What comes to mind when you hear the words “business law?” Do you imagine thick legal textbooks, loud courtrooms, and public corporate scandals? That’s simply a dramatized version of business law and can’t be further from the truth.
Business law isn’t limited to lawyers and boardroom meetings. It seeps into company culture and guides all major decisions. It is present each time an employer hires someone, signs a contract with a supplier, or runs a marketing campaign.
Understanding business law allows companies to avoid legal trouble, stay fair, and shape their day-to-day decisions in a way that helps them abide by the state and federal government’s rules and regulations.
Contracts and Business Deals
Contracts are one of the most obvious examples of day-to-day dealings where business law is heavily involved. This could include lease agreements if you want to rent a space for your office or your store. It also oversees partnership deals or contracts with suppliers.
Legal documents allow both parties to have full knowledge of what to expect. For example, if you are a cafe owner who orders coffee beans from a local supplier, you can ensure consistent pricing for yourself by creating a contract. This contract also assures the supplier you will pay on time.
Even a small business benefits greatly from business law. Verbal promises can be misleading but once you rely on the law to create a document, it enforces that promise. You can invest, hire, and grow knowing that there’s a safety net if things go wrong.
Employment Law
Hiring people is always great news because it means your business is growing. It’s also one of the biggest aspects of a business where you need legal support.
If you’re poorly educated on workplace discrimination laws and fail to make it an actual part of your code of conduct, it can quickly become dangerous.
Business law eventually affects how you write job descriptions, conduct interviews, and handle promotions. Factor in wage law and hour law, and things quickly get confusing.
A restaurant owner cannot pay staff below the minimum wage or skip overtime pay. This leads to lawsuits and government penalties. Similarly, businesses must also follow rules during termination.
So when you sit down to decide; “Should we hire another team member? Do we need another manager?” That isn’t a split-second decision. There’s a lot of legal considerations that employers need to account for before the final verdict.
Marketing and Advertising
Marketing is the one department within a company where you’d expect the most design freedom. They are definitely creatives but that doesn’t mean business law doesn’t come into play.
For instance, a skincare company is looking to advertise its product as “clinically proven to reduce wrinkles.” Unless there is no scientific evidence (clinical trials) to back this claim, the company can face serious repercussions for false advertising.
Just the way you use customer data in your marketing is now backed by a lot of privacy laws. If you collect emails for a newsletter through your online e-commerce store you must give people the option to unsubscribe and safeguard their data.
Thus, each decision a business marketing unit makes has legal implications attached to it.
Your Business Structure
It may seem easy. You simply need to register your business and you’re good to go. What if we told you the type of business you’re listed as can make a big difference down the line.
For example, an LLC (Limited Liability Company) protects your personal assets and possessions if your business gets sued or goes bankrupt.
If you go for a corporation structure, you could raise capital easily, but you need to be much more diligent with reporting. Similarly, sole proprietorships are easy to set up, but you need to take much more personal risk there.
Your choice is going to influence how much tax you pay in the future as well as your personal liability. Choose wisely.
Taxes and Regulations
Speaking of taxes, have you given those a thought? Business law is responsible for calculating how much tax you need to pay, reporting it, as well as paying it on time.
If you’re a small business owner hoping to hire an employee you must consider payroll taxes, benefits, and legal classification.
Let’s discuss a simple tax implication. Consider an employee of yours that is incorrectly classified as a contractor. This hire can trigger penalties down the line.
You must also consider regulatory compliance. These change depending on your sector. Food truck owners have health and safety codes while construction workers have laws revolving around their work environment.
Patents and Copyrights
Ideas must be protected. The best way to ensure your unique idea (intellectual property) is not stolen is through business law which provides you with tools like trademarks, patents, and copyrights.
You can protect pretty much anything you feel is unique for you or a part of your brand. This includes logos or special recipes and so on. If you are working on an app, for example, you could rely on patent law to stop competitors from stealing your inventions.
Wrapping it Up
Prevention is always better than a cure. It is best to learn to manage risks and avoid any legal implications than to begin the tedious process of fixing things that go wrong.
It is important for every business owner to carefully weigh their opportunities against potential legal consequences at each step. How hard is it going to be to expand to a new state? Should we launch an international campaign? How beneficial would it be to partner with a new company?
Get a lawyer involved and allow them to go through your agreements as well as oversee the drafting of the contracts. Ignoring legal considerations might seem cost effective at the start but it leads to exponential cost build-up later on.
Pro Tip: Businesses might often need support outside of their day-to-day operations. This includes dealing with past records that are hurting your current reputation, potential partnerships, or funding opportunities.
In this case, an expungement lawyer can help you evaluate eligibility, file the paperwork, and represent you to get those records cleared ASAP!
MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,