WHAT ARE THE RISKS OF OPENING YOUR BUSINESS EARLY?
Owning a business is a great responsibility. It is one of the hallmarks of an open economy and of a free society.
Governor Ducey recently extended the stay-at-home order. It will continue through May 15th. Warranted or not, Ducey’s decision disappointed many business owners. Because of the low coronavirus death statistics in Arizona, many expected the Governor would lift the stay-at-home order on May 1st. That was a fair assumption. Today, the Arizona State Department of Health is reporting just 348 deaths from Coronavirus. Of a population of 7.279 million (2019) that represents a small percentage, just .0047 percent.
Exasperated business owners have had enough. They say they need to go back to work to support themselves and their employees and they have begun to argue that they should be allowed to do so while following social distancing and sanitation protocols.
Some business owners have banded together. Recently some have announced that they will re-open their non-essential and non-exempt business without additional delay. A Facebook group called Great 48! has over 27,000 members. Its’ organizers are encouraging all businesses to reopen notwithstanding the Governor’s recent executive order. The group Great 48! is also planning things like a rally at the capitol on Sunday and other gatherings to promote fully reopening the state.
When asked about the potential of businesses reopening despite his order to keep things like salons, gyms, and in-person dining areas closed, Ducey said that owners have been cooperative up to this point. “I'm asking for that going forward.” But he then also threatened fines and potential loss of licenses for any businesses that plan to defy the extension of his stay-at-home order and reopen as early as Friday, as several business owners have planned to do.
“I'm asking for that going forward. If that's not there, this is an order that is enforceable by law, a violation is a $2,500 fine and up to six months in jail,” Ducey told reporters Wednesday. “And for those that own an establishment and are publicly going to flout the order, you are playing with your liquor license. Don't do that.”
In an article entitled “The Pursuit of Happiness,” posted at the Huffington Post July 4, 2007, Daniel Brook summed up what most of us learned in school: “The eighteenth-century British political philosopher John Locke wrote that governments are instituted to secure people's rights to ‘life, liberty, and property.’ And in 1776, Thomas Jefferson begged to differ. When he penned the Declaration of Independence, ratified on the Fourth of July, he edited out Locke's right to ‘property’ and substituted his own more broad-minded, distinctly American concept: the right to ‘the pursuit of happiness.’" Perhaps the pursuit of wealth (or work) and happiness are not so different.
Possible Consequences for Business Owners
Of course, in the world today processes and procedures exist before one can operate many businesses legally. These include properly forming the company, complying with state and federal regulations, and so forth. Skipping any of these steps may result in serious consequences for the business and its owners.
The consequences to business owners that disregard Governor Ducey’s orders remain unclear. Will they be given warnings or immediate fines and other punishments? Will their licenses actually be at risk? If so, what will that enforcement procedure look like?
Given the above, any business owner that is considering that course of action should consider the costs.
- Business License
- Fines And Fees
- Possibility of Lawsuits
- Loss of Reputation
- Other Penalty Considerations | Disruption
Depending on the industry, one or more licenses may be required. Before opening their doors, business owners must determine what licenses are required. One of the most important steps a business must take is attaining the proper licenses to legally operate.
A business caught operating without a license could be forced to cease operations. In some cases, once the licenses are attained, the business is free to reopen. But in some instances, a business might have to wait out a mandatory probationary period or worse, a city can refuse to grant a license to the business.
Operating without a business license is illegal. But how large of a legal infraction it is depends on the industry, location, and depth of licensing requirements. For example, a bookkeeper who works from home without the proper license or permit is minor in comparison to an over-the-road trucking company without a license. While the bookkeeper could face local fines, fees, and possible back taxes, the trucking company could face charges, fines, and fees from not only local authorities but from state and federal entities as well. In the case of the stay-at-home order, the fines are $2,500.00 (Dollars).
If you conduct business without a license, and a customer decides he is not pleased with the product or service offered him, he or she may sue and argue fraud as one reason for the lawsuit. Doing business without a license is a fraudulent act. If a plaintiff is successful in their lawsuit, and the business is found liable, the company is responsible for what the plaintiff paid for the product or service and possibly for damages in regard to the fraudulent activity.
If a business is caught operating without a license, this can cast doubt on the business' ability to conduct business ethically or competently. Customers could be left to draw the conclusion that if the business did not follow procedures to operate legally, they might not follow customer directives either.
In normal circumstances, this might seem a remote possibility. However, business owners are reporting that other busines owners, and private individuals, are reporting them if they even suggest disregarding Governor Ducey's recent extended order.
One of the more remarkable stories that are being reported are those of HOA's extending their authority because of the Governor's Orders.
Getting a business license can be a tedious process, especially if more than one license or permit is required for the industry. But the amount of work and effort to attain the licenses is worth it in the end. The penalties for operating a business far outweigh the inconvenience of attaining a license.
It is likely that a business owner may incur legal fees and other costs in either fighting the suspension of a license, or challenging the constitutional taking of the business owner's rights by the state or municipality.
Conclusion
If a business operates without a required license, it can be forced to close. The business owner may also face the possibility of fines and fees, the loss of reputation, and perhaps lawsuits from unhappy customers. In other words, there are real consequences of losing a business license. So maintaining that business license is as important to the business owner as obtraining was. As with any other decision, a business owner will need to evaluate the risk to their business. In this case, they must decide whether to abide the stay-at-home order or risk the fines and penalties.
IF YOU OPERATE AN EXISTING BUSINESS AND NEED TO REOPEN
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