Business Laws to Know as an Entrepreneur

Are you planning to open a business? Before proceeding, it’s crucial to understand the business laws you must follow. There are many federal and state laws that you must observe.

An experienced attorney can take you through the laws and regulations to follow to operate legally. Below, we dissect eight fundamental business laws every entrepreneur should know.

Business Registration and Licensing

Except for a few businesses, you need a license or permit to do business in the United States. Start by contacting your local government to find out whether you need authorization. Apart from certifying that you’re operating legally, proper licensing can qualify your business for benefits like tax credits and deductions.

Intellectual Property Law

One challenge that entrepreneurs face before launching startups is coming up with a unique business name, logo, symbols, brand colors, and so on. If you use someone’s intellectual property, you risk getting sued, and the consequences can be dire.

Intellectual property refers to the intangible creations of the human mind. For a new business, the main areas of intellectual property law that you should know are:

  • Patents, which protect inventions
  • Copyrights for artistic creations
  • Trademarks, protecting brands

Even with this knowledge, you can still fall prey to bad actors known as patent trolls who file patent infringement lawsuits to make money. Punishment can be hefty penalties and injunctions that can cripple your startup.

Legal professionals can help you to research and file patents and trademarks. They can also help with identifying potential infringement issues and provide legal defense against unjustified charges.

Tax Laws

Business owners have to file a tax return every year, but they cannot do it without an employer identification number (EIN). Visit the IRS website and fill out the necessary forms to get your number.

Secondly, understand the tax obligations related to your business. These can include federal and state taxes, Medicare, and unemployment tax requirements, among others.

Also, be sure whether your employees are responsible for their employment taxes or you’ll need to withhold them from their pay. An accountant can help you to make budget estimates for your taxes.

Employment Laws

The Fair Labor Standards Act of the United States gives direction on essential employment matters like the minimum wage. It also bans child labor and outlines overtime rules.

Additionally, the government emphasizes equal employment opportunities for qualified candidates. It’s unlawful to discriminate against someone based on race, gender, religion, disability, or nation of origin. You must also provide equal pay for all.

When an employee or a family member is suffering from a medical condition, there are rules that govern time off and compensation. You must also ensure that workers have a safe environment free from known hazards.

Overtime Rules

The statutory working hours in the United States are a maximum of 40 hours per week. Some businesses can have their workers extend to 44 hours weekly at not more than 8 hours per day. However, some employees can work longer for overtime pay.

It’s common practice for some employers to classify their workers as independent contractors to circumvent the law. If you have non-exempt personnel working extra hours, pay them for their time. Classify your employees properly and follow the latest wage and working hours business laws to avoid legal charges.

Workers’ Compensation

Employers are responsible when workers harm themselves or others within the workplace or when operating business equipment. Generally, you can be liable whenever your employees cause harm anywhere in the course of performing their duties.

For this reason, the government requires employers to obtain workers’ compensation insurance to cover bodily injuries related to workplace accidents. It’s advisable to define job descriptions for workers clearly and purchase the right insurance policy for them. Rules and regulations may vary from state to state.

Business Laws to Know as an Entrepreneur

Advertising and Marketing Laws

Promotion is vital to create brand awareness and stand out from your competitors. However, there are several rules to observe, one of which is honesty.

You must not lie, mislead, or be unfair, and you should have a way to substantiate your promotional assertion. The rule is even stricter when using endorsements or marketing to minors.

Email marketing is highly effective, but there is a federal law specific to it – the CAN-SPAM Act. Your subject lines for email ads must be in line with the message. It shouldn’t be deceptive.

You must tell the recipients the location of your business explicitly and indicate its address in the email. There should also be an easy opt-out method for people who don’t want to receive your emails.

Telemarketing Sales Rule

Primarily, telemarketing or inside sales is the sale of goods or services over the phone, mail, or internet. If you plan to take this path, study and understand the telemarketing rule of the Federal Trade Commission (FTC).

In a nutshell, the FTC requires you to ship items within 30 days and communicate to customers about delays. You must also provide refunds when you can’t fulfill orders.

Observe these laws to avoid unwarranted legal disputes. Find out if there are specific business laws in the industry you’re venturing from your trade association.

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About Dequiana Jackson

Dequiana Jackson, Founder of Inspired Marketing, Inc., helps overachieving women entrepreneurs conquer limiting beliefs and create marketing plans that win. This includes one-on-one marketing plan development, digital product creation, web design and content marketing. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog,

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