Small Business Accounting Lawyers

Small businesses are privately owned and operated and have less than 500 employees. Small businesses may also be defined by a lower volume of sales than other businesses.

The standards for small businesses in the United States vary by industry as well as by state. Due to their relative ease of operation and tax deductions which are available, small businesses are becoming more popular.

Other examples of reasons small businesses are becoming more popular include, but are not limited to:

• The amount of creative flexibility owners are allowed;
• The amount of control over work-life balance;
• Financial independence; and
• Starting incentives, such as financing options.

Small businesses often take the form of corporations, partnerships, or sole proprietorships. Another common term for a small business is a startup.

A startup is a business which has recently begun operations and is on a smaller scale until it has earned enough revenue to move forward. A startup business may remain a small business or it may grow past the criteria for defining a small business.

In manufacturing industries, a small business employs less than 500 employees. In a non-manufacturing industry, a small business usually earns less than $7 million in annual income.

What Types of Laws Govern Small Businesses?

The laws which govern small businesses generally cover license requirements which are related to the type of activity that the business engages in. The failure to meet the legal requirements for a small business may result in penalties, including:

• Fines;
• Jail time; or
• A revocation of operation privileges.

Licensing requirements can be divided into three categories:

• Federal requirements;
• State requirements; and
• Local requirements.

Federal small business requirements include, but are not limited to:

• Employer Identification Number (EIN): Regardless of the size of the business and the number of employees hired, most businesses must apply for an EIN in order to operate legally in the U.S.;
• Health insurance provisions: If a small business provides health insurance for its employees, it may be required to obtain a National Standard Employer Identifier (NSEI), which is used to monitor electronic health care transactions;
• Activity-specific licenses: A business may need to contact a federal agency if it engages in the following types of federally-regulated activities:
  • Manufacturing prescription drugs and pharmaceuticals;
  • Distributing:
    • alcohol;
    • tobacco; or
    • firearms;
  • Preparing meat products;
  • Engaging in broadcast activities; and
  • Providing advice on investments.

State requirements for small businesses include, but ar not limited to:

• Business licenses: State business licenses are the main document for tax purposes and other basic business functions;
• Occupational or profession-specific Licenses: Some occupational fields require specific licenses, for example, physicians, accountants and auto mechanics; and
• Employer registration: Unemployment insurance contributions are typically required if a business has hired a certain number of employees.

Local or municipal requirements for small businesses may include, but are not limited to:

• Local licenses: Most business operations will require a city or county license;
• Permit requirements: In addition to state permit requirements, a local municipality may have specific activity-related permit requirements as well; and
• Zoning ordinances: Small businesses are usually required to operate only in designated commercial zones.

What Are Some Unique Issues Small Businesses Face?

A small business may face some unique issues which larger businesses may not face or may not have faced but are better prepared to handle on their own. Unique issues a small business may face includes, but is not limited to:

• Which business structure to choose, such as choosing between an limited liability corporation (LLC) or an S Corp;
• Which contracts and business documents will need to be drafted, such as employment agreements and waivers;
• What steps to take when a contract is breached or disputed;
• How to navigate mergers and acquisitions, such as when being acquired by a larger company;
• How to resolve business issues as well as other claims, including establishing best practices for handling discrimination; workplace sexual harassment, etc;
• Managing risk management and compliance, which may include developing effective systems for monitoring and minimizing risks that the business may face; and
• Addressing real estate and property disputes, such as negotiating sales and leases.

If any legal issues which arise result in litigation, it may be helpful for a small business to be represented by an attorney. Although it is possible for a small business to represent itself, it would be easier to work with a small business attorney who has experience addressing the unique issues a small business may face.

What is Small Business Accounting?

Accounting is the overall interpretation of financial data or information for a business. In the context of a small business, this may refer to several aspects of finance, including:

• Profits;
• Revenue; and
• In certain situations, start-up expenses and overhead expenses.

Accounting may also include other aspects of financial operations, which may include the importance of financial advice or guidance regarding future company decisions. In general, it refers to an analysis of numbers and financial data for the business.

The process of accounting typically involves keeping a ledger, which contains all of the records of a business’:

• Major transactions;
• Revenues; and
• Expenses.

With a ledger, an account can use the document to produce a financial report that may help the business realize where it is able to make improvements in order to maximize its profits.

What Are Some Legal Issues with Small Business Accounting?

There are numerous different types of legal issues which may arise in connection with small business accounting, including:

• Tax issues, especially remaining prepared for a small business tax audit, which may occur at any time;
• Managing debt from loans and financing, which may include renegotiating loan terms when necessary and handling legal issues from investors;
• Problems stemming from employee-related expenses and benefits; and
• Identifying and resolving:
  • fraud;
  • theft;
  • embezzlement; and
  • other issues that can create profit losses.

What if I Have a Dispute Involving Small Business Accounting?

One of the main sources of small business accounting disputes includes conflicts over financial ledgers or ledger entries. If an individual is involved in a small business accounting dispute, steps that an individual should follow include:

• Identify the source of the conflict or disagreement, which may often involve in-depth reviewing of ledgers and financial reports;
• Create and retain copies of financial documents;
• Consult with all parties involved to help determine where a disagreement may stem from; and
• Research laws related to business accounting; and
• Consult with a lawyer for further advice.

Frequently reviewing business documents and business records can also assist in preventing small business accounting disputes in the future. It may also be helpful to include accounting guidelines in the small business plan.

The failure to have a comprehensive business plan in place to prevent a major legal problem is one common small business mistake.

Do I Need a Lawyer for Help with Small Business Accounting Issues?

In order for a small business to remain profitable, it is important to maintain sound accounting practices. It may be helpful for you to consult with a small business lawyer in your area for assistance with legal issues or disputes which involve business accounting.

Your attorney can provide you with up-to-date legal research and advise you regarding current laws which may apply to your business. If you have to make an appearance in court or if you are required to file a legal claim, your lawyer can assist you with those processes as well.