8 Types of Government Business Regulations You Need to Understand as a Business Owner
There’s more to running a business than selling products and services. On top of managing employees, finances and day-to-day tasks, business owners have to make sure they remain legally compliant.
The regulations and laws you’re expected to follow as a business owner depend on your industry and location. However, there are a few common categories of business regulations that all business owners can expect to encounter at one point or another. We’ll walk you through some of the standard laws and regulations you’re required to comply with to avoid getting into hot water.
Major types of government business regulations
The IRS requires businesses to pay an assortment of taxes. Your business entity, such as a sole proprietorship, limited liability company or corporation, determines which taxes you have to pay and how you pay them. However, there are a few general taxes that all business owners can anticipate paying, regardless of their business structure:
- Income tax: All businesses except partnerships have to file an annual income tax return. You must pay income taxes throughout the year as you receive income and file a return at the end of the year.
- Estimated tax: The taxes on your income may include estimated taxes if the amount withheld from your salary is not enough to cover what you owe when it’s time to file your annual taxes.
- Self-employment tax: Your self-employment tax contributes to your social security and Medicare benefits.
- Employment tax: As an employer, you must pay employment taxes, which include social security and Medicare taxes, federal income tax withholding and federal unemployment tax.
- Excise tax: You may be required to file excise tax forms if you manufacture or sell certain products, such as motor fuel, or use certain kinds of equipment, like trucks that travel on public highways.
The Department of Labor enforces more than 180 federal laws regulating the labor landscape in the U.S. Here’s an overview of the major mandates that are applicable to business owners:
- Wages and hours: The Fair Labor Standards Act requires employers to pay employees at least the federal minimum wage, which is currently $7.25 per hour, unless an employee is otherwise exempt. The law also mandates that overtime pay is one-and-one-half-times the regular pay rate.
- Workplace safety: The Occupational Safety and Health Act establishes safety and health requirements for most private industries and some state programs. Business owners must pass workplace inspections and investigations to remain compliant.
- Employee benefits: The Employee Retirement Income Security Act regulates pension or welfare benefit plans. Under the law, employers must meet reporting requirements and ensure they fund an insurance system to protect certain benefits.
- Family leave: The Family and Medical Leave Act mandates that employers with 50 or more workers provide up to 12 weeks of unpaid, job-protected leave. This leave can be granted upon the birth or adoption of a child or serious illness of an employee or their spouse, child or parent.
The U.S. Equal Employment Opportunity Commission prevents discrimination from occurring in the workplace. Business owners must follow anti-discrimination laws based on the number of employees they have. Here are few of the EEOC laws business owners face:
- Equal pay: Male and female employees are entitled to equal pay for equal work.
- Anti-discrimination: Employers are prohibited from discriminating against employees or job applicants based on race, color, religion, sex, sexual orientation, disability, national origin, age or genetic information.
- Accommodations: Business owners must provide reasonable accommodations to employees based on their disabilities or religious beliefs.
- Anti-retaliation: Business owners cannot retaliate against employees or job applicants for reporting any type of discrimination or participating in a discrimination lawsuit against the company.
- Reporting data: The EEOC requires companies with at least 100 employees to submit a yearly report outlining the ethnicity, race and gender of the staff.
Federal antitrust laws prohibit businesses from reducing competition in the marketplace. Preserving competition gives businesses an incentive to maintain quality and keep prices down, ultimately benefiting consumers. States may enforce additional antitrust laws that are based on the federal statutes. Federal antitrust laws ban the following business behavior:
- Conspiring to fix prices. Businesses cannot work together to fix prices, divide markets or rig bids.
- Unfair or deceptive acts. Businesses are not allowed to use competitive strategies that are unfair or deceptive in nature.
- Forming a monopoly. Companies are prohibited from initiating mergers or acquisitions with the intent to reduce competition by forming a monopoly.
The Federal Trade Commission enforces laws regulating advertising and marketing. Businesses must remain truthful in advertisements and cannot adopt deceptive practices. Business owners must adhere to a number of requirements related to the following marketing aspects:
- Health claims: Businesses that market food, over-the-counter drugs, dietary supplements and other health-related products must support their advertising claims with solid proof.
- Environmental advertising: Scientific evidence has to back up any mention of “green” products or packaging.
- Made in America: Before promoting products that are made in the U.S., businesses must disclose how much of their product is actually made within the country.
- Online advertising: Companies must maintain truthful standards on the internet.
- Telemarketing: The FTC prohibits fraudulent telemarketing calls and bans most forms of robocalling.
The U.S. Environmental Protection Agency requires businesses to meet environmental standards based on the industry in which they operate. For example, automotive businesses may have to follow pollution and waste management regulations. Find the regulatory information for your sector here.
Companies must adhere to business regulations protecting the privacy of their customers. Here are a few examples of when business owners may need to take extra steps in the name of privacy:
- Children’s privacy: The Children’s Online Privacy Protection Act regulates what information companies can collect from kids. Websites must provide parents with the opportunity to consent to the collection of their child’s personal information.
- Credit reporting: Businesses that evaluate customers’ creditworthiness must follow proper procedures when using and disposing of credit reports.
- Employee privacy: Many businesses are legally obligated to protect employees’ personal data.
- Financial services: The Gramm-Leach-Bliley Act requires companies that offer financial products or services to disclose their information sharing practices.
For example, businesses selling items like tobacco or alcohol may have to regularly renew their sales permits because those products are heavily regulated. Professional service providers like plumbers or nurses may have to obtain special certification and licenses.
Check with your local business licensing office to see what documents you need to obtain, as well as the renewal requirements. You may also be required to register your business with a federal agency or department based on your industry, such as the Alcohol and Tobacco Tax and Trade Bureau or the U.S. Department of Agriculture.
The bottom line
Federal laws and regulations impact nearly every aspect of your business, from taxes to advertising. It may seem intimidating to keep in line with all the rules, but one misstep could lead to trouble for your business.
You may want to contact your local business licensing office or chamber of commerce to make sure you understand all legal obligations. You could also speak to a business lawyer who may be able to tell you what you need for your specific industry. Be sure to stay up to date on changes at the federal or state level to ensure your business remains legally compliant.