Laws That Every Business Entity Should Follow in 2023

3 Laws That Every Business Entity Should Follow in 2023

Launching your brand in the commercial space needs plenty of preparation. One of them is knowing the business laws to comply with state, federal and local regulations. Companies unfamiliar with the legal essentials are susceptible to failure and losing big money in lawsuit. Studies found that 36% to 53% of small businesses are sued annually and about 45% of small businesses are currently involved in litigation as of 2022. The average liability suit costs at least $54,000. More than 75% of small business owners live in fear that they might be targeted for a lawsuit.

Kellogg launched a new ad campaign in 2009 for its Rice Krispies cereal claiming that it boosts children’s immunity. Various private individuals along with The Oregon attorney general and the FTC had issues due to a lack of scientific evidence. Multiple allegations were rolled into one and the company settled for $5 million as per Lexology report. McDonald’s, Apple and Red Bull also faced major financial setbacks with class-action settlements. So, below are a few legal necessities to stay compliant and protect your brand. Knowing these will keep you from getting caught off guard.

1. Pay-to-Play Law

Pay-to-play is the unethical act of money exchange with government officials to enjoy certain favors, privileges or benefits. It can be in areas like politics, entertainment, sports and business. New Jersey’s Pay-to-play law seeks to ensure open and fair public contracting that must be free of the sway of political interests. Section 84308 prohibits a party from looking for a permit, license and similar entitlements in return for political contributions.
Entities holding contracts worth more than $250,000 are banned from pay-to-play disclosure. As of February 2022, 15 states and the District of Columbia have pay-to-play laws of general jurisdiction and several other states have industry-specific pay-to-play laws. Make sure your company is in compliance with state contracts for a customized plan.

2. Privacy Laws

There is no single US law for the privacy of data but a mix of GLBA, FCRA, COPPA, VPPA and FERPA. These give consumers the right to control their data and businesses must strive to create a better world with a safe internet presence. Companies that store and process information are required to stay updated on the latest regulations even if there is a lack of a comprehensive privacy framework. This helps to ensure compliance with the data collection laws that regulate the collection, use and disclosure of personal data while setting standards regarding how to take care of sensitive details.

The US Privacy Act of 1974 establishes rules and regulations regarding US government agencies’ use, collection and disclosure of personal information. One of the is the right to access data based on an employee’s role in a company. Three states like California, Virginia and Colorado have comprehensive consumer privacy laws which applies to the residents. It is a good idea work with your lawyer and learn about the size of the income level of businesses the laws apply to, cure periods and whether you may use tools or authorized agents.

3.      Tax Laws

Businesses must file and pay federal taxes on income earned annually. This will need you to get an employer identification number. The nominal federal corporate tax rate in the US is a flat 21% since January 2018 due to the Tax Cuts and Jobs Acts of 2017. Not being able to pay the amount leads to Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or a part of the month the tax remains unpaid. Take some time to review the social security, Medicare, federal tax and federal unemployment tax needs.

You may also have to collect and pay state sales and state and federal excise taxes on specific business activities and property taxes on assets. Income taxes are also applicable for Sole Proprietors, Multiple-Member LLCs, Partners and Single-Member LLCs.

Try to protect your personal assets, ensure your workers and be careful not to violate trademarks. Check for licensing needs before opening doors to the public. Know the rules and guidelines about internet advertising to avoid anything that hurts customer sentiments. File for bankruptcy if your business debt is getting out of hand. Following these steps can help your new company run without hassles.

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