Those additional taxes are determined at the local level, but Clark County does not impose those additional taxes. Indiana is also one of the states that impose state income taxes; therefore an employer in Indiana must prepare withholding information for its employees. The general requirements of state income tax withholding in Indiana may be found in Ind. Code § 6-3-2.
Finally, in Indiana, business licenses and permits are a matter of local and county law, and those requirements will be examined in the local law section.
Labor and wage issues are of major concern to employers and are covered by a wide range of laws, ranging from occupational safety issues to whether or not an employer can loan an employee money. An employer must understand all of these laws in order to be in compliance with state labor laws. Indiana maintains a state minimum wage, which is governed by Ind. Code § 22-2-2.
How wages may be paid is governed by Ind. Code § 22-2-4.
How frequently wages must be paid is governed by Ind. Code § 22-2-5.
If any deductions are to be made from employee paychecks, those are governed by Ind. Code § 22-2-6.
Presumably, a restaurant in Indiana would be required to have worker's compensation insurance, though worker's compensation statutes are complex and depend on a variety of different issues. To determine whether or not a restaurant would need to maintain worker's compensation insurance for its employees, and its liabilities if not insured, one should examine the entirety of Ind. Code § 22-3.
In Kentucky, a restaurants needs to comply with the following state laws: tax registration, business licenses, incorporation filing, doing business as, employer requirements, withholding taxes, new hire reporting, insurance requirements, and displaying the appropriate workplace posters.
The first thing that one should do is obtain a DBA in Kentucky with the Secretary of State, as required under KY. Rev. Stat. Ann. § 365.
One would also need to learn the requirements for the Kentucky sales tax and determine whether or not food and beverage establishments in Indian pay sales tax. Information regarding sales taxes in Kentucky is contained in KY. Rev. Stat. § 139.00, and includes information on how to obtain a permit to engage in a retail business within the state.
Like Indiana, Kentucky is also one of the states that impose state income taxes; therefore an employer in Indiana must prepare withholding information for its employees. The general requirements of state income tax withholding in Kentucky may be found in Ky. Rev. Stat. Ann. § 141.
Like Indiana, Kentucky has a wide variety of laws governing working conditions and wages. An employer must understand all of these laws in order to be in compliance with state labor laws. Ky. Rev. Stat. Ann. § 337 covers wages and hours.
Ky. Rev. Stat. Ann. § 338 covers working conditions impacting safety and health for workers.
Ky. Rev. Stat. Ann. § 341 covers an employer's responsibilities under the state unemployment compensation insurance program.
Ky. Rev. Stat. Ann. § 342 covers workers' compensation and employer liability for worker injuries.
Ky. Rev. Stat. Ann. § 344 covers Kentucky's civil rights legislation.
Kentucky's alcoholic beverage code is somewhat complex, but allows for state administration of the right to sell alcohol in certain areas. Details of that code may be found in Ky. Rev. Stat. Ann. § 243.
Kentucky has a more centralized system of permits than Indiana. For example, in Kentucky there is a state fire marshal, and while his duties may be delegated to other officials, he is in charge of inspecting commercial properties.
Building safety requirements are outlined in Ky. Rev. Stat. Ann. § 227.300.
While this is not an exhaustive list of state laws and business permits with which a restaurant owner in Kentucky may need to comply, it does give a good overview of the nature and scope of the laws governing business in the state.
Local laws can have a huge impact on small business administration. While all businesses need to comply with state and federal laws, businesses are rarely shut down for failing to comply with those laws. Instead, the real threat to small-business administration is failure to comply with local laws. The local laws that may impact a restaurant include: business licenses, tax permits, building permits, health permits, occupational permits, signage permits, alarm permits, and zoning permits. Prior to attaining these permits, it would be critical for a restaurant owner to speak with the appropriate official about the requirements, which may or may not be officially codified. For example, zoning requirements may seem relatively strict on paper, but an area may be very willing to issue zoning variances; this would be impossible to detect just by looking at the written laws. Therefore, prior to opening a restaurant, one should speak with the local officials in charge of each area, submit plans for preapproval when possible, and attempt to utilize the same official throughout the process. Moreover, one should expect to encounter multiple lower level officials because of the high number of permits. While it may be inconvenient, all of these small permits are necessary in order for a business to operate on a local level. In both Indiana and Kentucky, these local permits can be obtained on a county level.
Clark County, Indiana
In addition to the general permits that one must have to operate a restaurant in both Indiana and Kentucky, the local government is in charge of alcoholic beverage sales at a restaurant. Because Clarksville has more than 20,000 inhabitants and the restaurant would be within corporate limits, issuance of the appropriate alcoholic beverage permit would be governed by Ind. Code § 7.1-3-20-10.
Health regulations for restaurants are governed by state law, but administered at the local level. The requirements for health regulations are found in Ind. Code § 16-42-5, and local health departments may not impose greater restrictions than those found in state law.
While Kentucky has less of a localized system than Indiana, it would be erroneous to assume that municipalities and counties are unable to impose their own requirements for business. For example, in Kentucky, local governments are specifically given the right to adopt safety standards that are more stringent than those imposed on the state level.
If the restaurant needs any electrical work, the owner must first obtain a permit and then have that electrical work inspected, as provided in Ky. Rev. Stat. Ann. § 227.480.
Moreover, while state inspectors are in nominally in charge of issues like fire safety inspections and building code inspections, they can and do have local individuals take responsibility for those inspections. Going to the municipal government with any questions about permits, licensing, and zoning is a critical step for small business owners in Louisville.
Applicability of Article 2 of the Uniform Commercial Code
Article 2 of the Uniform Commercial Code generally covers the sales of items.
In Indiana, Article 2 of the Uniform Commercial Code is codified at Ind. Code § 26-1-2.
In Kentucky, Article 2 of the Uniform Commercial Code is codified at Ky. Rev. Stat. Ann. § 355.02.
For all practical purposes, the texts of both articles have the same application in both states, and reflect the essence of the model Uniform Commercial Code (UCC). Article 2 of the UCC covers the sale of goods, not the sale of services. Restaurant transactions are generally viewed as a hybrid of a sale of services and a sale of goods. Therefore, the actual food sold in the restaurant would be covered by the UCC, but issues arising with the wait staff or other methods of service would not generally be covered by the UCC. Therefore, by offering food for sale, a restaurant is going to be held to the same standards as other merchants. For example, a restaurant would get in trouble for improperly labeling food, for example if it sold sirloin steak as ribeye steak, it would run afoul of the provisions of the UCC, even if there was nothing wrong with the steak from a health or safety viewpoint. Moreover, by offering food for sale, a merchant is warranting its fitness for consumption. That issue becomes more difficult because of how federal, state, and local food safety laws impact food sales, but the UCC would presumably cover a dispute between a disgruntled customer and a restaurant. However, the most well-known consumer lawsuits against restaurants have not been based in commercial law, but in tort law.
Interrelationship of Civil Rights Legislation and Hospitality
Civil rights are an interesting area and relate to restaurants in a unique manner because restaurants fall under the heading of hospitality businesses. This is an interesting distinction, because hospitality businesses are presumed to cater to interstate travelers, and, therefore, impact interstate commerce, even if the businesses are local. This distinction means that federal laws prohibiting discrimination by those types of businesses are applicable, even if the states…