10 Government Regulations That Impact Your Business, Part 1

Part of running a business is ensuring that your business complies with local, state, and federal regulations. Many regulations are industry-specific, such as hazardous waste removal or video copyright infringement, but several impacts every business. Being aware of these policies and regulations can help you ensure that your business is aware of them and adheres to them.

The volume of Federal regulations is enormous and difficult to keep abreast of, but they can be grouped into several main categories. We have compiled a list of the top 10 government regulations that impact your business, and how to find more information about them. Here are the first five.

1. Tax Codes

Everyone is aware of the tax code, at least its impact on individuals and businesses. While every business must file taxes, the formation of your business (LLC, Corporation, Sole Proprietorship) determines how your business will be taxed. There is great variability in business tax codes that affect businesses differently, but there are four main taxes that affect every business.

Income tax. Every business, except partnerships, files annual income tax returns. Those that do not have a separate filing for their business, report their business income on their individual taxes. Not filing your business taxes will get you in trouble with the IRS and could prevent you from ascertaining certain funding.
Estimated tax. Businesses are expected to pay a portion of their tax every quarter. Independent contractors, sole proprietors, partnerships, and S corporations must make payments if they expect to owe more than $1K in taxes, while corporations need to make payments if they will owe $500 or more.
Excise tax. Excise tax is a tax that is imposed on the manufacturer, retailer, or sometimes the consumer, for certain goods. Gasoline is one example of a product that has an excise tax built into the price. Companies that manufacture, sell, or offer certain kinds of services (such as indoor tanning) are subject to excise taxes. Check the IRS Excise Tax page for more information.
Employment tax. Companies that have employees must pay employment taxes, which include federal income tax withholdings, federal unemployment tax, Social Security, and Medicare taxes.

2. Labor Laws

Did you know that there are over 180 federal labor laws? Keeping up with all of them would require a lot of your time. Luckily, the Department of Labor's (DOL) FirstStep Employment Law Advisor helps business owners identify which laws apply to them, what posters to put up, and more. Here is a quick breakdown of three common labor laws.

Equal opportunity. The Equal Employment Opportunity Commission (EEOC) oversees compliance with hiring and employment practices. Under these laws, businesses (normally who have more than 15 employees) cannot act discriminatory towards an applicant or employee based on national origin, color, race, sex (including pregnancy, transgender status, and sexual orientation), religion, age (40 or older), disability or genetic information.
Employee benefits. Businesses that offer pensions or welfare benefits have to meet reporting, disclosure, and financial requirements set forth by the Employee Retirement Income Security Act (ERISA).
Health and Safety. The Occupational Safety and Health Administration (OSHA) creates and oversees health and safety requirements that businesses must meet to ensure their employees are working in safe conditions. To stay in compliance, businesses must regularly pass workplace inspections.

3. Licensing and Permits

Aside from federal regulations, businesses must also stay in compliance with state and local government policies and regulations. Two of the most common types of local and state government requirements are permits and licenses. These requirements vary greatly from state to state. Being caught without a required license or permit can be costly to your business and could result in your inability to operate in that city.

Common examples include occupational licenses (for barbers, contractors, daycare providers, massage therapists, etc.), occupancy permits for cafés, restaurants, and other venues, sales tax permits, and more. The best practice is to contact your county or city office to determine which licenses or permits your business requires. Even home-based businesses may need a general business license from their city in order to operate.

4. Insurance

Practically every business needs some kind of insurance. Even if it is not required for your industry and location, which is rare, it is still advisable due to the legal and financial ramifications that could ensue from not having insurance. Should a client decide to sue your business for damages, whether it is real or perceived, the legal expenses alone can be enough to bankrupt a small business. Here are three common types of business insurance to keep in mind.

General Liability. General liability insurance can help cover the cost of legal fees, attorney fees, settlements, damages, and medical expenses resulting from bodily injuries and property damage that came about from your company's products, services, or operation.
Business Owners Policy (BOP). A Business Owner's Policy (BOP) is a combination of General Liability Insurance and Commercial Property Insurance. It helps cover the cost of lawsuits stemming from bodily injury, property damage, or advertising injury that your business causes and covers the cost of repairing or replacing damaged, destroyed, or stolen business property.
Professional Liability. Also called Errors and Omission/E&O Insurance, it is geared towards business owners who make a living providing expertise to their clients. Professional liability covers lawsuits over mistakes, omissions (real or perceived) missed deadlines, and other claims of negligence.

5. Data reporting

Companies that employ more than 100 employees, 50 if a government contractor, are required to report certain demographic data each year to the EEOC. This data includes the pay rate for each employee, their race/ethnicity, gender, and job category or description. The goal of this reporting is to ensure that companies are not violating non-discrimination laws.

For example, if a company paid its female employees significantly less than male employees for the same job title and description, it would be violating non-discrimination laws. Such a case would not necessarily be noticed due to the private nature of individual income. The data reporting requirement is there to prevent any hidden wage discrimination.

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