4 Legal Essentials for Start-Ups

Getting hit with a lawsuit can be a nightmare for a small business owner, but it happens more often than most entrepreneurs may realize. For instance, Jacksonville Sandwich House owner George Bateh was stunned when double amputee Wanda Moore suddenly filed a lawsuit against his restaurant alleging a violation of the Americans with Disabilities Act. As it turned out, Moore and her attorney had been going around the area filing suits against 40 small businesses in the area in what defendants argue is a scam. The Attorney General of Arizona has complained about a similar shakedown scheme there, citing a 150 percent national increase in ADA suits. A typical suit seeks $5,000 in damages and $5,000 in attorney’s fees.

Research Your Federal, State and Local Legal Requirements

The Small Business Administration provides a legal requirements checklist to help guide you through the legal side of starting up your business. One of the first items you should take care of is researching the federal, state and local requirements that apply to your business. Your requirements will vary with your industry, location and type of business entity. Items you should address include whether or not you need a business name; what naming laws and requirements apply to your business; whether you need to obtain and Employer Identification Number; permit and license requirements; and tax and securities registrations.

Taking care of these items is not difficult, but finding the relevant information can be a chore. To simplify this process, legal self-help site Nolo provides resources to help you locate the information applicable to your business, and Business USA has an online wizard you can use. An attorney specializing in business formation and incorporation can also assist you.

Know Your Tax and Accounting Obligations

An important part of the task of researching the legal requirements for your business is identifying your federal, state and local tax collection and reporting requirements. Depending on the specifics of your business, this can include income taxes, estimated taxes, self-employment taxes, employment taxes, excise taxes and sales taxes. Your tax requirements in turn dictate what types of accounting information you will need to record and maintain.

The Internal Revenue Service provides a guide to federal requirements for business taxes and record-keeping. The SBA publishes an index of links to help you find state and local taxes.

Learn About Labor Laws

If you plan to have employees, you will need to learn about federal and state labor laws that apply to your business. These laws cover topics such as wages and overtime pay, employee benefits and workers compensation. You are also required to post certain posters in your workplace. The Department of Labor provides an online tool to help you navigate through federal labor laws, as well as links to information on state labor laws.

Comply with Regulatory Safety and Health Standards

Another important legal base to cover is compliance with federal and state safety and health regulations. The federal Occupational Safety and Health Act requires all employers to keep their workplace free from hazards that can cause harm or death to employees. There are also state standards that may apply to your business. In addition, your company may face legal issues specific to the nature of your business. For instance, if your employees work with or near asbestos, you may wish to consult a mesothelioma attorney to find out how to comply with regulations and avoid lawsuits. For general regulations, the SBA provides links to an online tool to help you identify which OSHA requirements apply to your business, as well as links to information on state-specific regulations and requirements.