In 2020, 804,398 businesses in the US were less than one year old. On average, 600,000 companies launch in the US every year, but some alarming statistics prove why not all entrepreneurs will launch a brand and find success. One study found that 20% of those businesses will fail within the first year, and 50% will fail within five years. That proves that there’s a ton of room for failure. It also proves there is room for success if the essential compliances are followed, and the right formula for success molds into the foundations of a business.
Yes, the right time, product or service, marketing, and overall business model play a factor – but failing to comply with the rules and regulations can bring a business crashing and burning down. Below, we’ll look at the essential compliance all budding entrepreneurs must get right.
Licenses, Permits, And Regulations
Any new entrepreneur must understand that there are various licenses, permits, and regulations that a new brand must be adhered to – failing to do so will result in legal prosecution. For example, starting a homemade cocktail company will require a license and permit, and there’s an endless list of regulations related to selling alcohol. Or, an entrepreneur wishing to sell sports clothes must adhere to fair trade regulations and policies. It’s relatively easy to find the required licenses, permits, and regulations relating to a new business online.
Website accessibility was once somewhat overlooked, but in 2022, compliance is essential. What that means is anyone with a disability should be able to browse the internet and websites the same as anyone else.
The Americans Disability Act outlines regulations for website accessibility, and the Department of Justice recently released new guidance that further solidifies the requirement for website accessibility – failing to do so will result in lawsuits. Brands like accessiBe assist with combating lawsuits and help new entrepreneurs in ensuring their website complies with accessibility laws.
The taxman will surely come knocking if entrepreneurs don’t pay the correct taxes – and the US taxman is very unforgiving. Taxes include income tax and self-employment taxes – and most businesses will pay sales tax. It’s wise and almost essential to hire an accountant or bookkeeper to assist with taxes. Even accidentally filing the wrong taxes can result in a headache and a financial loss. The IRS has a pay-as-you-go tax schedule that means businesses have to pay taxes on the go – making it hard for new entrepreneurs to manage.
Closely related to business taxes is bookkeeping. Businesses must comply with the law that states they have to keep accurate bookkeeping records and be ready to produce them when needed, such as paying taxes. Proper filing of transactions and documents is essential – hence why hiring a bookkeeper becomes a viable option.
Copyrights And Trademarks
Perhaps the holy grail of starting a business is complying with copyright and trademark rules. To dumb it down, don’t copy another brand – and copyright your business ideas and trademark your entire business. Trademark protects the unique identification of a brand or product, whereas copyright prevents copying and reproduction. One famous copyright court case was between Apple and Microsoft – read about it here.
The list of essential compliance could go on – anything entrepreneurs must comply with by law is classed as essential. Many new entrepreneurs fail to understand that not complying will result in fines, court cases, and perhaps the cessation of the business. There’s tons of information online about the essential compliance new and established brands must follow.