Global Business Laws

by Nathan Melville on 1/16/2015

Trade Laws

  1. NAFTA: (North American Free Trade Agreement

  2. The goal of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that were to be phased out within 15 years. Most U.S.-Canada trade was already duty-free.

  3. Regulations: There are good regulations (like a regulation that restaurants must post the amount of calories for a certain food item) and some weird ones like the city of Milwaukee, Wisconsin makes it incredibly difficult to go out of business. In order to close down a business, Milwaukee requires you to purchase an expensive license, you must submit a huge pile of paperwork to the city regarding the inventory you wish to sell off, and you must pay a fee based on the length of your "going out of business sale" plus a two dollar charge for every $1,000 worth of inventory that you are attempting to sell off. These laws and regulations include licensing and registration of business name, workers compensation, unemployment compensation, and permission to do business in a form other than a sole proprietorship. The collection of sales taxes and the withholding of employees’ wages are further examples of obligations with which to comply. The Occupational Safety and Health Administration (OSHA) has very specific requirements concerning health and safety which apply to many businesses’ employees and customers. The enactment of the Americans with Disabilities Act (ADA) affects many businesses both in hiring practices and customer accommodations. Businesses supplying food or ingested items must obtain health permits and undergo initial and periodic inspections. Pharmaceutical manufacturers undergo a lengthy and costly approval process before receiving approval to offer their products for sale. Those engaged in inherently dangerous businesses such as handling or detonating explosives require special permits. Many lawful products are only to be sold to persons who have attained a certain age or meet specific criteria. Regardless of the type of business or its location—in a home, manufacturing plant, strip mall, or high rise office building—the uses to which land may be lawfully put are matters that should be of great concern to an entrepreneur. Virtually every incorporated city, town, village, and county have adopted zoning regulations that permit only certain business activities in certain zones.

    The Zoning Office, Land Use Office, or other so-titled agency has zoning maps and regulations that must be examined to determine if your business is permitted at your desired location. The attitude, “It’s my land and what I do with it is my business,” is not only wrong but also dangerous. Do not assume that simply because you have been operating a business in a certain location you may continue to do so, especially if the size of the business increases. Violation of land use regulations can shut down your business with little or no recourse. At the very least, it will cause an expensive and protracted interruption of that business. Make certain your plans for the future are compatible with zoning.

    The fact that a business operates out of a home does not solve the land use problem. Most residential zoning codes limit home-based businesses to those which employ no more than a few employees, sometimes two or three people who are not members of the family, and also prohibit frequent motor carrier deliveries and customer parking.

    Building and Fire Codes

    Often when applying for a local license, a business is subjected to inspection by the fire department and building code officials. The fire department wants to know if you are doing anything that could be a potential fire or chemical hazard and whether exits are adequate and marked properly, fire extinguishers are present, and appropriate materials are used for fire retardant purposes. It also wants to know if the building meets all fire codes. The building inspection department may inspect the property to make sure it is safe for the planned use and in compliance with the building code.

    Local governments can impose changes to existing and new buildings. For example, a new plant was forced to cut a large hole in the middle of its floor for another stairway from the basement even though the basement was not used for anything. The stairway added a significant expense of $9,500. Although the plant had been built to local building-code specifications, the local authorities still had the ability to order the extra stairway.


    The IRS wants to know where a business is and what it does. Most entrepreneurs must file form SS-4 with the IRS to register the business. If a sole proprietor has no employees, an SS-4 form may not be required. Upon filing the form, the owner will receive an employer’s kit containing information about the types of taxes owed, when to pay them, where to pay them, and how to compute the amounts due.

    Owners also receive an Employer’s Identification Number (sole proprietors use their Social Security number) to identify the business. All communications with all governmental agencies must include this EIN. The EIN is also needed to open business bank and brokerage accounts and to deal with others who must report the business’s actions to any governmental agency. The government identifies the venture by its EIN, not by name.

    If the business has employees, the business must withhold portions of each employee’s earnings and contribute the employer’s share as well. These funds are then deposited to special accounts at designated banking facilities. The regulations regarding withheld wages are very strict and must be complied with. Failure to make the required deposits in a timely manner usually brings swift action by the government. Agents can padlock the business and arrest the owner until the deposits are made. The reason for such drastic action is that the money involved belongs to the employees. The business is simply a temporary custodian or trustee of it.

    One of the primary requirements of many state governments is that businesses collect sales tax from their customers. Although most states have a sales tax, the method of each state for handling the tax differs. Some states tax certain products and services differently. You can find out about state sales tax on the Internet, from local chambers of commerce, or by contacting your closest Small Business Development Center. If you conduct business in several states, you will have to be authorized to do business in all of them. Companies that plan to resell goods use a state sales tax identification number when purchasing goods that will be resold. In this way, sales taxes are not paid by the company but collected when the product or service is sold to the final user. The business must still pay sales tax on the things it buys for company use such as plant equipment, office supplies, and plant-maintenance supplies.


The Foreign Corrupt Practices Act is a federal law enacted in 1977 which prohibits companies from paying bribes to foreign government officials and political figures for the purpose of obtaining business. There are two provisions to the Foreign Corrupt Practices Act. First, the anti-bribery provisions which are enforced by the Department of Justice and second, the accounting provisions which are enforced by the Securities and Exchange Commission (SEC).