Spring cleaning: Getting your business in order

Spring cleaning traditionally means scrubbing floors, dusting, and getting winter's grime off the windows.

But spring is also a good time to “clean house" business-wise, by making sure you're in compliance with state, local, and federal regulations.

By putting your business through a quick compliance check, you'll avoid legal or tax problems later in the year – whether you're a tiny part-time business or a growing company with dozens of employees.

Licensing compliance

If you've got a brick-and-mortar location, you probably have city or county business licenses. But many licenses must be renewed annually, and you may also have to pay taxes or file other reports.

If you run your business out of your home, it may not have occurred to you that you need a local business license. Many cities and counties require all businesses to be licensed – even if you just do some consulting on the side or sell jewelry online.

In addition, you may need a special permit to operate a business out of your home, or you may need permission from your homeowner's association.

As part of the licensing process, your locality will look at whether your location is zoned for the type of business you're in. If it's not, you may have to apply for a variance. If your business will create parking problems or change the character of the neighborhood, you may run into problems.

Some professions, ranging from lawyers to electricians to hairstylists, must have a professional license to do business. Food preparation businesses typically must be licensed by the health department (even if they're home-based), while other businesses including bars and firearms dealers need specialty licenses. If you don't get the proper licenses, your business could face fines or be temporarily shut down.

Finally, if you sell products or services, most states require you to obtain a seller's permit and remit sales tax to the state.

Licensing and permitting requirements vary depending on your location and the type of business you're in. Contact your city, county, and state to find out what applies to you and how to comply.

Human resources compliance

If you have employees, spring is a good time to check that you're in compliance with all state and federal employment laws. This is especially true if you've expanded your workforce this year because many employment laws apply only to employers with more than a certain number of employees. Here are some key areas that can cause problems for small businesses.

Federal discrimination in the workplace laws prohibit discrimination based on race, gender, age, religion, disability, and other factors.

Violations can lead to expensive lawsuits. If these laws apply to your business, consider hiring a human resources consultant or employment lawyer to help you create and implement policies that will discourage discrimination and encourage diversity.

Certain employees are entitled to overtime pay. Make sure you comply with the law, classify employees properly for overtime purposes, and encourage your employees to report their time accurately.

If you hire freelancers or other independent contractors, re-evaluate their status and correct it if necessary for the coming year. The IRS makes a clear distinction between independent contractors and employees, and you can wind up owing taxes and penalties if you misclassify. Ask your accountant for advice.

Other business registrations and renewals

If your business is a corporation or limited liability company, you may need to file an annual report with the state. Check the requirements in your state and file reports on time to avoid having your business fined or suspended.

If you have trademarks, you'll need to file paperwork every five to 10 years to keep your trademark active. Know when your next filing is due and put it on your calendar, so you don't miss a deadline.

Giving your business an annual spring checkup will give you peace of mind that it's in good legal health and ready for the opportunities of the coming year.