December 8, 2016 Compliance & Licensing en_US From business licenses and permits to zoning laws and insurance, make sure your business is compliant from the very beginning. https://quickbooks.intuit.com/cas/dam/IMAGE/A31Wjd60b/41300fac5eb771729f6614e167f734ae.jpg https://quickbooks.intuit.com/r/compliance-licensing/how-to-navigate-the-rules-and-regulations-that-affect-your-business How to navigate the rules and regulations that affect your business
Compliance & Licensing

How to navigate the rules and regulations that affect your business

By QuickBooks December 8, 2016

Business laws and federal regulations must be managed in every small business.

Applying for a business license, or complying with a particular state regulation can be time consuming. Rules and regulations aren’t the most exciting tasks for small business owners, but you must be in compliance to operate your company.

Business owners can navigate government regulation tasks if they have a plan, starting with local business licenses.

Business licenses

City business licenses

Apply for a business license with your city’s business licensing department. Depending on the nature of your new business, you may also need a state or federal business license. In many cases, you need the same licenses and permits for an online business as you would a brick-and-mortar location.

State business licenses

States typically require licenses if a customer’s physical safety or financial well-being depends on the business owner’s knowledge. This may include building contractors, electricians, plumbers, real estate brokers and insurance agents. These consumer protections are in place to prevent property damage and physical harm.

State licenses are also required for owners who provide personal services that may affect a customer’s health. Licensing is required for health care workers (doctors and nurses), as well as barbers and cosmetologists.

Federal business licenses

The federal government requires licenses for certain industries that affect the public welfare — such as meatpacking, investment advisory services and TV stations.

The Small Business Administration’s website provides additional information on state and federal licensing requirements.

Depending on your location and type of business, you may also need a business permit to operate.

Business permits

Many of the same types of permits required by cities are also required by counties, if you live outside the jurisdiction of a town or city.

Fire department permits

If you handle flammable materials, or operate a building that will be open to the public, you may need to either obtain a permit from the local fire department, or schedule periodic inspections.

When you don’t meet fire safety regulations, you may receive a citation.

Local government agencies are particularly vigilant about enforcing fire permit regulations against businesses where large groups of people gather, such as restaurants, day-care centers and retirement homes.

Permits also address environmental regulations.

You may also need a permit from your city’s air and water control department if you burn materials, or use products that produce gas. For instance, if you use spray paint that emits gas, environmental laws may require a permit.

Land use permits

Some cities have restrictions on signs limiting where they can be placed, the size of the sign, and what type of lighting you can use. To determine if you need a permit, check with your city’s planning and zoning department. If you rent space, you should also get written permission for the land use from your landlord.

Sales tax permits

You may need a sales tax permit (also called a seller’s permit, certificate of resale or certificate of authority). Home-based businesses selling taxable goods and services generally need a sales tax permit, as do retailers and wholesalers.

Health department

If you plan to sell or handle food, you’ll need a permit from the county health department. The health department will conduct an inspection before issuing a permit.

Alcohol permits

If you own a bar, or serve alcohol at your business, you’ll need to register and obtain certain permits from the Alcohol and Tobacco Tax and Trade Bureau.

In some cases, businesses need a large number of permits. For instance, if you operate at multiple locations, you may need permits for each location. Some business owners find this easier to manage if they hire compliance experts to research which permits and licenses are needed.

Zoning laws

Zoning laws are intended to preserve the character of a neighborhood for the residents. These laws tend to restrict things like:

  • Excessive traffic and parking from visiting customers
  • Receiving customers in a residential neighborhood at odd hours
  • Loud noise
  • Eyesores, such as large signs
  • Safety hazards
  • Types of animals allowed on a property

You probably cannot run a retail business out of your home, due to the amount of traffic it would create. Depending on your city, you may or may not be allowed to run your accounting firm or your dog grooming business from your home. You could have noise ordinances in place for specific hours each day.

Check with your city zoning department to see if your location is zoned for the type of business you intend to run. This will also determine whether there are enough parking spaces to support the type of business you want to operate.

If your area is not zoned for your type of business, you will need to apply for a variance or conditional-use permit by presenting your case to your city’s planning commission. You may be able to get a variance granted, if you can demonstrate that your business won’t disrupt the neighborhood.

If you’re running your business out of your home, strict zoning regulations prohibiting business use of homes may apply to you, so you should research this carefully. Check if your local homeowner’s association imposes any restrictions as well.

There are a number of business regulations related to insurance.

Insurance

Insurance coverage is designed to manage risks, but some policies are required by regulatory agencies.

  • Depending on your state and your business structure, you may be required to carry professional liability insurance.
  • Most states require businesses to purchase workers’ compensation insurance.
  • While not a regulatory requirement, many businesses pay for general liability and commercial property insurance.

As your business grows, you may need to comply with a number of federal laws and regulations.

Federal laws

Consider each of these U.S. Government entities, and decide if these regulations apply to your business.

Environmental regulations

The United States is increasingly focused on environmental issues, and the Environmental Protection Agency (EPA) oversees business activity related to the environment.

If you produce food, manufacture a product, or manage a physical store space, your business operations may impact the environment. Start-ups and other businesses can use this EPA site to comply with environmental laws.

Federal Trade Commission

The Federal Trade Commission (FTC) protects consumers by preventing deceptive and unfair business practices. The FTC oversees how businesses market and advertised, and how customers are treated. If a business makes promises that are false, or sells a defective product, the FTC may get involved to protect consumers.

There are a number of labor laws that your business must address.

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) regulates employee wages (including the minimum wage) and overtime pay, to ensure that workers are paid fairly. Processing payroll requires a great deal of recordkeeping, and includes these important components:

  • Tax withholdings: Employment laws require businesses to withhold income tax from worker pay, including federal tax and state tax withholdings.
  • Social Security: To comply with the Department of Labor, you must withhold and pay the employee’s share of Social Security and Medicare (FICA taxes). The employer’s share of FICA tax is a business expense.
  • Retirement plans: If your firm provides a retirement plan to workers, you must follow the Employee Retirement Income Security Act (ERISA) laws for your plan.

Managing payroll requires you to collect and manage sensitive information, including each worker’s Social Security number. If you pay workers electronically, you’ll also need to protect bank information from theft.

Invest in cyber security software to safeguard data. If information is accessed by a third party, your workers could have their bank accounts, credit card numbers and other data stolen.

Finally, look into the requirements of the Equal Employment Opportunity Commission (EEOC), and the Occupational Safety and Health Administration (OHSA). These organizations also exist to protect workers and their rights.

Meet with an attorney and explain how you do business. Your attorney may uncover other business regulations that apply to your firm, including antitrust laws or industry-specific regulations.

Local entities can help you comply with regulatory requirements.

Use local programs and regulations to your advantage

City and county government

Local city and county governments often support local businesses through financing programs. These programs may offer direct grants, subsidized loan programs, direct equity investment and tax credits. Market research and free advertising programs may also be available. Consult your local chamber of commerce for details.

Your city’s business center is your best resource for keeping track of local regulations. Unless you keep up-to-date, you won’t know when certain laws change and how they vary from place to place.

Local banks and credit unions

Local community banks and credit unions may have programs geared toward supporting local small businesses.

Unlike national banks, they have a vested interest in developing the local community. Local financial institutions may be able to point you toward networking connections that can be useful to your business.

Plan for success
To point your business in the right direction, do your homework. Learn about the rules and regulations you must follow, and plan for compliance. Take these steps to manage regulation, so you can spend more time growing your business.

Zoning laws

Zoning laws are intended to preserve the character of the neighborhood for your neighbors. They tend to restrict things like:

  • Excessive traffic and parking from visiting customers
  • Receiving customers in a residential neighborhood at odd hours
  • Loud noise
  • Eyesores such as large signs
  • Safety hazards
  • Types of animals allowed on a property

You probably cannot run a retail business out of your home due to the amount of traffic it would create. Depending on your city, you may or may not be allowed to run your accounting firm or your dog grooming business from your home. You could have noise ordinances in place for specific hours each day. If the neighborhood isn’t zoned to accommodate alpacas in your yard, you’ll be in violation if you do.

When you apply for your business license, your city zoning department or planning department with check to see whether your location is zoned for the type of business you intend to run. This will also determine whether there are enough parking spaces to support the type of business you want to operate.

If your area is not zoned for your type of business, you will need to apply for a variance or conditional-use permit by presenting your case to your city’s planning commission. You can usually get a variance granted as long as you can demonstrate that your business won’t disrupt the neighborhood you want to open in.

If you’re running your business out of your home, strict zoning regulations prohibiting business use of homes may apply to you, so you should research this carefully. Check if your local homeowner’s association imposes any restrictions as well.

Insurance

Depending on where you’re located, you may be required to carry professional liability, product liability, general liability or commercial property insurance. Additionally, your homeowners insurance may not cover business losses, so if you’re operating out of your house, in-home business insurance is advisable.

Use local programs and regulations to your advantage

City and county government

Local city and county governments often support local businesses through financing programs. These can cover direct grants, subsidized loan programs, direct equity investment, and tax credits and deductions. Market research and free advertising programs may also be available. Consult your local chamber of commerce for details.

Your city’s business center is your best resource for keeping track of local regulations. Unless you keep up-to-date, you won’t know when certain laws change and how they vary from place to place. Overlooking them can get a business in trouble, or could mean you’re overpaying on taxes. For example:

  • Chicago recently changed its ordinances on tobacco sales to prohibit sales to those under 21, with citations to be issued to violators.
  • Real estate title insurance companies in New York City and Miami are subject to reporting obligations for all-cash sales.
  • San Francisco has a gross receipts tax ordinance which has certain exemptions based on items federal and state law prohibits the city from taxing.

Local banks and credit unions

Local community banks and credit unions may have programs geared toward supporting local small businesses. Small financial institutions provide more than half of small business lending, compared to less than one-fifth provided by the 20 largest banks.

Unlike national banks, they have a vested interest in developing the local community. Local financial institutions may be able to point you toward networking connections that can be useful to your business.

Start on the city level with licenses and permits and work your way out from there.

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