Manhattan is in many ways synonymous with business. Companies large and small have made New York their home and have enjoyed success as they claim their portion of the American dream. However, doing business does require compliance with a number of important rules and regulations, and companies overlook their responsibilities at their own peril.
One of the simplest regulations with which a company must comply is renewing its business license or permit. Despite the relative ease of this, many businesses fail to take this step and thereby put themselves in serious legal jeopardy. The New York business lawyers of Levy Goldenberg LLP explain what some of the consequences might be.
Fines and Penalties
Regulatory agencies monitor businesses rather closely, especially in Manhattan, to ensure their licenses and permits stay active. Following a lapse the government will sanction your business almost right away with fines, which will increase in severity the longer you operate out of compliance. These monetary penalties will divert critical business resources away from more profitable endeavors like marketing.
Fines could increase to the point of thousands of dollars if your business fails to address the problem. Larger companies can more easily absorb the financial impact of these penalties than smaller, newer operations.
Liability and Reputational Damage
Without a valid license or permit, your business may be looking at heightened legal penalties in the event of a complaint, a workplace incident, or a government investigation. Certain claims or defenses may not be available if your business license is expired. You could face different penalties that fall under the state’s strict business regulations.
Moreover, relevant stakeholders will likely perceive your business as less trustworthy. For instance, your loyal customers may not be as loyal if they learn that your business does not have the legal authority to operate.
Forced Closure
If the fines and increased liabilities do not induce a business to renew their license, the threat of a forced closure might. City and state regulatory agencies in New York have the authority to shut down a company that is not complying with its rules. A cessation of business operations will have immediate and severe consequences, including:
- Layoffs of employees
- Decreased revenues
- Halted production and sales
- Client and customer dissatisfaction
- Reputational harm
In some cases these effects become irreversible because they grow to the point that the business is unable to bounce back. Even if the business decides to start complying and renew its license or permit, the loyal customer base may no longer trust the company or simply flock to a more reputable competitor.
Legal Action
Assuming you are unable to operate your business, you can expect legal action from within and outside of your organization. Employees may sue you for failing to pay them or honoring your agreements and legal obligations. Suppliers, distributors, and other third party companies may file lawsuits because of your failure to deliver goods and services pursuant to contracts.
Perhaps your business will be unable to pay its ongoing debts or expenses. For instance, if you have a debt, a forced shutdown or other interruption in business may make it impossible to pay what you owe. Your lender will initiate collections, a lawsuit, and possibly seek additional legal remedies.
Helping You Stay Compliant to Avoid Business Interruptions
Business permits and licenses are just one facet of the various regulations by which your Manhattan business must abide. There are numerous other rules that apply, and having dedicated legal counsel can help you follow them so you can stay focused on your business. Reach out to the experienced business law team of Levy Goldenberg LLP to take care of your compliance issues today.