Law plays a significant role in the operation of business in society. Laws provide rules of conduct and ethical standards that regulate social behavior. Without these rules and standards, society would not be able to efficiently run and the business world would virtually end (Bushman, 2007). What is Law
Law has been defined in many ways. A body of rules of action or conduct prescribed by a controlling authority, and having legal binding force (Melvin, p. 4, 2011) is one of the most generally accepted definitions. Essentially law provides a way of resolving disputes and dealing with individual who break the rules and regulations set forth from our government. Role of Law in Business
Since the body of American law is so diverse, business law is broken down into three categories: •Criminal and Civil Law – These laws are of criminal or civil nature. Criminal law is for the protection of society of an individual breaking the law. Most violators are subject to fines and possibly imprisonment. Civil laws are designed for individuals to be compensated for losses as a result of another’s actions. •Substantive and Procedural law – Substantive law provides individuals with social rights and duties while procedural law gives structure for pursuing substantive rights.
•Public and Private Law – Public law is the defining framework between an individual and the government. Private law is where individual contract with each other where no specific statues or regulations are involved. These categories of law are very important to business and society by having guidelines setup for individuals to abide by. These laws were also setup for the protection of society (Melvin, p. 18, 2011). Law in the World of Accounting
When starting a business, an individual must attain legal counsel to get the correct paperwork in order for your company to operate correctly and to avoid potential legal liabilities in the future. There are very important legal matters that need to be addressed in agreements and contracts whether you are opening a new business or purchasing an existing. Depending on what type of business the individual is interested in, there can be several extra forms and legal obligations to the business that need to be handled before the business can start operating. Not all registrations need to be handled by legal counsel; some can be taken care of by an accountant, and possibly an insurance company depending on the type of business.
After the business is operating, there are many laws is has to follow on a daily basis. There are federal laws of filing income tax as well as business tax returns to pay the necessary taxes on the business. Most states have income tax and other taxes such as sales tax and use tax also for most businesses. If a business chooses to ignore these laws and regulations, the taxing authorities will come in and enforce these laws by assessing hefty penalties and interest for these tax laws not being followed, and possibly even levying bank accounts and canceling permits and licenses to operate.
They also pull returns in for audit to make sure individuals and business are showing accurate information on their income tax returns. At times there are issues that are not agreeable between the taxpayer and the Internal Revenue. When this problem arises, there are tax courts where you go before the judge to plea your case and why you feel your information is correct.
As a public accountant, a person must stay on top of all the law changes that occur. There are laws and acts coming into effect, or expiring that can have a major impact on the clients. Being licensed, an accountant is required to have continuing education on a yearly basis to help keep in check with the changes. There are also many ethical standards and codes of conduct an individual must maintain as an accountant. One of the main issues with law and accounting today is the reminder that an accountant has an accounting license not a law license and should in no way perform any legal acts for any individuals.
With the evolution of the internet and the paperless world, it is becoming more difficult to get actual signatures on forms. The government has changed the laws on having signatures on documents and instead having pin codes, etc., this in turn makes issues for the accountant of having a signed document from the client which states they are showing accurate information on their returns. We have release forms in our office that our clients must sign to give us consent to send in their payments, forms, and documents electronically. Conclusion
The legal system for the United States is a very complex system. Laws, enforcement of these laws, and consequences for breaking them help to ensure a successful business and society for our country. It is up to our governing body to protect society from the criminals and keep the law abiding individuals innocent from injustices. .
References Bushman, M. (2007). The Role and Functions of Law in Business and Society. Retrieved from http://voices.yahoo.com/the-role-functions-law-business-society-191823.html?cat=3 Melvin, S.P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practive. Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/TOC.aspx?assetMetaId=975f42c4-9d85-4785-93f4-867c4ee6986d&assetDataId=ba00b38d-2bb3-465c-b189-549fe15eedf4. Compliance & Enforcement Rules. Retrieved from http://www.irs.gov/uac/Compliance-&-Enforcement-News