As an entrepreneur or small business owner, having a basic understanding of business law can help you avoid legal issues and protect your company as it grows. Here are some key areas of business law that entrepreneurs and small business owners should be familiar with.
Employment Law
Employers must comply with employment laws that deal with minimum wage (currently $7.25/hour), overtime pay, leave time, discrimination, harassment, hiring and firing, workplace safety and more. Having employment policies and procedures in place and clearly communicating expectations to workers can help business owners avoid employment-related lawsuits. 2,873 workplace discrimination claims are filed each year in the US. It’s also critical to know when and how to classify workers as employees or independent contractors.
Health & Safety
Health and safety laws exist to protect employees from workplace hazards and ensure that employers provide safe working conditions. The preventable injury death in 2021 was 3.2 per 100,000 workers, with 4.53 million workplace injuries in 2022.
Health and safety regulations cover issues like employee training, safety equipment, reporting requirements, sanitation, chemical handling and illness prevention. Employers must provide safety gear, post warnings, eliminate dangerous conditions and document injuries. They can face lawsuits, fines or criminal charges for violating health and safety rules. Jay Murray Personal Injury Lawyers state that adhering to occupational health and safety laws demonstrates a commitment to employee well-being and reduces liability risks for businesses, following safety protocols makes good ethical and financial sense.
Intellectual Property
Intellectual property (IP) refers to creations of the mind like inventions, literary works, symbols, names, images and artistic works. IP can be protected through copyrights, trademarks, patents and trade secrets. As an entrepreneur, formally protecting your business name, branding, inventions and other IP prevents others from using your work and innovations without permission.
Contracts
Contracts are legally binding agreements between two or more parties. As a small business owner, you’ll likely enter into many types of contracts like vendor, customer and employment agreements. To avoid disputes, all contracts should be written clearly and reviewed by a lawyer when dealing with complex issues. Key contract provisions may address payment terms, deliverables, dispute resolution and termination clauses. Following contract requirements can help avoid lawsuits. There were 22,274 contract actions filed in 2020.
Consumer Protection Laws
Federal and state consumer protection laws are designed to prevent businesses from employing unfair or deceptive trade practices. Examples include making false advertising claims, not delivering promised goods or services and failing to properly disclose relevant information to consumers. Violating these laws can result in hefty fines or consumer class action suits.
Taxes
Business owners are required to pay various federal, state, and local taxes. This includes income tax, self-employment tax, employment taxes, excise taxes and business taxes. Working with an accountant or tax professional can help entrepreneurs understand what taxes they need to pay, how to properly calculate them and when payments are due. Failing to meet tax obligations can lead to penalties and interest charges.
Insurance
There are various types of insurance policies that small businesses need for protection. These include general liability insurance, professional liability insurance, commercial property insurance, errors and omissions insurance, workers’ compensation and cyber insurance. The right insurance coverage limits financial risk and provides peace of mind.
Gaining familiarity with key areas of business law helps entrepreneurs follow regulations, avoid costly mistakes and protect their interests as they build their companies.
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