Common Regulations Imposed on Firms by the Government

Photo by Benjamin Child/ Unsplash

Common Regulations Imposed on Firms by the Government

All businesses must follow all regulations imposed on firms by the government. Conforming to these rules means thriving in any industry, including government contracting. These government regulations protect consumers and create opportunities; however, they also pose challenges for businesses. Continue reading to learn more about the most common government regulations.


Government-Imposed Regulations Every Firm Should Know


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Government regulations on businesses vary depending on the industry, location, and structure. However, there are a number of standard regulations that most business owners are likely to encounter in their operations. Here are the common laws and regulations imposed on firms by the government.


Business Registration and Licensing Regulations


Every business needs to do this one thing first: get registered and licensed.


Companies must get the necessary business licenses before they can sell goods or services. These may include a business operating license, industry license, and seller’s permit. On top of the federal requirements, companies must also follow the laws of each state.


Understanding and following the statutes specific to each state is vital. Otherwise, the business may face potential legal issues.


Tax Regulations


Business owners must conform to the tax regulations stipulated by the Internal Revenue Service (IRS). Tax compliance guarantees the business’s financial health and high reputation, preventing any legal dispute with the government.


In the United States, all corporations are subject to federal taxes. Most businesses are also expected to pay local taxes on the state in which they are registered or operate. Each state has specific tax laws and rates, which may be based on the business structure.


Here are the business taxes that all business owners should adhere to.


  • Income Tax

The government imposes taxes on a business entity’s earnings, profits, and other streams of income. Companies are legally required to report their income and submit a tax return to the IRS. Taxes are calculated based on the rates and deductions determined by the law.


  • Estimated Tax

Instead of waiting until the end of the year to settle tax liabilities, businesses can make quarterly payments to the IRS. These tax payments are based on their reported income and deductions for the year. 


  • Employment Tax

Companies have tax obligations that must be paid and filed accordingly on behalf of their employees. These obligations include Social Security and Medicare (FICA taxes), federal income tax withholding, and federal unemployment (FUTA) tax. In most corporate settings, employees contribute to employment taxes through deductions taken directly from their paychecks.


  • Excise Taxes 

The government levies excise taxes on specific goods or services, such as tobacco, firearms, and alcohol. It aims to discourage the consumption of these products by including taxes on the price that consumers pay. Businesses need to remit excise taxes to the government and file IRS Form 720.


Employment and Labor Laws


The employment and labor regulations imposed on firms by the government protect workers’ rights, guarantee safe work conditions, and ensure that employers fulfill their responsibilities.


  • Minimum Wage and Overtime Pay

Minimum wage regulations ensure that employees receive fair compensation for their labor. The Fair Labor Standards Act (FLSA) sets the minimum wage rate, which varies by state, as well as mandates overtime pay regulations. If an employee exceeds the standard 40-hour work week, the employer must pay overtime at a rate of at least 1.5 times more than the regular hourly wage.


  • Workplace Safety Regulations

As per the Occupational Safety and Health Administration (OSHA) Act, companies must provide a safe and healthful workplace for their employees.


  • Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) mandates employers to provide eligible employees with unpaid leave for specific family and medical reasons. Simply put, this act enables employees to manage both work and family responsibilities without risking job security or health benefits.


Anti-Discrimination Laws


On top of basic employment regulations, the Equal Employment Opportunity Commission (EEOC) enforces anti-discrimination policies.


Anti-discrimination regulations imposed on firms by the government promote fairness in the workplace. They ensure all workers are treated fairly and receive just compensation for their work, regardless of their gender, race, color, disabilities, and other factors.


Some anti-discrimination laws include Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA).


Antitrust Laws


Antitrust laws, or competition laws, promote fair competition in the marketplace. They prevent businesses from doing exploitive corporate activities to make a profit. These practices include price-fixing, monopolies, bid rigging, and unfair trade practices.


Antitrust laws safeguard consumers from unfair business practices. Without these regulations, consumers may suffer from limited choices and higher prices in the marketplace.


The three primary antitrust laws are the Sherman Antitrust Act, the Federal Trade Commission Act, and the Clayton Antitrust Act.


Common Government Contracting Regulations


Apart from the basic regulations imposed on firms by the government, contractors must also know different contracting regulations.


Trade Agreements Act (TAA)


The Trade Agreements Act of 1979 (TAA) governs trade agreements negotiated between the U.S. and other countries. It enforces rules to promote a fair and open international trading system. The TAA also aims to expand opportunities for U.S. commerce in international trade.


To consider a product TAA compliant, it must originate from one of the countries mentioned in the act. It protects the products made and manufactured in a country with trade agreements with the U.S.


Government contractors must verify the origin of the products. Failure to meet the TAA requirements can result in disqualification from government procurement contracts.


Davis-Bacon Act


The Davis-Bacon Act is a federal law enacted in 1931, aiming to maintain labor standards in the construction industry. The act covers contractors and subcontractors engaged in federally funded construction projects. It also mandates contractors to pay their workers prevailing wage rates and benefits.


Small Business Administration (SBA) Regulations


The Small Business Administration (SBA) helps small businesses get federal contracting opportunities. It sets guidelines to give small businesses a fair shot at government contracts. These regulations include criteria for determining small business eligibility, set-aside programs for certain contracts, and subcontracting requirements.


Additionally, the SBA covers regulations related to disadvantaged business enterprises, such as the 8(a) Business Development Program and the HUBZone Program.


Federal Agencies That Regulate Businesses

The Federal Trade Commission (FTC)


The Federal Trade Commission (FTC) is an independent government agency that protects consumer rights from fraudulent business practices and promotes fair marketplace competition. It enforces federal antitrust and consumer protection laws.


One of the FTC’s main roles is to ensure companies follow these laws. If it finds potential violations during its investigations, it can take a number of actions: seeking voluntary compliance through a consent order, initiating federal litigation, or lodging an administrative complaint.


The Securities and Exchange Commission (SEC)


Established by Congress in 1934, the Securities and Exchange Commission (SEC) is the first federal authority to administer the securities markets. It was created to rebuild investors’ trust following the aftermath of the 1929 stock market crash.


Nowadays, the SEC regulates all operations in the securities markets. It is tasked with overseeing securities exchanges, brokerage firms, investment advisers, dealers, and other market participants.


In addition, it enforces federal securities laws that protect investors from fraudulent activities and maintain fair and orderly markets.


The Food and Drug Administration (FDA)


The Food and Drug Administration (FDA) is an agency responsible for ensuring the safety and efficacy of food, medicine, and cosmetics, among other products before they can be sold in the market. The FDA conducts inspections and tests for approval of the sale of these products.


If the products do not meet FDA’s standards, they are to be removed from the market or are not be released for sale at all.

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Category: Articles