A lot of people want to start a business. You hear it all the time from people in bars after a long day of work. They’re sick of working for some corporate fat cat and want to do things by themselves. Or, you get people that devote their life to coming up with business ideas in the hope that they’ll strike gold. Everyone wants to become the owner of a big and successful company. Some of the richest people in the world are business owners, so you can see the appeal of this!
The trouble is, a lot of aspiring business owners know very little about starting a business. They may do some research, and find a few tips here and there. They’ll understand what needs to be done to finance a business, etc. However, very few people know much about the law and business. The law is something that’s very important when it comes to running a profitable company. There are loads of legal issues that you have to be aware of. And, most new business owners aren’t aware of them.
So, I thought I’d put together a guide to help you understand more about law and your business. I’ll start by telling you why it’s important to know more about this topic.
Why Should Business Owners Care About The Law?
The main reason a business owner needs to care about the law is simply that they have to. You can’t afford to turn a blind eye to things and be negligent. If your company is caught breaking laws, then the only way is down. You can become embroiled in a nasty lawsuit, and it will cost you a fortune. There are numerous small startups that neglected some business laws. As a result, they were fined/sued, and couldn’t handle the costs. So, the business went bankrupt, and it no longer existed. Imagine putting in years of hard work, only for it to be wiped out because you weren’t knowledgeable.
Also, disobeying laws can have a huge bearing on your reputation. And I’m not just talking about your business; I’m talking about you personally. Getting into legal trouble will look extremely bad. I just mentioned the potential financial impact. But, even if you aren’t forced to pay a big fine, it can still impact your company. People will be aware that you were involved in legal disputes. Your business will become known as one that breaks the law. Do you think consumers are going to trust you? Of course not! No one will trust a business that’s broken laws and got into lots of legal trouble. Similarly, you’ll become a laughing stock in most business circles. All of your contacts will start to distance themselves from you. They won’t want their businesses tarnished by your dodgy reputation. And, if your business does end up going under, then it will be harder to find a new line of work. You’ll end up with a sketchy past because you didn’t obey the laws as a business owner.
If you didn’t think this was a serious topic before, I’m sure you do now. Just look at how much of a negative impact legal problems can have on your business. If you want what’s best for you, and your company, you have to stay clear of them.
But, how do you ensure that your company doesn’t get involved in legal disputes? Well, the best thing to do is to make sure you aren’t breaking any laws. To do this, you need to know about various laws and regulations. Here are some of the main things you have to be aware of:
Business Licenses
There are numerous laws and regulations surrounding the business world. And, the first thing we’ll talk about is business licenses. Most businesses needs to be fully licensed before it can start operating. I say most because some don’t need a license, so this won’t be a law they worry about breaking. However, to be on the safe side, assume that you need a license. Get in contact with your local government and ask them about obtaining one. If you do this, then you’re going to find out if you need one or not. They’ll ask questions about the business, and what you’re selling/how you’ll make money. If you need a license, they’ll point you in the right direction. Typically, you can apply for your license online. When you do this, you’ll find out why you need the license, and any penalties if you don’t have one. Businesses that need licensing can be fined lots of money if they’re caught without one. Or, even worse, they could be shut down completely.
Employment Laws
As a business owner, you’re going to have to abide by numerous employment laws. These are rules and regulations that apply to how you treat your employees. Failure to abide by them can result in lawsuits. There are many employees that have sued their employer for millions because they breached an employment law. Seeing as there are so many of these, I’ve picked the most important ones and listed them below:
Workers Compensation
You’re required to buy insurance that covers all of your staff. What does this mean? It means that if they get hurt or ill, from working at your company, they’re duly compensated. For example, someone’s chair leg can break, and it causes them to fall off their chair and hurt their leg. By this law, you have to pay them compensation. Similarly, this applies to occupational diseases too. If your employees get ill because of exposure to something in the workplace, they’re due compensation. If you want to learn more about occupational diseases, then this info from Brown and Crouppen goes into it in more detail. All you need to know is that you must get an insurance policy for your workers.
Occupational Health And Safety Act
Following on from workers compensation, we have the occupational health and safety act. Now, this is something that’s probably broken more often than anything else. The purpose of the act is to ensure that all business owners provide a safe working environment. This means ensuring that your premises are safe and free from hazards. The trouble is, so many offices have safety hazards all over the place. I’m talking about having ten things all plugged into the same electrical outlet. Or, having a water cooler close to computers. These are things that could lead you to fail and health and safety check. If this happens, you will be fined and forced to make your premises safer. If things are extremely unsafe, then your business will be shut down.
Equal Employment Opportunities Law
This next law revolves around discrimination in the workplace. You aren’t allowed to offer people better jobs just because of their race or gender. It seems like such an obvious thing, especially in this day and age. However, there are still businesses that discriminate and get punished for it. This is probably the law that will affect your business most if broken. Your reputation will be completely tarnished forever. No one wants to buy from a business that’s proven to be racist or sexist. Plus, you can get sued by an employee for an absolute fortune.
Intellectual Property Laws
Moving away from employment law, we arrive at intellectual property. This is a law that your business needs to take advantage of. If you come up with an idea or product, you need to patent it. This ensures that your intellectual property is protected, and people can’t steal it. Too many small businesses don’t protect their property. As a result, the big companies steal their idea, and there’s nothing they can do about it. Also, you can’t steal ideas that have been patented. If you do, then expect to find yourself in the middle of a lawsuit.
Tax Laws
Tax is something that all business owners need to be aware of. There are numerous tax laws out there, and they can be complicated. For the purpose of this article, I’ll talk through one. I’ll speak about the main tax law that you should be concerned with. How much tax should you pay? You must pay the right amount, or you’ll end up in trouble. And, you can’t evade tax either. Tax evasion is a serious crime, and you could end up in prison for it.
Marketing & Advertising Laws
We’ll round things off with something a lot of people have no idea exists. Marketing and advertising laws are real, and serious too! The basic principle is that you have to be truthful with all your advertising and marketing efforts. You can’t produce adverts that make false claims, or you’ll face the consequences.
And, so concludes all of the main laws you need to be aware of. Ensure that your business is following every single one. If you aren’t then, you’ll be in serious trouble. I already spoke about why you need to be aware of the law earlier in this piece. Failure to abide by laws can leave your company in a very sticky situation. I hope this guide has helped you understand this topic, and you’re one step closer to starting a business.
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