Complying with government regulations
All businesses, regardless of type, must comply with statutes (laws passed by legislative bodies) and regulations (rules enacted by regulatory agencies to carry out the purposes of statutes). These statutes and regulations can come from all levels of government; federal, state, and local. Some of these statutes and regulations apply regardless of the nature of the business and, of course, a venture engaged in business in more than one state or local jurisdiction must comply with applicable laws and regulations from all applicable jurisdictions.
The enforcement agency has no obligation to notify the business that it must comply with the law. It is the business’s obligation to inquire and comply. Fortunately, most agencies have public information departments eager to assist in providing information and obtaining compliance.
These laws and regulations include licensing and registration of business name, workers compensation, unemployment compensation, and permission to do business in a form other than a sole proprietorship. The collection of sales taxes and the withholding of employees’ wages are further examples of obligations with which to comply.
Product/Service Specific
The very nature of some businesses makes them susceptible to special laws and regulations. Most states require professions that require specific licensing such as medicine, law, architecture, accountancy, and engineering to go through several additional steps before receiving approval to do corporate or other forms of business.
Businesses supplying food or ingested items must obtain health permits and undergo initial and periodic inspections. Pharmaceutical manufacturers undergo a lengthy and costly approval process before receiving approval to offer their products for sale. Those engaged in inherently dangerous businesses such as handling or detonating explosives require special permits. Many lawful products are only to be sold to persons who have attained a certain age or meet specific criteria.
Entrepreneurs need to know what laws and regulations apply to their particular business. Once engaged in business, they must be constantly aware of what new or amended laws and regulations apply.
Trade associations provide excellent sources of such information and can suggest means to comply with laws and regulations. Often, trade associations will lobby for or against proposed changes in statutes or regulations on behalf of their members. Many trade groups offer education to their member organizations as new or amended regulations are promulgated. The buying power of a large group and the economy of scale generally deliver these services at a bargain price.
Land Use Regulation
Regardless of the type of business or its location—in a home, manufacturing plant, strip mall, or high rise office building—the uses to which land may be lawfully put are matters that should be of great concern to an entrepreneur. Virtually every incorporated city, town, village, and county have adopted zoning regulations that permit only certain business activities in certain zones.
The fact that a business operates out of a home does not solve the land use problem. Most residential zoning codes limit home-based businesses to those which employ no more than a few employees, sometimes two or three people who are not members of the family, and also prohibit frequent motor carrier deliveries and customer parking.
Building and Fire Codes
Often when applying for a local license, a business is subjected to inspection by the fire department and building code officials. The fire department wants to know if you are doing anything that could be a potential fire or chemical hazard and whether exits are adequate and marked properly, fire extinguishers are present, and appropriate materials are used for fire retardant purposes. It also wants to know if the building meets all fire codes. The building inspection department may inspect the property to make sure it is safe for the planned use and in compliance with the building code.
Local governments can impose changes to existing and new buildings. For example, a new plant was forced to cut a large hole in the middle of its floor for another stairway from the basement even though the basement was not used for anything.
Taxation and statutory payments – This is fundamental. Every entrepreneur must from the onset be aware of regulations on Company tax, Value Added Tax or other forms of sales/consumption tax and employee income tax, and other compulsory contributions by employees, employers towards the National Health Insurance(NHIS), Pensions, National Housing Fund and other requirement by states with regards to waste disposal, environmental safety, signs and advertisements.
Source: Ewing Marion Kauffman Foundation.