Any entrepreneur should be aware of a few basic business laws. Even though you don’t need to be an expert – that’s where we come in – you should at least have a high-level understanding of these things.
Here are the main aspects of business law you should know.
Business Entities and How to Form One
There are several types of businesses. Each has its pros and cons, which we wrote about a while ago in this article on choosing the best legal structure for your business. For example, if you have a sole proprietorship, one pro is that it’s easy to set up. The con is that your personal assets are not legally protected, like if you created another entity, such as an LLC or S Corporation.
This is essential to business law because you want to protect your personal assets from loss. One of the best ways to do that is to set up a business structure that limits liability.
Get an Employer Identification Number (EIN)
The IRS tracks your spending via your social security number, right? That nine-digit number is one you’ll have your entire life, and it’s a way for the government to identify who you are forever.
Think of the EIN for your business as your company’s social security number. It is how the IRS will keep tabs on you.
This is one of the first steps you should take when you start a business. Because you need one to set up a bank account, sign up with a payroll service, register for your business license, and more.
If you still need to register your business EIN, you can do that on IRS.gov.
The two guarantees in life are death…and taxes. Like your personal income, your business must pay income taxes.
The tax law can be complex and confusing, so we recommend working with an accountant here – especially as your company grows. Even if you are structured as a sole proprietorship or LLC and are including your business income with your personal tax filing every year, it’s a good idea to have an accountant look everything over.
This one doesn’t necessarily apply to you if you are a one-person operation and never intend on hiring an employee. But if you’re a business owner who wants to grow your company to be so big, you can’t do it all single-handedly; this is for you.
It would be best to understand employment laws, like the current minimum wage and how overtime works. You should also understand exceptions, even though many states allow restaurants to pay servers who make tips just $2.13 per hour, California requires servers to make the full minimum wage.
Communication and Privacy Laws
Did you know there are basic business laws in place around advertising to protect citizens? For example, the CAN-SPAM Act puts rules in place regarding how a company can email customers.
These advertising rules apply whether you’re considering either digital or physical advertising.
We didn’t even get a chance to talk about other things like equal employment, Americans with disabilities, or healthcare. So if you have any questions about these things – or basic business laws in general – give us a call at 714.456.9118 or send us a message, and we’ll reach out soon.