Starting a Business? Avoid these Actions that Could Lead to Criminal Liability

Starting a business is one of the most rewarding and challenging ventures you can take. There are a variety of contractual matters that must be taken care of, but you must also ensure that you are in compliance with the laws and regulations governing your industry. In fact, failing to comply with certain laws and regulations could lead to you being found criminally liable. Below are a few examples of areas where you could get into trouble if you fail to obtain proper legal advice:

• Employment laws . A business owner that fails to properly classify an employee as an independent contractor or one that fails to pay its employee the minimum wage could face criminal charges for failure to pay proper wages. It is also illegal for an employer to hire individuals who have illegally immigrated to the United States. An employer must require proper documentation to be provided when hiring a foreigner.
• Securities laws . There are a variety of ways start-ups violate applicable securities laws. For example, they make materially false or misleading statements in the offer or sale of securities or they retain an unregistered finder to sell the start-up’s securities. It is also a common mistake for start-ups to improperly sell securities to their loved ones who are not accredited investors.
• Tax laws . Many start-up companies get themselves into trouble for failing to pay the IRS the payroll taxes that have been withheld from an employee’s paycheck. You can also face criminal charges if you fail to pay the sales taxes collected from your customers to the applicable state taxing authority.
• Privacy laws . The issue of privacy has increased in importance and focus recently. A start-up company should have proper privacy policies established and ensure that it adheres to them. This includes everything from your information sharing processes to posting libelous or false information on the web.