How Legal Factors Affect Businesses


Going forward with a business is a great career choice. But to start and run a business and keep it running smoothly, it takes more than efficiency and management skills. There are many external factors that can either help the business grow or ultimately ruin it. One of these important factors is the laws that affect businesses.

Legal factors affect businesses in several ways. Whether it’s business contracts, obtaining licenses, hiring employees, or managing tax, there are many factors to consider that can potentially harm a business if they are not. not processed initially. This article will shed light on some key legal issues affecting businesses.

Legal Factors in a Business Environment – How to Define

Legal factors in a business environment are defined as issues and procedures related to the law that a business owner must take into account in order to run the business transparently. Laws that affect businesses include federal regulations, state laws, and standards imposed by customs. These are implicit structures of authority that business owners must adhere to. Otherwise, they could be victims of legal harassment in the future.

In the business environment, these are the reasons why a legal understanding is necessary for a business owner.

  • Obtain a business license.
  • Company financing.
  • Tax procedures.
  • Hire employees.
  • Labor protection.
  • Customer security.
  • Export and import.

For a detailed analysis of the laws affecting businesses, business owners and new entrepreneurs can refer to the official US government website or the US state commercial law website.

How Legal Factors Affect Businesses

Legal factors affect businesses in several ways. There are company and business laws that determine whether a product is legal to sell in the market or not. In addition, a business must also comply with national policies and regulations on marketing, sales, inventory management, etc. some products. Here are the laws that affect businesses.

Securities law

Financing a business is an important part that an entrepreneur must consider. Securities law concerns the investment part of the company. These regulations determine the legal transactions with investors if the owner opts for an investment loan. An investor statement involves federal standards and safety laws.

In a limited liability company, securities law is a predominant factor as it involves third party investment procedures. To guarantee the authenticity of the transaction and the proper repayment of the debt, securities law is necessary.

Labor protection law

There are federal regulations to protect the interests of workers in commercial industries. This is an important legal factor affecting businesses. These employment and labor protection laws determine the following parts.

  • Annual salary for an employee.
  • Planning and payment of overtime.
  • Youth employment programs.
  • Protection against illegal discrimination such as caste, religion, color or sex.
  • Safety at work for employees.

If a business owner does not respect employment law, he could face legal challenges. To better understand the labor laws in the United States, business owners can refer to the labor laws of the United States.

Consumer Protection Law

Consumer protection law connects the legal thread between business and consumer. Thanks to this regulation, business owners are likely to face legal problems if they engage in fraudulent transactions with the customer. The Legal Information Institute has a comprehensive guide to consumer protection acts in commercial matters. Here are the 4 branches of this law.

  • The Standard Weight and Measure Law ensures that products in trade are weighed on standard measuring scales.
  • The Consumer Credit Protection Act ensures that consumers have clear information on product prices and loan interest rates.
  • The Sale of Goods Act guarantees the quality of the products sold. Thanks to this law, customers can take legal action in case they get damaged or defective goods.
  • The Trade Descriptions Act ensures that traders cannot deceive consumers with misleading and false information about their products.

Intellectual Property Laws

Intellectual property laws protect the patents and copyrights of a particular company. It is one of the most important legal issues affecting businesses. Violating these laws can lead to serious legal risks. Intellectual properties of a business include logos, domain names, trade names, symbols or specific illustrations. If a company uses one of these intellectual properties of another company without prior legal process, then the latter can impose charges of copyright infringement on the old company.

For more information on intellectual property laws, owners should consider visiting the US Patent and Trademark Office.

Organizational law

It is perhaps the most crucial legal factor affecting businesses. Organizational law applies when a business is in the planning stage. This law determines the operational structures of a business that has not yet been launched. When a business is structured, it must have a legal entity that must comply with the laws of the state. These legal entities can be of the following types.

  • Limited partnership.
  • Limited liability company business.
  • Partnership.
  • Limited liability company.
  • Society.

Tax laws

Any business entity is required to pay taxes based on its location and income. Breaking tax regulations can end the future of the business. Hence, this is another crucial legal factor affecting businesses. Tax standards differ from state to state. Some states have more flexible tax rules than others. The tax return requires the owner to obtain an employer identification number. The tax responsibilities of a business owner include the following taxes.

  • Labor tax
  • Sales tax
  • Federal tax
  • Income tax

Health and Safety Regulations

When a company hires employees, it must provide health and safety facilities for them. Health and safety regulations include legal attributes that help employees take legal action if the company does not provide the required health and safety facilities. These standards include the following.

  • Employees should be provided with adequate protection when working with hazardous industrial machinery and equipment.
  • Workers should be provided with appropriate clothing and other equipment to meet safety standards.
  • In the workplace, the premises must have an air temperature which is reasonable for the employees.
  • The organization must maintain hygiene standards on the site. They should also provide washing facilities for employees.
  • While working, employees should have enough free time.

These are some of the major legal factors that can affect businesses to a great extent. Business owners should consider these legal checkpoints while continuing to do business.

Follow the latest news live on CEOWORLD magazine and get updates from the US and around the world. The opinions expressed are those of the author and are not necessarily those of CEOWORLD magazine. Follow CEOWORLD magazine on Twitter and Facebook. For media inquiries, please contact: info@ceoworld.biz


About Charles D. Goolsby

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