If you own or run a business, there are all kinds of responsibilities that you have. Presumably, you don’t have a problem with any of them, or else you wouldn’t be in that particular line of work.
You need to make sure that every customer trusts you and that you treat your employees well. If you have investors, you need to keep them happy, and if you have bank or credit union loans, you need to pay them back as soon as you are able to do so.
You probably know all of these things, and you don’t shy away from any of them. At the same time, though, you can’t break any laws, either intentionally or because you didn’t know about them.
Since business law covers a broad scope of things, from how to organize a business to how a business can advertise, business owners either do not know about all of them or do not fully understand them. Illegal business practices such as OSHA violations, not buying the right workers’ comp policy, paying people improperly, wrongful termination, misclassifying employees as independent contractors, not paying income or sales taxes, workplace sexual harassment, or failing to secure the licenses you need to conduct business are unfortunately common.
Make sure you fully understand how to avoid these and other pitfalls. Asking a business law attorney for free advice online is a great first step when starting your business. This will ensure your company complies with the law.
We’ll take a moment right now to mention some of the illegal business practices that you should avoid at all costs.
Buying or Selling Counterfeit Goods
Some people don’t think very much about whether the goods they’re buying are real or fake. In fact, some individuals will go places like New York’s Chinatown specifically to buy:
- Cut-rate purses
- Jewelry
- Clothing items
As a consumer, if you look at purchasing counterfeit goods for a moment, you might not think it’s that big of a deal. The clothing item or whatever else might look virtually the same, and you might enjoy it just as much.
The issue is usually about the individuals who made that merchandise. They might have to work in sweatshops for just pennies an hour. In China and elsewhere, this happens all the time.
As a business owner, you have to demonstrate to the customers that you only want to sell them authentic products. If you sell them counterfeit ones, they won’t trust you anymore, nor should they.
Also, if the police catch you selling knockoff goods, you can face severe penalties. For instance, in South Carolina, the cops could hit you with a $20,000 fine or up to five years in jail. It is a little different in every state, but every state does frown on it and will penalize you severely if they catch you.
Tax Evasion
Many businesses or private citizens also try to get away with tax evasion. Your taxes can be confusing, especially if you run a business. You have to think about things like:
- Misreporting income
- Overreporting income
It’s easy to make a mistake. You might not be sure how deducting meals works if you’re wining and dining a client. You have to watch out for mixing personal and business finances. You also need to have a mileage record if you use your vehicle for work purposes.
You probably aren’t considering trying to trick the IRS in any way, but if you are, think again. The IRS took down Al Capone, and they’re always ready to conduct an audit.
If you run a business, but you have no head for numbers, that’s precisely why you need someone like a CPA. You can always use a company like H and R Block, or you can reach out to a tax lawyer.
Generally, the more complex and larger your business, the more it’s worth it to hire someone, or even a whole team, to handle this aspect of it. Whether you mean to defraud the IRS or not, if you try to tackle this endeavor yourself, it can quickly turn into a quagmire.
Hiring Undocumented Workers
You might have a business where you feel like you can get away with hiring some undocumented workers, or “illegal immigrants,” as some people dub them. Some examples might be if you’re running a restaurant, a car wash, manufacturing or selling clothing, painting houses, etc.
This is a tricky issue. It’s definitely illegal to hire undocumented workers, and if the authorities catch you, you can face some severe penalties.
On the other hand, you’re giving people jobs who need them. These individuals sometimes flee from horrifying conditions or abject poverty in other countries. They might be very glad of the position you are offering them, and they may be taking jobs that most American citizens don’t want anyway.
You have to look at the legal ramifications, though. While your conscience might dictate that you should give these individuals work and pay them off the books, you take a significant risk when you do that.
It’s probably better to only have legal, documented workers on your staff. If you deviate from that policy, you face some potentially harsh penalties.
Illegal Environmental Practices
Improper waste disposal is another illegal business practice. You might run a business where you produce large waste amounts. That waste might even be toxic, in which case you can only dispose of it in certain ways.
If so, you need to comply with all federal government regulations, as well as those of any other applicable governing body. If you decide to just take the waste and dump it out in the woods or in a lake somewhere because it’s cheaper or easier, you can get some serious penalties for that. That’s as it should be since you ought to protect the environment for future generations.
Proprietary Information Disclosure
Proprietary information disclosure is another unethical and typically illegal business practice. You might work with clients in a field where you have access to their sensitive data. Maybe you’re helping them conduct market research of some kind, and they anticipate coming out with a revolutionary new product because of it.
It’s probably illegal if you share this information with other individuals or companies and attempt to profit off of it. Not only will you lose client trust this way, but you’re also usually breaking confidentiality laws.
Knowledge is power, and it’s generally illegal and undoubtedly unethical if you use proprietary knowledge to enrich yourself. You owe it to your clients to guard their research, just as you’d protect credit card numbers and other customer data if you were running an eCommerce website.
Ingrid Maldine is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Ingrid’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Ingrid has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Ingrid has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.
