When you sit down and think about it, laws invade almost every part of our lives.
Under the auspices of social order and the greater good, it is largely accepted that laws are a necessity in our complex culture. This is as true in our private lives as it is in our business activities.
In private day-to-day life, most of the laws that impact our activities are either so widely known that they are second nature, or are based in common sense and ingrained in us from birth.
In business, however, the laws governing business activities are usually not widely known among the populous, nor are they usually based in common sense. As a business person it is important to take the time and study up on some of the most impactful areas of law that affect your business.
Spending some time educating yourself before issues arise can save you a lot of time and money in preventing trouble down the line.
Here are three of the most important areas of law of which business owners should have a basic understanding:
1. Employment Law.
If you have any employees at all – even just one – this subject is critical to your business.
A mistake in calculating overtime, vacation hours or paid time off can quickly and quietly result in a huge backlog of wages owed to your employee. Furthermore, the penalties that the Division of Labor Standards Enforcement levies for unpaid wages often exceeds the cost of the wages themselves, in the thousands of dollars.
On top of wage and hour issues, the Affordable Care Act is very complex, not intuitive, and can also result in debilitating penalties to the unwary businessperson.
2. Contracts.
One of the biggest risks to your business arising out of contract law is your assumption that you know very much about contract law.
People assume they know about contracts because the concept seems simple: Write down the terms of the deal, both parties sign, and the contract is done. What else is there to know?
In practice, there is a lot to know.
Beyond the basic terms of the deal, the “boilerplate” is often far more significant in the implications it creates than the terms of price, delivery, timing, etc. Allocation of risk and liability, arbitration and venue provisions, and indemnification provisions can each have a greater financial impact on the parties than the mere failure to pay or perform the basic terms of the contract.
3. Tax.
Uncle Sam, the state of California, and the local municipality each take a chunk.
How much is owed to which agency can surprise even the most sophisticated businesspeople. Once a mistake is made, not only can it be costly, but while your employee or a party with whom you conduct business may work something out, the government is usually not as willing to concede or make accommodations for you.
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