Small-Business Challenge: Complying with Regulatory and Legal Issues

• Licenses: State licensing requirements vary by occupation and by state. In some states, you can get certain licenses if you're able to complete a few forms and write the state a check to pay your fees. In most cases, however, you have to take a test or complete some certification in order to get a license.

• Taxes: Some businesses, such as retailers, must collect sales tax on products sold. And in most states, all businesses, regardless of type, must pay income taxes at the state level.

• Insurance: Common state-required coverages include worker's compensation and unemployment insurance.

• Environment: If your plant emits things into the air or water, you can be pretty certain that your state and possibly other government agencies will regulate your activities.

Federal regulations: Still more taxes, licenses, and requirements

Myriad U.S. governmental regulations cover taxes, licenses, as well as the health, safety, and welfare of your employees. This section cover the critical ones. Note that not all federal labor laws affect all small businesses, because some issues apply only to employers with a certain number of employees. Here are the key federal regulations you need to think about:

• Licenses: Most businesses that require a license or permit to operate generally obtain such licenses and permits at the state level. However, some businesses (such as alcohol manufacturers, drug companies, firearm manufacturers and dealers, investment advisers, meat packing and preparation companies, radio stations, tobacco manufacturers, television stations, and trucking and other transportation companies) are permitted and licensed at the federal level.

• Taxes: All businesses that are incorporated, or their owners if the business is not incorporated, must file a federal income tax return. Additionally, most small-business owners apply for a federal Employer Identification Number (EIN).

• Americans with Disabilities Act (ADA): The ADA prohibits employers with 15 or more employees from discriminating against prospective and current employees or customers with disabilities. Get more information from the ADA Home Page.

• Family Medical Leave Act (FMLA): Employers with 50 or more employees (within 75 miles) are required to provide up to 12 weeks of unpaid leave to employees who desire or need the leave for specified personal health reasons. For more information, see the FMLA Web site.

Selection of a business entity

In the start-up phase of your business, you should think about what type of organization or business entity makes the best sense for your enterprise. Because of tax and other issues, you should choose sooner rather than later which entity will best serve your needs.

Trademarks, patents, and copyrights

Some business owners take a different twist on something or a have a truly unique product or service to offer. If your work and ideas are proprietary and protectable, speak with an attorney concerning copyrights, trademarks, and patents.

If you have created something unique that you would like to protect others from copying, or simply wish to restrain others from using and profiting from the name of your business or creations, prepare to enter the wacky world of patent, copyright, and trademark law.

• By filing a patent, you have exclusive rights to manufacture, sell, and use the patented invention. A trademark protects your brands and prevents others from profiting from the recognition and reputation you've developed. For more information, check with the U.S. Patent and Trademark Office. Most small-business owners need not be as concerned with protecting their own trademarks as with infringing on someone else's.

• Copyright laws cover such works as musical and sound recordings, literary works, software, graphics, and audiovisuals. The copyright owner is solely allowed to sell the work, copy it, create derivations from it, and perform and display the work. For more information, see the U.S. Copyright Office Web page.