Laws You Must Know Before Starting Your Own Business
Starting a business is an exciting and wonderful prospect for so many individuals. It is risky, but the reward can be more than worth it. That being said, if you do not know the legal implications of your actions as a business owner and operator, you may be shooting yourself in the foot right out of the gate. Read on to learn more about some basic laws pertaining to businesses.
This should go without saying but, as a business owner, you must make sure your ads are not deceptive. Your ads must be supported by evidence. The FTC describes deceptive advertising material as:
- ‘Likely to mislead consumers acting reasonably under the circumstances’;
- Misrepresents or omits information that ‘is important to a consumer’s decision to buy or use a product’.
An Employer Identification Number (EIN)
If you plan to file business taxes, you must apply for an EIN. If your business structure is that of a sole proprietorship or single member LLC, you can file your business income with your personal income tax return utilizing what are called ‘pass-through taxes’. If your LLC has multiple members or you have filed as an S corporation, you must file business taxes in most situations.
The Name of Your Business
This may seem like common sense, but you should trademark the name of your business before someone else does. This requires you (or preferably a lawyer) to do a trademark search for your desired business name. Even before checking this on the Federal level, you can apply to do business under a fictitious name with your state. It usually costs less than $10 to apply and ensures that no one else in your state can do business under the same name.
If you intend to sell physical products in a brick and mortar store or online, you need to read up on the laws of sales tax. A brick and mortar shop should always collect sales tax on sales made in the store or anywhere else in the state in which it has a ‘nexus’ (physical presence). If you sell items online to someone else in a state in which you have ‘nexus’, you must collect sales tax. Also, in many states, you must remit sales tax to each state each year if you made sales in that state. This applies even if you do not have a ‘nexus’ in that state. States are beginning to catch up with online retailers even on sites like Amazon and eBay. They are changing their laws to force business owners to collect and remit sales tax pertaining to online sales.
If you are starting a business and have questions, you should contact a professional. Elias Dsouza has been helping small business owners navigate complex legal issues for over 15 years. Contact Elias for a free consultation.