and who they protect laws that regulate business
Post on 21-Dec-2015
221 views
TRANSCRIPT
Government Regulation of Businesses
Federal, State, and Local legislations pass many laws that regulate businesses.
Federal, State, and Local Government agencies enforce these laws
Government Regulation of Businesses
Businesses that do not comply with these laws may face legal actions, in the form of: Fines Penalties Loss of license Jail
Government Regulation of Businesses
Many companies hire a government affairs manager to make sure the company follows the laws that regulate its business
Government affairs manager – a person with a great knowledge of laws pertaining to their business and keeps up with all new laws created
Government Regulation of Businesses
Regulations – rules that government agencies issue to implement laws
Business must comply with all laws and regulations
Government Regulation of Businesses
There are six important areas of law that affect business operations: Corporate Law Tax Law Intellectual Property Law Consumer Law Commercial Law Licensing and Zoning Law
Corporate Law
Law that regulates how businesses set themselves up to operate as companies.
Laws regulate one person, small, or large companies
One person company – Sole Proprietorship Small company – Partnerships Large company – Corporation
Corporate Law
Sole Proprietorship
A business owned by a single individual, or a proprietor
Easy to start, most of the time a person just starts doing business, after checking with state and local officials about licenses, zoning regulations, etc…
Examples may be restaurants, grocery stores, hardware stores, consignment shops, ebay dealers
Corporate Law
Sole Proprietorship Advantages
The proprietor controls the entire business, and keeps all the profit
The proprietor can make decisions quickly, due to nobody else having any decision making power
Pay fewer taxes than other kinds of business
Corporate Law
Sole Proprietorship Disadvantages
Proprietor has full responsibility for the business Success and failure, so profit and debt
Business may fail completely due to proprietor becoming ill, disabled, death, etc…
Corporate Law
PartnershipsAn association of two or more people who
jointly own a business.
Partnerships are governed by the Uniform Partnership Act
Corporate Law
PartnershipsUniform Partnership Act – governs general
partnerships in two ways:1. Must be owned by two or more people2. Partners must share profits from the business
Corporate Law
Partnerships Advantages
Allows partners to combine talents, ideas, and financial resources
Partners share decision making responsibilities
Pay less taxes than a corporation
Corporate Law
Partnerships DisadvantagesPartners have unlimited liability for business
debtsPartners may disagree
How to run the business How to invest profits
Disagreements may hurt the business
Corporate Law
CorporationsA business formed under state and federal
regulations that is authorized to act as a legal person.
Corporation owners have limited liability (L.L.C.) Owner cannot lose personal funds or resources, just
those of the corporation
Corporate Law
Corporations
L.L.C – Limited Liability Company
Publicly Traded Company – Shares of stock are issued for people to invest in People invested in the company are called
stockholders
Corporate Law
Corporation Advantages
They offer stockholders limited liability and a share of the profits
Stockholders have no management responsibilities
Can raise money by selling stockVery easy to get a line of credit
Corporate Law
Corporation Disadvantages
Have the most federal and state regulations to follow Must register with state agency before beginning
businessPay more taxes that other types of businesses
Pay taxes to state and federal governments as well as income tax on profit
Tax Law
The type of ownership businesses choose often depend on the types of taxes required
Tax – Money paid by corporations and individuals that are used to fund government programs and services Highways and roadways Public schools
Tax Law
Businesses pay several different kinds of taxes: Income Tax Property Tax Withholding Federal Taxes
Tax Law
Income TaxA tax levied against the businesses profits
Example Spending $80,000 on expenses and had a revenue
stream of $180,000, A business earns $100,000 in profits this year.
The income tax rate is 30%
How much will the business have to pay the government?
Tax Law
Property TaxTaxes levied against the property, buildings,
or land owned by a business
Property taxes are based on an assessed valuation of the building or land
Tax Law
Property TaxAssessed Valuation – the amount that a piece of
property is worth, according to the tax assessor
Example The assessed valuation for a building in the heart of
Manhattan is extremely high due to very little space to construct new buildings.
Business owners would pay more taxes in New York City than any other place in the U.S.
What about the assessed valuation of land in Ohatchee? Wellington? Oxford?
Tax Law
Withholding Federal TaxesTaxes withheld from each paycheck to
employees to be sent to the federal government.
Tax Law
Some states have more favorable tax breaks available for businesses
Tax standards should be considered when building a business
Example In 1998, the Caterpillar Corporation, a major
equipment manufacturer, moved its operations from Illinois to Texas because the taxes were more favorable in the state of Texas
Intellectual Property Laws
Laws that protect ideas and inventions of individuals or businesses
Three kinds of intellectual property protections: Patents Trademarks Copyrights
Intellectual Property Laws
PatentsA document the federal government issues to
inventors and companies that give them the exclusive right to make, use, and sell their inventions
Patents are granted at the Federal Patent and Trademark Office
Intellectual Property Laws
Patents
A patent is good for 17 years, then it expires
The inventor must renew the patent after it expires or other companies can use that invention or idea
Intellectual Property Laws
TrademarksWord, name, symbol, or slogan a Business
uses to identify its own goods and set them apart from others
What are the World’s most recognizable trademarks?
Intellectual Property Laws
Trademarks
Trademarks are granted at the Federal Patent and Trademark Office
Once granted, no other company can use it for 10 years, when it must be renewed
Intellectual Property Laws
CopyrightsProtection provided to a creative work such
as: Literary works Musical compositions Plays Dances Paintings Movies Computer Programs
Intellectual Property Laws
Copyrights
The owner of the copyright is the only person with the legal right to sell, reproduce, or allow others to use it
A copyright is granted by the U.S. Copyright Office Lasts for the life of the holder plus 70 years.After that, it becomes part of public domain
Gives the public the right to reproduce or use a previously copyrighted item
Consumer Law
Laws that are designed to protect consumers of goods and services for their own use
You are a consumer each time you buy food, clothing, medicine or any other item from a business
Consumers need to understand laws so they know their rights when dealing with businesses
Consumer Law
From last exam
The Federal Food, Drug, and Cosmetic Act Consumer Product Safety Commission Truth-In-Lending Act Equal Credit Opportunity Act
Consumer Law
Used Car Rule – Requires dealers to tell customers important information about a car Mileage Major body work Flood Damage
Telemarketing Sales Rule – protects against being bombarded by sales calls by placing limitations on businesses that promote by telephone
Consumer Law
Clothing Care Rule – requires manufacturers of clothing to put a tag specifying how to care for the clothes
Full Disclosure Rule – requires the seller of a house to inform the buyer of any defects with the property Foundation Leaky Roof Busted pipes Indian Burial Ground
Consumer Law
If you feel that you have been wronged by someone, you can write a letter to the FTC FTC – Federal Trade Commission
The FTC will take action if enough complaints are received to build a “pattern of wrongdoing” and will then investigate it
Consumer Law
The FDA also protects consumers Food and Drug Administration
Protects consumers against mislabeled or impure food, drugs, cosmetics, and medical devices
Consumer Law
FDA approves all new drugs before they are sold
Fair Packaging and Labeling Act – requires manufactures of foods, drugs, cosmetics, and medical devices to clearly label products with: Name of manufacturer Contents Amount contained in the package Label must contain complete nutritional information
Commercial Law
Laws regulating business dealings with other businesses such as contracts
The basic commercial law guide is called the Uniform Commercial Code (UCC) Large text that was created to unify commercial
standards in all 50 states under one stated guide
Commercial Law
Businesses must follow the UCC when writing and entering into contracts An agreement between two parties to carry out a
transaction, such as a sale of goods, or services provided
Contracts create an obligation between parties that, if not performed can be enforced in a court of law
Commercial Law
Businesses enter into contracts daily
Contracts must follow very specific guidelines outlined by the UCC. It may be short 1-2 pages for a small order or
agreement Very long for larger purchases
Commercial Law
The UCC requires a business contract to: Must state both members that are entering into the
contract The date the contract was entered into State that both parties agree to the transaction State the quantity to be exchanged Must have signatures of both parties Must be witnessed by a neutral, third party
A manager will review the contracts to ensure legality
Licensing and Zoning Law
Laws that regulate who can operate a business and where they can run it from.
License – gives the right to operate a business and guarantees the license holder knows all rules and regulations of the business
Zoning – Government set regulations on where a business can be
Licensing and Zoning Law
LicensingState and local governments use licensing to
limit and control people who plan to open certain types of businesses.
Example To start a restaurant, you need to apply for a license
from the local department of food and beverage control. They may deny the license if they feel there are too many restaurants in the general vicinity of your planned location
Licensing and Zoning Law
LicensingGovernment officials may revoke a license
from a business that is not complying with laws and regulations
Example The department of sanitation will shut the restaurant
down if they are not complying with health codes, such as storing food properly and keeping bathrooms and public areas sanitary.
Licensing and Zoning Law
LicensingUsually, a warning comes first
May require a fine or penalty
Followed by a suspended license Gives the restaurant an opportunity to operate on
probation
Finally, the government will revoke the license Restaurant will shut down and go out of business
Licensing and Zoning Law
ZoningBuilding Zones – Industrial, Commercial, or
Residential
Industrial – land zoned for industries and large corporations McClellan Industrial Park
Commercial – land zoned for places of business Quintard Avenue
Residential – land zoned for places for people to live Barrington Farms
Licensing and Zoning Law
ZoningBuilding Codes – Regulates the physical features or
structures of a building
May regulate: Maximum building height Minimum square footage Material used to construct the building Material used on the outside of the building Emergency exits and evacuation routes Drainage requirements Fencing or shrubbery Set back ordinace