What Do Small Businesses and Startups Need to Know about the Law?

What is considered small business?

There is no strict definition of the term “small business.” A small business is usually a company owned by one person or a few people, with maybe a few employees.

What is considered a startup?

There is also no strict definition of the term “startup.” But in general, the term “startup” refers to a business that is just starting out but expects to “scale up” and grow quite fast to become a large company.

If you consider your business a true “startup” and want to grow very quickly, you will probably take some different legal steps than with a traditional small business. In particular, if you are planning to get major investment, you would most likely form a corporation, and possibly in a particular state, like Delaware.

Do different laws apply to small businesses and startups?

Most laws apply to small businesses and startups the same as to large businesses. One exception is employment laws, many of which only apply to businesses with a certain number of employees. Other areas are industry specific, such as more regulations that apply to large banks but not small banks.

Other than that, most laws, rules and regulations are essentially the same for small and large companies alike, such as business structures, business names, intellectual property, consumer rights, and more.

See our Guide to Laws for Business Owners and Entrepreneurs for more.