Jean L. Serio

Why waste thousands, on easily avoided legal battles, when hiring a business attorney helps create that "ounce of prevention" to protect you and your business? Yet many small business owners needlessly pay those fines for "failure to comply".

Many entrepreneurs consider an attorney unnecessary and too expensive. Cut you'll call an attorney - any attorney - when an over-heated situation turns to a battle, or you've received a notice from a government agency saying you're being fined, thousands, for "failure to pay", or "failure to comply". Then you'll pay whatever an attorney charges, to keep your business from being slapped with more fines, or hauled into court.

As a business owner your job is, among other things, to create, market and promote your business. And, very importantly, to protect yourself and your investment to the best your ability. To help you do this, you need an experienced attorney who'll guide you through the complex and ever changing world of government regulations.

For example, a business neighbor of mine was in court, regularly, charged with "failure to comply". In one case, wound up paying $250 per month for 1 year for "failure to pay" a simple $75 annual business tax (interest and fees added for each day, on top of the unpaid $75, totaling $4400, including court costs). She'd been operating her business 3 years, when the state finally caught up with her. Aside from paying 3 years for past license fees, she was charged interest, several types of fines and court costs. While licensing fees were $125 per year, she wound up paying $6200 for "failure to comply". A sensible business person would have hired an accountant if they were unable to, or incapable of, handling such situations.

Here are some guidelines:

Licenses -

In most cases you won't need an attorney when applying for the usual business license. It's a simple process requiring basic personal and business information, payment of a licensing fee. On the other hand, if you're opening a manufacturing plant, restaurant, or serving liquor (in the U.S.), the application process is more stringent; paperwork more complex. In cases like these, it's best to have an attorney guide you through the lengthy process.

Some communities require licenses for home based businesses, some don't. Others require all businesses be licensed. Barbers, hair stylists, attorneys, nurses, to name a few, may require two or more licenses: a professional license issued by the state they practice in, and a business license issued by the community the business is located in. If you're a barber, or hair stylist opening a business in your home, other licenses may be required; also permits issued by the health department (in the U.S.). It's best to consult your attorney before dealing with any government agency.

Permits -

These are usually required for specific situations. For instance, construction permits to build, to remodel; to serve drink or food in an unrelated business (i.e. Espresso in a gift shop, tea and desserts in an antique shop); special events (sidewalk sales, car shows); to hang signs; various permits for health providers and others. In some places, putting in a garden by your business entrance requires a permit.

The reasons for permits are many and varied. The requirements determined by each community. And, there may also be restrictions on what each permit covers. Ignore them and risk a hefty fine.

The permit application process is straight forward. But a word to the wise - some communities may require permits be applied for in a prescribed number of days or months, prior to the project or function taking place. Because the process can take weeks, or months, apply for one as soon as the need arises. Unless you're requiresting a permit with "special requirements", you can handle these yourself.

Sales Tax Permit - Also called a Resale Permit or Number -

Technically these permits allow a business to purchase goods for resale, or materials to produce goods that will be resold, without having to pay taxes on those items, as the regular public might. Your assigned number may also be used as a business ID in some states. And wholesale vendors you buy from will usually ask for that number before they'll sell to you.

Once you manufacture, or sell your merchandise, you are then required to collect sales taxes if your state has them. While each state has it's own rules, the scenario is basically the same. You collect the appropriate taxes, file a quarterly tax report, include a check for the amount of tax collected.

Some U.S. states, like Florida, require out-of-state businesses selling to residents of Florida, to collect state taxes and file tax forms quarterly.

Local Taxes -

In some communities you're charged once a year; fees determined by the number of employees you have. In others, you may be required to deduct a local, or city, tax from an employee's paycheck, to file the appropriate tax forms when necessary, and include a check for taxes collected.

Why You Might Need an Attorney:

In all the cases above, "failure to file" is cause for a fine. A fine may range from a set amount, to a fine with interest added, to a fine with interest added and charged daily until requirements are met. In many cases, your city, county or state will take you to court and you will need an attorney to represent you.

"Failure to file" for a sales permit is only the start of fines and problems in most U.S. states. Once they've discovered you have a full scale business up and running, but haven't applied for a sales permit, it's almost a sure bet you're selling without collecting taxes; or collecting taxes, but failing to file. There are a variety of things the government can do. What they do depends on the seriousness of your situation. It could be anything from shutting your business down until you comply and pay the fines, to requiring you turn over all docusments relating to monies you've collected.

If you fail to respond, after they've notified you of "failure to file" or comply, they can and will take any legal measures necessary to collect. Don't take this lightly. In cases like this you'll probably need an attorney to represent you should this go to court. Cases like this are rarely won by the business owner, and can often result in thousands of dollars in fines. For a small business, this can mean closing the doors.

Other Related Legal Issues:

In all U.S. states, and many countries, there are laws in place to protect consumers. This includes such laws prohibiting:

* misleading advertising * phony products or services * bait and switch tactics * mail and credit card fraud, for example.

Depending upon your type of business, you may be required to put in writing such things as warranty information and specific money-back (or merchandise return) policies.

There may also be laws in your state or the state in which your business is located, regarding "deceptive pricing". Fr instance, a customer orders over the phone at one price, and their credit card is charged a larger amount, or charged fees for which the customer was not notified of. There are a variety of "deceptive pricing" laws. Check with your community or state. If you're caught when a customer complains of use of these policies, and complains to a consumer advocacy group, or the government, you'll receive a stern letter of reprimand from the government agency covering this area; and the possibility of a fine. You may also receive a scathing letter from the advocacy group; and be listed on their web page and other literature as a company using "deceptive pricing" practices.

A Final Word:

A good business person knows what the laws are, regarding their business, what permits they need and taxes to collect, for example. They do their best to comply with government regulations. Not only is this smart, but it helps keep your business prosperous - and in good financial and legal health.

Jean L. Serio, Copyright 2006. Are you one of the 1.2 million women tired of working the 9-5 grind, sick of worrying about making ends meet? As you know starting your own business still remains one of the best strategies for providing you financial freedom. Discover how to start a business, today, with your own step-by-step Action Plan. Plus to ensure you receive all the details FREE, and learn how you can harness the power and resources you need to start, first sign up for your Free Newsletter "Start Up a Business Today" and receive your Bonus Report "5 Mistakes Women Make Starting Up a Biz". Go to: www.womensmarketingandbusinessnetwork.com "We help you make it happen!"