay.

Tax is a big issue when it comes to a business organization, and without managing your tax issues, you can certainly be in a financial mess. As tax is a complicated area; it is always better to hire an accountant who will look into tax matters like depreciation, deductions, tax minimizations and other reporting requirements.

Without proper business accounting principles, an organization may lose track on the daily finances and land up in high-interest debt. As all business organizations need to take out loans for meeting their spiraling expenses, they’re liable to repay them on time to avoid falling into the high-interest debt cycle. High-interest debts can spoil the profitability of a business organization and therefore without properly managing your business accounts, you can never stay on top of your finances.

You may face various kinds of challenges while running a small business. However, it is always better to stay safe than sorry. You need to be wise. For example, the simpler your accounting process, the better off you can be as a business organization. If you’re thinking of a complicated process that takes too much time, you’re perhaps moving on the wrong track.

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