In fact, the above is only a small list of the numerous laws and regulations that businesses are expected to be familiar with and comply. The very survival of a business can depend on such familiarity and compliance. Non-compliance, whether intentional or innocent, can lead to a great deal of trouble that is the last thing a busy businessperson needs.
Contract Law, Commercial Law, Tax Law and More
Business transactions are based on contracts. In brief, one party makes an offer and the other party accepts it creating a contract that can be enforced in a court of law. However, the issue of enforcement can get complicated if the terms agreed upon and the facts of the case cannot be proved to the satisfaction of the court. Business laws typically start with contract law.
The term commercial law is a wide one covering a varied range of commercial transactions such as agency, carriage of goods, insurance, sale of goods, occupational health, guarantees, copyright, intellectual property, consumer protection and hiring of employees.
Tax laws are intended generally to generate revenue for the government and include laws and regulations at federal, state and local government levels. You have to know the taxes to be paid to all these governments.
Then there are laws for environmental protection, manufacture and transport of hazardous goods and protection of individual privacy. There are even laws that impose penalties and more for sending out spam e-mails.
Starting a Business and Acquiring Property
Startup businesses have to decide on the legal form to adopt. They can be formed broadly as single-owner sole proprietorships, multi-owner partnerships or a company with a separate legal existence from its shareholders. Each of these carries different risks and has different tax impact.
Startups also have to deal with regulations relating to zoning, licensing and obtaining any needed permissions, e.g. for storage of dangerous goods.
Acquiring immovable property is another tedious procedure. One has to verify the seller's title to the property; any charges created on it (such as a second mortgage) and also ensure that the title is fully conveyed by the sale deed. Conveyancing is a whole topic by itself.
Obtaining finance will usually involve creating mortgages or entering into leasing agreements. Unless the business is reasonably familiar with the relevant legal issues, it might enter into an unnecessarily burdensome agreement. Similar is the case with insurance; unless you can understand the small print, you might never be able to get the insurance money you thought you were entitled to.
Dispute Resolution
Disputes are usually unavoidable in business and business owners should be aware of the various means of resolving them. Litigation is usually the last resort. There are other options such as negotiation, mediation, conciliation and arbitration. All of these are covered by relevant laws and unfamiliarity with them can lead to unnecessary trouble, if not loss.
If litigation is to be resorted to, one has to be aware of how to substantiate one's claims in a manner acceptable to courts. In these days when documents and records are created and maintained electronically, with consequent ease of manipulation, the issue of supporting claims with acceptable evidence has got even more complicated. Businesses have to be aware of issues like electronic discovery.
Other Laws Affecting Business
Employment and health laws, land use laws, laws relating to international trade, product liability laws and laws relating to negotiable instruments such as checks are just some examples of the numerous other laws that businesses will have to deal with.
The options open to businesses for ensuring that they comply with all laws and regulations include:
- Seeking the help of legal adviser if it is affordable
- Obtaining advice from small business support agencies, chambers of commerce and experienced businesspersons
- Looking up resources on business laws, such as the Business.Gov website in the U.S.
- Talking to knowledgeable officials at the local city council
Business and law are closely tied together with the very possibility of carrying on business depending on laws like contract law. Complying with law is not a simple issue as laws and regulations are innumerable. Certain practical options are available for startups to make sure that they comply with applicable laws.
Join the Conversation