AREAS OF GOVERNMENTAL REGULATION
AFFECTING BUSINESSES

Governmental regulations affect your business and you should be familiar with them. Below I have listed several areas that affect your business. Some of these areas may not affect you if you do not have any employees. However, if you have a tea room or tea bar and have employees, you should think about how these areas will affect you and your business.



Taxation
Federal and state income tax
All governments have the power to collect taxes. State taxation of personal and corporate income parallels the federal system. One of the primary problems with doing business as a corporation is the potential for double taxation, in which your company’s profits are taxed, and any income paid to you as the owner is also taxed.

Sales tax
All but three states have enacted sales taxes which affect businesses by taxing transactions. As discussed in Government, Taxes and Financial, you will need to obtain a resale tax identification number. You can find your state's department of revenue online or in the state government section of your phone book.

Property tax
Most states assess taxes against real estate as a means of funding state government. The property tax structure can have interesting twists, such as your equipment (including your computer) being taxed as real estate or personal property. I have to pay between $20 and $22 every year for my computer, which NV taxes as personal property.

Business license fees
These include city or country business license fees. Some states assess special fees for regulated professions and industries (such as beer and wine) which would affect you if you decide to serve wine or champagne for your Royal Teas (this is an afternoon tea with champagne.) Call your city or county license office listed in your phone book to find out information on this.

Employees
Payroll/withholding
The federal government has a standard system for requiring employers to deduct and pay various payroll taxes on their employees. These include the Federal Insurance Contributions Act (FICA), which is the social security tax, and the Federal Unemployment Tax Act (FUTA). The employer is also required to withhold sums from their employees for state unemployment compensation, injured worker compensation, and consumer protection escrow. Some areas have city taxes withheld. As an employer, you must make quarterly (sometimes monthly) payments of income tax withholdings to the government; incorrect or late payments can result in severe penalties.

Responsibility for the acts of employees
Under civil law, the employer is generally held responsible for any injurious act of its employees that occurs within the scope of employment. This is why you should buy liability insurance, and incorporate to avoid personal liability.

Wage and hour regulation
The federal government has established a minimum wage under the Fair Labor Standards Act. Most states have also adopted such requirements. You should familiarize yourself with these laws and keep updated on the most recent increase to the minimum wage.

OSHA
The Occupational Safety and Health Administration (OSHA) sets guidelines for worker safety. Governing the guidelines are a complex series of regulation by both federal and state agencies.

The hiring process
Under Title VII of the Civil Rights Act of 1964, your business is prohibited from discriminating against someone on the basis of race, color, sex, national origin, or age. There are a number of federal and state codes and regulations that affect your hiring process. It is strongly recommended that you establish a standard set of questions for your interviews.

Harassment
There are laws to discourage harassment in the workplace. Harassment can take many forms, from unfair job placement and promotion to permitting sexual harassment to occur in the office. You will avoid this pitfall if you adopt and enforce an employee policy manual specifying conduct that your business does not tolerate.

Americans with Disabilities Act
The disabled cannot be discriminated against, whether in the work force or in facilities that are open to the public. This will affect you when you are planning a tea room in the fact that these regulations include the size of restroom doors, type of door handles used, and so forth.

Other
You should also familiarize yourself with any specific regulations for your state and/or county or city. A good attorney or CPA should be able to steer you in the right direction. See Managing Risks.

Licenses, Taxes, and Financial Information

Legal Structures of Business

Managing Risk

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