Opening and maintaining a business requires more than setting up shop and promoting your product. To legally operate—and avoid hefty fines, jail time and business closure—you need to follow government regulated business laws.
Every business is different. What regulations apply to your company as a restaurant owner will be different than if you’re operating a technology startup. But there are common areas of business regulations to be aware of, which we’ll cover here.
What Are Business Regulations?
First, what exactly are business laws and regulations? Government regulations that impact business are laws that owners must follow to operate legally. Regulation of business will depend on diverse factors, including:
- The industry your business is in
- How many people you employ
- What type of product or service you provide
- Work environment for employees
For example, regulation of a business at a construction site will mandate that employees are provided personal protective equipment to stay safe on job sites. That regulation likely won’t be present in an office environment.
Another example of how business regulations vary is the Family and Medical Leave Act. It applies only to businesses in the private and public sector with 50 or more employees. These employers must provide at least 12 workweeks of leave in a 12-month period for the birth of a child, care of an immediate family member with a serious health condition and other factors. A small operation of a few employees likely won’t have that regulation.
What’s the Purpose of Government Regulation of Business?
Business owners don’t always embrace business regulation laws, but they exist to protect employees and consumers. Some reasons for business regulations in the U.S. include:
- Businesses are required to operate in a safe working environment for employees and customers
- Employees get the benefits they’re entitled to
- Business monopolies don’t form
- The environment is protected from business harm
- Businesses in similar industries are held to the same standards and are not allowed to use unfair business practices to their advantage
Regulation of business is something all companies must deal with. Even solopreneurs who work for themselves must abide by tax laws regulating business. To stay safe and legal, know what common business regulations may apply to you so you can follow them.
The Most Common Business Regulations
Generally, no matter what type of business you have, you’ll need to follow business regulations in these categories. Work with a business attorney when setting up your business to make sure you’re abiding by the laws and regulations you should be. Retain a business law expert so you can get updates.
The U.S. Equal Employment Opportunity Commission requires that businesses follow federal anti-discrimination laws. Ones to be aware of include:
- You must provide equal pay for male and female employees
- If you have 15-19 employees, you’re not allowed to discriminate based on race, color, religion, sex, disability and other factors. You must provide equal pay for equal work
- If you have 20 or more employees, all the above applies, and you cannot discriminate based on age
Employers must also accommodate employees based on religious beliefs or disabilities. Business owners can’t retaliate against employees or applicants who report discrimination or participate in a discrimination lawsuit.
Business must meet federal, state and local tax obligations to operate legally. How your business is structured (corporation versus partnership versus limited liability company, for example) will determine what taxes you owe and when. Get information on your business tax obligations here.
The Federal Trade Commission enforces government regulation of business advertising. Advertisements must be truthful, can’t deceive and must be based on evidence. Businesses must have evidence to support any claims they make in ads, such as environmental and health claims.
Employees are entitled to safe working conditions, which businesses must provide, according to the U.S. Department of Labor. There are dozens of labor laws (many which are industry-specific), but some common ones include:
- Employees must make minimum wage and be paid overtime of 1.5 times the regular pay rate unless the employee is exempt.
- The work environment must prioritize employee safety.
- Child labor laws protect educational opportunities of minors and prohibit hiring children for dangerous positions.
- Employers can only hire legal citizens or workers with appropriate work permits or employment-related visas.
Certain business regulation posters must be displayed in the workplace for employee visibility.
The United States Environmental Protection Agency has business regulations in place depending on the sector the business is in, including regulations for industries like agriculture, automotive, construction and oil and gas. Businesses have a legal obligation to follow regulations that avoid harming the environment, such as properly managing waste.
Businesses often get access to sensitive personal information of employees, job applicants and consumers, which could include home addresses and social security numbers. Companies have a legal obligation not to share this information with third parties and to protect the privacy of those they connect with.
Especially in the digital age, access to information—and privacy concerns—are greater than ever. Businesses are not allowed to:
- Collect certain information from minors
- Share certain information with certain parties
- Use private information in any way other than what a consumer or employee agrees to
You should also be aware of privacy laws you must follow if your business serves customers in certain countries. For example, companies with customers in Europe must follow the EU General Data Protection Regulation when dealing with those customers.
Other Business Regulations to Keep in Mind
There are a couple of other government regulations that impact business. One is antitrust laws. Your business is not allowed to conspire with other companies to:
- Fix market prices
- Boycott a supplier
- Create market monopolies
These laws help protect consumers and foster a competitive free market system that benefits customers.
Also, your business may need specific licensure to operate. If you sell certain products (like alcohol) or perform a particular service (like those in a beauty salon), you and those you employ may need specific licenses. You’ll need to make sure those are always up-to-date to keep operating legally.
How to Determine What Regulations Apply to Your Company
The U.S. Small Business Administration is a great resource to get information on business regulation for your business. You can find a local office to connect with and look up information online for topics like these:
- Licenses and permits and how to apply for them
- How to stay legally compliant with federal and state laws
- Business tax information
You can also connect with your local chamber of commerce to see what state and local business laws and regulations you should be following.
The United States Department of Labor also provides an online FirstStep Employment Law Advisor service, so you know which major federal employment laws apply to your business. There’s also a FirstStep Poster Advisor that helps companies learn which posters they’re legally required to display at the workplace.
And, as mentioned, working with a business attorney, especially in the early stages, is also a good idea. You don’t want to risk getting your business shut down—or face jail time—because you’re not following a legal regulation.
Business regulations are continually evolving, and new ones pop up often. Work with someone versed in business law to ensure your company is always compliant and legally operating.