How to Keep Red Tape From Strangling Your Startup
- Thomas Edison
Many people consider Edison America’s greatest inventor - ever. But he never had to deal with the reams of rules and regulations today’s startups need to heed just to stay out of trouble with federal and state governments.
Red tape is likely the last thing you want to think about when you’re in the throes of a startup, but there are some things you really need to consider:
Are you providing a safe working environment for your staff? Even if you’ve only got one employee, Occupational Safety and Health Administration (OSHA) regulations require you to make sure he or she operates in safe and healthful working conditions. If you have more than 10 employees, the requirements get a little tougher: For example, you now have to maintain specific records related to injuries and illnesses. The three most important parts of OSHA rules are:
- All employees have access to your safety records.
- Employers must provide personal protective equipment at no cost to their employees.
- Manufacturers and importers of hazardous materials must be evaluated, and employees kept informed about the hazards.
Chances are these regs won’t affect startups like yours, but to be sure, you can ask OSHA to stop by your offices for a free evaluation and consultation. Check with your closest OSHA regional office.
Some industries have specific regulations you also need to follow. The federal government has more than 25 regulatory agencies with rules on what you can manufacture, how you should conduct your business, how you can advertise your products or services, and more. The Consumer Product Safety Commission and the Environmental Protection Agency are just two of the agencies that may have regulations affecting your business.
State and City Licenses and Permits
Depending on your industry, you may need specific business licenses and permits from your state or city. These vary depending on your location (and the cost varies, too). Lots of startups operate virtually these days, but does your city allow people to work from home? Zoning laws are created and regulated at the municipal level, so check with your city or town to make sure it’s legit to work out of your house or apartment.
Even if you operate a solo home-based business and use a post office box as your business address, you’ll need to register a street address where the majority of the business is operated and pay the fees to that city.
Finally, you can’t forget the Internal Revenue Service. Make sure you’re in compliance with the IRS and pay the proper business and employer taxes (if you have employees), or you may have an auditor knocking on your door.
Do you operate under a calendar or fiscal-year basis? What corporate structure (S corporation, LLC, etc.) did you choose? Did you get your Tax ID number or EIN number? If this all sounds like alphabet soup, check the IRS website for more information, then turn your books over to a trusted accountant to keep you in compliance. The IRS website also offers industry-specific tax information worth checking out.
There are plenty of places where you can get help. Start at the top. Last year, the Obama administration created Business.USA.gov, a one-stop platform that helps small businesses get access to relevant government information. Search the site’s database by industry, then click on rules and you’ll find the agency guidelines that pertain to your business.
Once you’ve gathered the information online, make an appointment with a local agency such as your industry association, your local SCORE office or your nearest Small Business Development Center (SBDC). Their experts can help you comply with any pertinent business regulations, navigate any hurdles and fill out the required paperwork.
Just don’t expect any of this work to actually help your business succeed. That’s not how it works. All you can hope for is to keep the mountains of red tape and compliance issues from causing your company to fail.