Every business has its way of doing things. While there’s usually a reason why things are done the way they’re done, that doesn’t always mean that every business practice should be continued. Some business practices can lead to your business being penalized. Do you know what they are?

Failing to Meet Tax Deadlines

The IRS takes tax deadlines very seriously. Failing to meet them could result in penalties for your business. Tax deadlines for small businesses are different from personal taxes. Most small business owners are required to pay quarterly tax payments if they anticipate owing more than $1,000 in taxes. Don’t make the mistake of thinking that the term “quarterly tax payments” means that the year is divided into four even quarters. The deadlines aren’t always so neat. The IRS won’t let you off the hook just because you were ignorant of the deadline. They’ll find you all the same.

Incorrectly Paying Employees

Employees rely on you to accurately process payroll. Their ability to live life normally depends on it. Payroll problems can be unfortunately common. Employee misclassification, employee over- or underpayment, and employee overtime discrepancies can all lead to payroll errors that could result in penalties if not corrected. Overtime can be especially tricky for some businesses. Employees must be paid time and a half for overtime hours worked. Overtime hours are based on the hours worked in a single work week, regardless of what your pay periods look like.

False Advertising

You’ve probably heard about businesses that get in trouble with the Federal Trade Commission (FTC) because of false advertising before. False advertising can result in fines for your business to the tune of thousands of dollars in addition to other legal penalties. Multiple violations could see those fines increase to tens of thousands of dollars. It’s worth noting that false advertising is different from puffery. Puffery is an exaggerated statement intended to attract customers. The statements are opinions stated in a way that reasonable people would know not to accept as literal fact. False advertising, on the other hand, is a factual statement, rather than an opinion. It’s meant to deceive consumers, rather than simply attract them. 

Other business practices could lead to penalties for your business. Discrimination, harassment, bribery, and fraud can also land your business in hot water, even if they are committed accidentally. If you find yourself or your business accused of unlawful business practices, consult a business lawyer as soon as possible to have the best chance at a favorable outcome.

Check out this article on what you need to do before selling your business!