As we’ve discussed in plenty of posts, incorporation of a business comes with enormous responsibility. We’ve provided tips and tricks with regards to business licensure, negotiation procedure and much more. Some tax advice from BizFilings’ own Tom Parker was even featured recently on Mashable. But now that you’re a business owner, it’s time to dive in and familiarize yourself with new legal responsibilities as you continue to grow and manage your business. Unsurprisingly, there’s a lot to consider – but here are some top priorities:
- Liability as an employer. As you look to expand your business and bring on employees, various federal and state laws come into play. Wage and hour laws, payroll taxes and anti-discrimination laws are all things you’ll need to be mindful of. Not to mention, there’s a big difference between hiring employees and independent contractors, and you are subject to different legal responsibilities for each. The IRS has a 20-Factor Analysis to determine the difference and ensure your payroll taxes are done correctly.
- Proper termination procedures. Suppose one of your employees isn’t working out. While there are several avenues to take in handling the situation, if you decide to terminate the business relationship there are legal concerns at stake. These days many federal and state laws favor employees, so aside from the obvious – avoiding a lawsuit altogether – be sure that you have a valid, nondiscriminatory business reason for firing an employee.
- Where you run your business. The location of your business itself comes with legal concerns. The Federal Labor Standards Act, for example, can restrict work done at home in order to enforce minimum wage laws. Also, there may be zoning regulations that prevent you from opening your business in a residential neighborhood, or may limit the number of employees you’re permitted to have.
- What’s in a name? When selecting a name for your business, first and foremost, make sure that the name is not already taken. Many companies have invested significant time, effort and money on a name they thought was available – but in the end it wasn’t. It might be worth it to reserve the name before the business has even been formed. Also, laws dictate both required and restricted words. For example, a required word might include a one that identifies the type of entity, such as “incorporated” or “LLC.”
Among the many things on your plate when starting a business, legal concerns should absolutely be a top priority. As you can see, there are laws and regulations that apply to every aspect of managing a business, so it’s important to stay ahead of the curve and make sure your business in compliance. As your business grows, you may eventually find that it’s time to hire a general counsel who can focus solely on your company’s legal obligations.