Business Law: Why Are Ethics So Important in Business?

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Business law pertains to all of the laws that are necessary to form and run a business, including how to start, buy, manage, and sell any type of business. Business law are the rules that need to be followed in addition to state and federal laws. The purpose of business law is to regulate commercial entities and commercial transactions— it can determine the minimum standards of behavior to be expected of companies and sole proprietorships. Some of the most common type of business law are: 

• Employment law, which focuses on offering employees the best possible care without violating their rights. It inspects whether they are required to offer health insurance, policies against sexual harassment, or discrimination among many more. 
• Immigration law deals with temporary, full time, and seasonal employees. It focuses on following all laws dealing with foreign labor. 
• Contract drafting deals with property lease and sales; contracts make sure parties make a deal on the same terms making sure the best interest enters the business. 
• Taxes simply make sure the business pays the required taxes – income taxes, sales tax, property tax, employment tax, etc. 
• Antitrust laws help different businesses to function in a fair market. 

Business law balances contracts and advices companies to avoid lawsuits. Some businesses hire attorneys to protect and serve the interests of the company. 

Akin to business law, business ethics is the way a business should behave – doing what they are obligated to do. It is the sportsmanship of the law compared to written obligations, and is designed to create an environment that shows accountability. Business ethics shape the perspective of the public views on businesses. Values like honesty, confidentiality, and respect, are part of business ethics. People would want to do business with companies who are ethical— business ethics is about trust with customers, employees, and stakeholders ensuring expectations are met. In short, they are the guiding principles that organizations should follow to build a good reputation. Creating such a reputation is important because businesses not only represent themselves but also to anyone that has purchased or owns the brand.

Business ethics can also create an ambient environment for employees focused on leadership. Leadership displays a strong moral compass and encourages others. An employee that behaves and is treated well and reflects the company’s values and morals. In addition, business ethics are helpful in negotiations. When a company has a strong reputation, investors or new clients are more likely to accept deals. However, if an organization is unethical, it endangers its reputation and it can lose customers. Businesses should build their ethical behavior to create company integrity and effectively perform with loyal employees. Companies who take the incentive to perform ethically are of social responsibility and investing will increasingly grow in investors. 

Business law and ethics studies the role of the law on all aspects of business. Business law can pertain to following the law, while business ethics is the behavior to certain laws. In other words, both business law and business ethics are essential to ensure businesses prosper both legally and equitably.