Commercial law is a body of law that regulates the conduct of people, merchants, and businesses who are engaged in trade, sales, and/or commerce. Also known as business law, it interacts with many other areas of law, such as:
- Environmental regulation;
- Real estate; and
- Food and safety laws.
Some specific branches of commercial law are consumer protection, contract laws, and intellectual property laws.
Commercial and business laws are commonly associated with distinct legal issues, the majority of which are contract violations. Transactions between businesses and with customers generally involve a contract, and legal issues are commonly associated with the terms of that contract. More specifically, a breach of contract can cause significant losses for either party involved in the contract.
Other common commercial law legal issues include:
- Advertising and marketing disputes and violations;
- Unfair competition issues;
- Starting a new business;
- Transferring or terminating a business;
- Consumer complaints; and
- Protection of intellectual property and trade secrets.
What Are Small Business Laws?
Small businesses are owned and operated privately, with a relatively low volume of sales and a small number of employees. U.S. small business standards vary by state, as well as on an industry-by-industry business. Because of the ease of operation and certain tax deductions for small businesses that are commonly available, small businesses are especially popular.
In a legal context, a small business is defined as having less than 500 employees for manufacturing industries and less than $7 million in annual income for non-manufacturing industries. Small businesses generally take the form of a corporation, partnership, or sole proprietorship in terms of business management structures.
The laws governing small businesses largely address license requirements associated with the type of activity that the entity engages in. Failure to meet the legal requirements for small businesses can result in various penalties such as fines, jail time, and/or a revocation of operation privileges.
Federal Small Business Requirements:
- Employer Identification Number (“EIN”): Regardless of the size of the business and the number of employees hired by the business, most businesses must apply for an EIN in order to legally operate in the U.S.;
- Health Insurance Provisions: If the small business provides health insurance for its employees, the business may be required to obtain a National Standard Employer Identifier (“NSEI”) in order to monitor electronic health care transactions;
- Intellectual Property Registration: Federal registration of intellectual property is not a legal requirement, but it is highly recommended. Patents, trademarks, trade names, and copyrights can all provide small business owners with the exclusive use of intellectual properties;
- Activity-Specific Licenses: You may need to contact a federal agency if your small business engages in the following types of federally-regulated business 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:
- Business Licenses: State business licenses are the essential document for tax purposes, as well as other basic business functions. Additionally, many states provide small business assistance agencies in order to help organizations meet state requirements;
- Occupational/Profession-Specific Licenses: Some occupational fields require specific licenses. An example of this would be physicians, accountants, and auto mechanics. Additionally, some professions also require continuing education credits in order to maintain a license;
- Licenses for Product Sales: A state license may be required in order to sell liquor, gasoline, lottery stubs, or firearms;
- Tax Registration: You may need to register for an EIN or a sales tax license if your state has a state income tax, and/or a retail sales tax;
- Trade Name Registration: You may be required to register the name of your small business; and
- Employer Registration: Unemployment insurance contributions are generally required if the business has hired any number of employees
Local/Municipal Requirements:
- Local Licenses: Nearly all business operations require a county or city license, which allow the entity to operate within a given county or city jurisdiction. They may involve a small fee, and are relatively easy to obtain;
- Permit Requirements: In addition to state permit requirements, a local municipality may have specific activity-related permit requirements; and
- Zoning Ordinances: Small businesses are generally only allowed to operate in specifically designated commercial zones.
What Is Small Business Advertising?
Small business advertising refers to informing the public consumer base about a local small business. This may include overall marketing efforts in order to increase business visibility, or it can involve very specific promotional sales for specific products. Small business advertising is essential for most small businesses as many small businesses do not yet have a consistent customer base, especially at the beginning of their operations.
Some common examples of advertising for small businesses include, but may not be limited to:
- Phone book listing ads, although these are less common;
- Online advertising;
- Flyering;
- Handing out business cards;
- Word-of-mouth;
- Membership in a chamber of commerce or local small business association;
- Billboards and signs; and/or
- Social network promotion.
Most small businesses will use multiple methods in order to increase visibility of their products or services. It is also common for small businesses to work in cooperation with other businesses in the area for projects and advertising campaigns.
What Are Some Of The Most Common Types Of Advertising Violations?
The laws governing advertising rules may vary by region, as well as according to the type of product or service that is being advertised. Generally speaking, the following may be considered common types of advertising violations:
- Copyright Infringement: Using another company’s copyrighted material in an ad without their permission;
- False Advertising: This involves advertised claims that are not true in connection with the product or service. It must generally be shown that the company or business intended to mislead the public with their advertising tactics;
- Deceptive Advertisement: This refers to statements that are not necessarily untrue, but are meant to deceive or mislead the consumer in some way; and
- Trademark Counterfeiting: Using or reproducing another company’s trademark or logo without their permission in an advertisement.
While false and deceptive advertising is generally prohibited, the use of puffery is common practice in business advertising, and is generally not considered to be illegal. In short, puffery is usually recognizable as an exaggerated claim or opinion.
Like any business activity, small business advertising must conform to local, state, and federal laws. Some other examples of common advertising violations and legal issues include advertising efforts that involve slander, or that amount to unfair business practices. Using illegal marketing tactics, such as illegally obtaining personal information in order to call the person or send them mail, is another example of an advertising violation.
Penalties for advertising violations most commonly include fines and/or suspensions of business licenses. In many cases, a civil lawsuit may also result if the advertising violation caused losses to a consumer or to another business.
Do I Need A Lawyer For Help With Small Business Advertising Laws?
Small business advertising generally involves an understanding of considerably specific laws. You should hire an experienced small business attorney if you have any questions associated with small business advertising issues.
Your business lawyer can help you with an advertising campaign to ensure that your efforts are in compliance with all applicable business laws. Additionally, your attorney will also be able to represent you in court, as needed, should any legal issues arise.
