As an entrepreneur, there are many types of business laws you need to know about – not just to stay on the right side of the law, but also to protect what you’ve built. Patents, trademarks, and other legal matters can be game-changers for businesses that have built something worthwhile.
Here are eleven types of laws you need to know about — and potentially hire a business lawyer to discuss.
Patents are one of the best ways to protect your intellectual property. They protect your inventions by giving you the right to stop others from making, selling, or otherwise using your invention for a period of time. Patents generally last for 20 years after the day you file your patent application.
There are several different types of patents, including utility patents, design patents, and plant patents. We recommend researching which type of patent makes the most sense for your invention so you can fully protect your idea. Patents are different from copyright protections, which protect creative works such as books.
Trademarks are another important way to protect your intellectual property, but they are aimed at protecting a brand rather than an invention. They can cover words, phrases, designs, symbols, sounds, colors, and anything else that identifies your brand. Using a trademark allows you to identify yourself as the seller of a service or product.
We generally recommend that entrepreneurs perform clearance searches for their trademarks and register trademarks for their businesses sooner rather than later. It’s all too common for a business to accidentally infringe on someone else’s trademark rights with confusingly similar branding.
If you delay trademark registration, you may expose your business to trademark infringement risks, which could lead to mandatory rebranding later on that disrupts your business operations.
3. Business Laws Require to Pay Employment Taxes
Businesses are required to pay taxes associated with each employee they have. As a minimum, these taxes will generally include Social Security, Medicare, and federal unemployment taxes, but there may be additional taxes depending on your location.
Employers must also withhold federal income tax from their employees’ wages. Here, too, there may be additional taxes to withhold, such as state income taxes depending on your employees’ locations.
4. Business Laws Include Income Tax Rules
Nearly every type of business is required to file annual income tax returns, including sole proprietorships, general partnerships, limited liability companies, and corporations. The one exception is partnerships, which are required to file informational returns.
We recommend familiarizing yourself with the tax rules for your business structure so you don’t get any surprises from the IRS.
5. Excise Tax
Excise taxes relate to the type of business you have. You may need to pay excises taxes for manufacturing or selling specific products or services, using specific types of equipment and facilities, and more.
Some of the most common excise taxes in the U.S. are taxes on gasoline and tobacco, as well as taxes on businesses that use trucks or tractors. We suggest checking with your accountant or lawyer to see if there are any excise taxes that will affect your business.
6. Consumer and Employee Privacy Business Laws
The Federal Trade Commission enforces a number of laws that are intended to protect consumer and employee privacy.
As a general rule, it’s important to clearly communicate how your business uses consumers’ and employees’ data, including storing and sharing email addresses and protecting payment information. Credit card information must be secured in ways that are PCI-DSS compliant, and consumer credit reports must be used in line with the Fair Credit Reporting Act.
7. Data Security Law
Privacy and data security laws may affect how your business is allowed to handle customer, prospect, and employee data. While there are currently no federal privacy laws regulating most companies in the U.S., your business may be impacted by state laws such as the California Consumer Privacy Act.
If you do business internationally, you may be affected by additional laws such as the European Union’s General Data Protection Regulation (GDPR).
8. Workers’ Compensation Business Laws
Workers’ compensation provides monetary benefits and/or medical care for workers who become ill or injured due to their job. There are different requirements for employers in different states and industries, so we recommend checking with a lawyer to see how your business can meet local workers’ compensation requirements.
In Washington State, workers’ compensation is usually funded and administered through the Department of Labor and Industries. Most workers are covered through a public State Fund or through self-insured employers, although other systems cover a small percentage of workers.
9. Equal Opportunity Business Laws
The U.S. has a number of laws to prevent discrimination against specific groups of people during the hiring process and in other areas of work. The Federal Equal Employment Opportunity Commission oversees laws that protect people from discrimination based on race, color, national origin, religion, age, sex, pregnancy, sexual orientation, physical or mental disability, and genetic information.
Many states, like Washington, have additional equal opportunity laws and protections. If you have any questions about how to avoid discrimination and stay within the law, we recommend consulting with legal and diversity professionals.
10. Minimum Wage Business Laws
There are many laws throughout the U.S. that require employers to pay a minimum wage. For example, the Fair Labor Standards Act (FLSA) sets the federal minimum wage, which is $7.25 per hour for covered, nonexempt employees, and classifies which employees are exempt or nonexempt from overtime pay.
Many states, counties, and cities (such as Washington State, King County, and Seattle) have higher minimum wage requirements. Before you hire an employee, we recommend researching wage-related laws in your state, county, and city, which may set higher standards than the FLSA.
11. Business Contracts
Business contracts are generally built on three basic building blocks: the offer, the consideration (where the parties exchange something of value), and the acceptance. For example, if Eddie the electrician agrees to work on a project for Anna, the business contract should include the work Eddie will do, how much Anna will pay, and both Eddie’s and Anna’s signatures.
Business contracts should also include supporting provisions to make sure the contract works as intended. For example, Eddie and Anna’s contract could include specifications about the project timeline, work quality standards, clear remedies for a breach, and what will happen in case of a dispute.
When to Hire a Business Lawyer
We recommend that entrepreneurs hire a business lawyer early on when they are forming and starting up their business. A lawyer can help you avoid serious legal trouble later on by getting your business on the right footing from the beginning.
If you are looking for legal advice for your business, reach out to the Anderson Hunter Law Firm today. Our business lawyers have been helping entrepreneurs and other business owners in Snohomish County for over 100 years.