Dawn Pamulaya
As a business owner, you must follow different rules and laws depending on your industry and where your business resides. But there are a few types of business rules that almost every business owner will have to deal with. We’ll go over some of the most important rules and regulations that you need to follow to keep your business out of trouble.
Table of Contents
What is government regulation of businesses?
Government regulation of businesses is business rules mandated by the U.S. Government to protect workers’ rights, the environment, and businesses’ power in a business-driven society.
Government-issued regulations are essentially guidelines that set the boundaries of legal conduct. Infractions of the rules would result in penalties. Business owners must be aware of the essential details of the regulations.
Advantages of rules made by the government
People, businesses, communities, and the environment are all protected by government regulation. Because of government regulation, we are safe from environmental degradation, child labor abuses, insufficiently trained experts, monopolies, and other possible business-related abuses.
Other specific benefits of government business regulations are:
- Employees who earn a living wage and are committed to your company
- Increased client loyalty and consumer confidence
- Your firm and its employees may thrive in a secure atmosphere.
- Small enterprises that are proud to support socially beneficial initiatives
Challenges with government regulation of business
Business regulations from the federal government are meant to help owners comply and organize their business. But it’s important to know that business laws vary from state to state, city to city, and country to country.
These laws can also make it hard for you to run your business so that you can’t give your customers the goods and services you think are best for them.
It can be expensive and time-consuming to follow government rules or change your business to meet new regulations. Regulations may also put you in a lot of legal trouble and put your business at risk of being shut down if you don’t follow them.
Where does the government regulation have control over business?
Government regulation affects most aspects of your business. You must follow the rules from applying for company licenses to obtaining building permits, insurance, and paying your first employee. Government rules can help you set up your firm legally and ethically.
Restrictions on advertising
The Federal Trade Commission has set up laws about marketing and advertising to protect consumers and make sure that companies are telling the truth about their products.
One of the best examples is the Fair Packaging and Labeling Act (FPLA) of 1966, which tells the FDA and FTC to make rules about how products should be packaged and labeled. The act regulates companies to put accurate and complete information on their packages and labels.
Occupational safety and health
Employment laws are one of the many rules constantly changing and vital in the corporate world. These laws and regulations encompass the minimum salaries, employee benefits, workplace safety and health, and employment of non-U.S. citizens employee. Among the many employment restrictions, here are the three essential acts under Employment and Labor Protection:
- 1938 Fair Labor Standards Act – The Fair Labor Standards Act of 1938 establishes the minimum wage and “time-and-a-half” overtime pay for workers who work more than 40 hours a week and other benefits. Oppressive child labor is likewise under this law.
- Employee Retirement Income Security Act – When it comes to retirement and health plans, the Employee Retirement Income Security Act of 1974 (ERISA) specifies basic rules for most voluntarily setting up retirement or health plans in the private sector.
- Immigration and Nationality Act – The law removed the last restrictions on Asian immigration. It gave each Asian country a minimum of 100 visas per year and got rid of laws that made it hard for Asians to become naturalized American citizens.
The effects of business on the environment
The Environmental Protection Agency (EPA) and state agencies watch how businesses affect the environment. They also monitor how much carbon the company uses.
The EPA makes sure that businesses follow federal laws about the environment. They also provide educational resources, frequent inspections, and ensure that local agencies are held accountable.
The Environmental Compliance Assistance Guide is there to help businesses, big and small, comply with environmental laws. It is more of an educational tool than a way to force companies to do what is right.
Protecting the confidentiality of data and personal information
Government regulations of businesses also encompass confidentiality and personal information rules between sellers and consumers. Privacy rules prevent organizations from freely sharing sensitive employee and consumer information. Social Security number, address, name, health conditions, credit card, bank, and personal history are collected.
FTC oversees corporate practices and fines firms that break customer privacy pledges.
Protecting health and safety
Using a grading scale and routine inspections, the 1970s Safety and Health Act requires employers to provide healthy and safe working conditions for their employees. This rule has undergone numerous revisions to keep pace with the evolution of sanitary and occupational conditions.
The 1970 legislation requires to ensure that workplaces are free of hazards that could cause injury or death to employees.
Workplace health and safety is the responsibility of three organizations:
- Occupational Safety and Health Administration (OSHA)
- Mine Safety and Health Administration (MSHA)
- Wage and Hour Division
Government regulation of business examples
In a very business-driven society, the U.S. government created regulations for businesses to protect workers’ rights, protect the environment, and hold corporations accountable for how much power they have.
Tax Code
There’s more to them than simply paying them when it comes to taxes. Knowing which business taxes you must pay, when you must pay them, and how to set up your firm to account for future tax payments can save you a lot of time and prevent future problems.
All companies in the United States must pay federal taxes. Most corporations will also require to pay local taxes depending on where state the company has registered. Avoiding taxes, or simply refusing to pay them, can result in significant fines.
Here are the standard taxes in businesses:
Income tax – Businesses pay income tax when they earn and receive money and file a tax return. Most firms file annual taxes.
Estimated tax – In the United States, an estimated tax is a quarterly payment of taxes based on a person’s reported quarterly income. Businesses, freelancers, and independent contractors are the most common taxpayers who must pay quarterly.
Employment tax – Employers must pay taxes when they employ workers. It includes the contribution to the Social Security and Medicare systems.
Excise taxes – Forms for excise taxes may be necessary if you are in an industry related to motor fuel or operate vehicles that drive on public highways.
Labor
The Department of Labor’s FirstStep Employment Law Advisor is available to those just beginning their careers. This tool helps you learn whether federal employment regulations apply to your business or organization. It also states what reporting and record-keeping obligations you must meet and what on-site posters you need to display in your workplace or office space.
These are the examples of common labor laws:
- Wages and hours – Under the Labor Department, Fair Labor Regulations Act (FLSA) sets wage and overtime pay standards. This statute impacts most private and public employment and mandates employers to pay covered employees the federal minimum wage and overtime pay of 1.5 times the regular pay rate; unless they are exempt employees.
- Workplace safety and health – Under the Occupational Safety and Health Administration (OSHA), employers must offer work and a workplace free from recognized, significant dangers. Inspections and investigations implement OSH Act.
- Equal opportunity – Most firms with 15 or more workers must follow Equal Employment Opportunity Commission laws (EEOC). EEOC prohibits hiring practices based on gender, race, religion, age, handicap, etc.
- Non-US citizen workers – The federal government requires companies to verify workers’ legal status in the U.S. Several employment classifications have distinct prerequisites, limitations, and allowable stays.
- Employee benefits security– The Employee Retirement Income Security Act (ERISA) sets basic rules for most privately organized retirement and health care programs.
- Unions -As a business owner with union employees, you need to file particular reports and conduct union relations in a specified way.
- Family and medical leave – Under the Family and Medical Leave Act, workers who are expecting a child or have a family member who is seriously ill may be eligible for up to 12 weeks of pay.
- Posters – Department of Labor states mandate posting notices for employees to see. The laws Poster Advisor helps you find the signs you need and provides free electronic and printed copies in multiple languages.
Antitrust
Antitrust laws are statutes enacted by governments to protect consumers from predatory business activities and promote fair competition. An array of dubious corporate practices, including market allocation, bidding wars, price-fixing monopolies, and price-fixing, are covered under antitrust legislation.
- Conspiring to fix prices – It monitors fixed pricing, divides markets, or rigs bids. Businesses can’t collaborate with other companies to set prices.
- Unfair or deceptive acts – Businesses are not permitted to engage in unfair or misleading competition.
- Forming a monopoly – Companies must not merge or buy each other businesses to create a monopoly.
- Conspiring to boycott – It monitors firms not to discuss boycotting another rival or supplier.
- Conspiring to allocate markets or customers – Illegal to split clients, territory, or needs between competitors. This clause applies even if competitors don’t control the market.
Advertising
Your firm can benefit significantly from a well-executed advertising campaign. However, you must first comply with all applicable laws and government regulations before you begin.
You must ensure that the claims made in your advertisements are not false or misleading on purpose. Additional rules apply to using testimonials in your advertising.
The Federal Trade Commission enforces advertisement and marketing laws. There can be no deception on the part of businesses when it comes to advertising. Breaking the rule like creating contradicting purposes for your ads may lead you to pay fines.
Environmental regulations
Depending on your line of work, you may have to get familiar with various environmental protection regulations. Marketing products that claim to be natural, organic, or eco-friendly is particularly relevant here. You’ll find a slew of federal and state environmental rules and regulations that could impact your small business.
For businesses, the EPA mandates that they satisfy environmental requirements based on the industry in which they work. For example, pollution and waste management restrictions may apply to the automotive industry. Visit the EPA’s website to learn more about the regulations that apply to your industry.
How do government regulations affect businesses?
Governments create regulations to protect the environment and employees primarily. Business government regulations affect how owners handle their business.
The U.S. government also has specific rules to protect workers’ rights in particular situations and save the environment. These rules also ensure that businesses are held responsible for how much power and influence they have in society.
These standards could benefit or suffer the companies. However, all businesses must engage and follow the same standard and regulations to protect health and safety and keep the market fair.
Examples of government regulations that affect small business regulations
Small business entrepreneurs have a lot to keep track of in government regulations of business because these rules exist in federal, state, and local governments.
Moreover, some groups like the U.S. Small Business Administration (SBA) and the Chamber of Commerce want to modify the rules. This reform aims to stop federal agencies from doing too much and keep the costs of meeting different directions to a minimum.
Here are some examples of government business regulations that negatively affect small businesses:
Federal tax code
The federal tax code has several rules for different-sized corporations. Because federal tax is pretty complicated and covers many areas, it can be challenging for small businesses to spend time and budget figuring out what they need to do.
Regulations concerning overtime
As stated above, overtime compensation must be 1.5 times the ordinary pay rate, as the law requires. Small businesses may find it challenging.
If a federal court hadn’t stopped the regulation, the number of employees exempt from overtime pay could have changed for businesses of all sizes.
Self-employed rules
Today, businesses increasingly turn to freelancers and non-traditional employees instead of regular ones. A firm may have to meet some of the exact requirements of a typical employer if a contractor relies on it for most of their employment and income. These independent contractor rules are laborious for small business owners.
Fair Packaging and Labeling Act
The government requires product components and businesses selling food or other packaged items to provide information about the product itself. It also includes the details of packaging and shipment to customers.
Fair Packaging and Labeling Act act might be pretty challenging for starting businesses as they need a lot of research and resources for their products. Every business must fulfill the Truth-In-Advertising Act criteria, or else there will be fine.
The importance of complying with government regulations
The resources and reputation of your company are better protected when you adhere to regulatory requirements. Building customer, prospect, and vendor trust take time; along with that, you must ensure that you are following the regulations. The reputation of your organization is built on the foundation of compliance.
For consumers, regulations help make educated decisions regarding health and welfare. As employees, they provide us with a sense of security that our employer’s procedures will be fair and that public areas will be clean and satisfy the required standards.
Even though regulations can make it hard for small business owners to do their jobs, they are there to protect the greater good and make sure everyone has a fair chance in the market.
