1. Laws That Regulate Business
And who they protect

2. Government Regulation of Businesses
Federal, State, and Local legislations pass many laws that regulate businesses.
Federal, State, and Local Government agencies enforce these laws

3. 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

4. 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

5. Government Regulation of Businesses
Regulations – rules that government agencies issue to implement laws
Business must comply with all laws and regulations

6. 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

7. 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

8. 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

9. Sole Proprietorship Advantages
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

10. Sole Proprietorship Disadvantages
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…

11. Corporate Law Partnerships
An association of two or more people who jointly own a business.
Partnerships are governed by the Uniform Partnership Act

12. Corporate Law Partnerships
Uniform Partnership Act – governs general partnerships in two ways:
Must be owned by two or more people
Partners must share profits from the business

13. Partnerships Advantages
Corporate Law
Partnerships Advantages
Allows partners to combine talents, ideas, and financial resources
Partners share decision making responsibilities
Pay less taxes than a corporation

14. Partnerships Disadvantages
Corporate Law
Partnerships Disadvantages
Partners have unlimited liability for business debts
Partners may disagree
How to run the business
How to invest profits
Disagreements may hurt the business

15. Corporate Law Corporations
A 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

16. 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

17. Corporation Advantages
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 stock
Very easy to get a line of credit

18. Corporation Disadvantages
Corporate Law
Corporation Disadvantages
Have the most federal and state regulations to follow
Must register with state agency before beginning business
Pay more taxes that other types of businesses
Pay taxes to state and federal governments as well as income tax on profit

19. 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

20. Tax Law Businesses pay several different kinds of taxes: Income Tax
Property Tax
Withholding Federal Taxes

21. Tax Law Income Tax A 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?

22. Tax Law
Property Tax
Taxes levied against the property, buildings, or land owned by a business
Property taxes are based on an assessed valuation of the building or land

23. Tax Law
Property Tax
Assessed 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?

24. Withholding Federal Taxes
Tax Law
Withholding Federal Taxes
Taxes withheld from each paycheck to employees to be sent to the federal government.

25. 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

26. Intellectual Property Laws
Laws that protect ideas and inventions of individuals or businesses
Three kinds of intellectual property protections:
Patents
Trademarks
Copyrights

27. Intellectual Property Laws
Patents
A 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

28. 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

29. Intellectual Property Laws
Trademarks
Word, 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?

30. 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

31. Intellectual Property Laws
Copyrights
Protection provided to a creative work such as:
Literary works
Musical compositions
Plays
Dances
Paintings
Movies
Computer Programs

32. 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

33. 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

34. Consumer Law From last exam The Federal Food, Drug, and Cosmetic Act
Consumer Product Safety Commission
Truth-In-Lending Act
Equal Credit Opportunity Act

35. 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

36. 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

37. 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

38. Consumer Law The FDA also protects consumers
Food and Drug Administration
Protects consumers against mislabeled or impure food, drugs, cosmetics, and medical devices

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. Licensing and Zoning Law
State 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

46. Licensing and Zoning Law
Government 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.

47. Licensing and Zoning Law
Usually, 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

48. Licensing and Zoning Law
Building 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

49. Licensing and Zoning Law
Building 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