Startups and new businesses often concentrate on building revenue, establishing wider client bases and growing their bottom lines. And for good reason – if that steady stream of profits slows or stops, a new business can quickly become a failed business.
But, income generation aside, what are the next set of hurdles that await CEOs, sole proprietors and entrepreneurs?
Ask any longtime business owner, and one of the first subjects they’ll mention is laws and / or regulations. It’s not the most interesting element of business ownership, but it might be the most impactful. And the most dynamic – every year brings new challenges for businesses all across the United States.
You don’t need a J.D. degree and you also don’t need to be a certified “legal eagle” to gain a proper understanding of business laws and regulations. This post will help lay the groundwork of what you need to be aware of – but first, let’s look at one way legislative changes create a long-lasting (and cost-consuming) ripple effect for businesses.
From News Report to Financial Impact: It’s Faster than You Think
Remember when the Affordable Health Care Act (ACA) was passed? Also called “Obamacare,” this law was formally signed into law in late 2009. Implementation took another year, and businesses finally felt the aftershocks within the past few years.
The law allowed millions of people to gain access to healthcare insurance coverage. But following the “no free lunches” maxim, businesses ended up footing the bill. With more stringent standards in place, and large paperwork requirements for compliance, the law’s cost for small businesses across America is estimated at about $15,000 per firm.
The ACA is only one example of one aspect of business law and regulation. To get a better idea of the entire regulatory machinery businesses should be aware of, it helps to categorize the different types of laws.
Business Laws & Regulations – An Introductory Primer
Commerce between businesses and consumers is a highly regulated environment. If a child’s lemonade stand can be shut down for not following health guidelines, imagine the legal considerations for an established enterprise. Regulations can sour practically any business endeavor, not just lemonade stands. Here are the major areas in which U.S. business laws can affect day-to-day operations:
The Environmental Protection Agency (EPA) is the nationwide authority on business compliance with environmental law, so pay attention to updated legislation. Laws to protect the environment don’t impact heavy industries only. A Nebraska real estate company was recently fined almost $9,000 by the EPA for not containing dust and debris on a renovation project. With better training and awareness in regards to environmental regulations, the fine would’ve been avoided.
This covers everything from big bankruptcies to small invoice disputes. Financial law also includes stock exchanges, investment management (including 401k plans) and much more.
Intellectual property law
If your business willingly or unwillingly infringes on another’s intellectual property (individuals or businesses), hefty fines and penalties can result. A few ways intellectual property laws come into play involve trademark, patent or copyright infringement.
Employment and labor law
Disgruntled employees, benefit issues, constantly evolving regulations – welcome to the world of human resource management laws! This sector of business law is perhaps the most complex of all the regulations a CEO has to deal with. As mortgage giant Quicken Loans recently discovered, internal documents can be in violation of national labor laws. Their employee manual, called the “Big Book,” was deemed illegal and in conflict with National Labor Relations Act, due to “overly broad” definitions that could interfere with protected employee activities, mostly involving confidentiality requirements.
Workplace safety law
The Occupational Safety and Health Administration (OSHA) handles all workplace safety regulations. For business owners, having a properly trained workforce is of paramount importance. If your company is cited by OSHA, fines can climb into the $20,000 – $30,000 range – not to mention the legal fees involved.
The aforementioned five categories cover the major aspects of business laws and regulations. How does your business stack up in regards to HR, financial or regulatory laws? Are there some areas you might be non-compliant with? Keep a close eye on regulatory changes to stay one step ahead – upfront awareness can pay dividends in the long run.