Bottom line is, Legal factors are external factors which refer to how the law affects the

way businesses operate and customers behave.

Some things that can be influenced by legal factors are Product transportation, profit
margins, and viability of certain markets.

How Do Legal Factors Affect Business?

Legal factors affect businesses in several ways. There are corporate and business laws that
determine whether a product is legal to sell in the market or not. (perhaps drugs, or sharp
objects)
Also, In the business environment, there are grounds where legal understanding is necessary
for a business owner. Some of these are:

 Getting a business license.

 Financing the business.
 Taxation procedures.
 Hiring employees.
 Labor protection.
 Customer security.
 Export and imports.

Here are the laws that affect businesses.

 Securities Law

Securities law caters to the investment part of the business. These regulations determine
lawful dealings with the investors if the owner goes for an investment loan.

 Labor Protection Law

These employment protection and labor laws determine

 Yearly wages for an employee.

 Overtime scheduling and payment.
 Youth employment schemes.
 Protection against unlawful discriminations like caste, religion, color, or gender.
 Workplace safety for employees.
If a business owner fails to comply with employment law, he/she might have to face legal
challenges. 

 Consumer Protection Law

Consumer protection law connects the legal thread between the business and the
consumer. Through this regulation, business owners are liable to face legal issues if they
get into fraudulent dealings with the customer. 

 Intellectual Property Laws

Intellectual property laws protect the patents and copyrights of a particular business. 

 Organizational Law

Organizational law implements when a business is at the planning stage. This law
determines the operational structures of a business that is yet to launch. When a
business structures, it must get a legal entity that needs to comply with state laws. 

 Tax Laws

Any business entity is liable to pay taxes based on its location and revenue earnings.
Violating tax regulations can end the future of the business. Hence, it is another crucial
legal factor affecting business. 

 Health and Safety Regulations

Health and safety regulations include legal attributes that help employees to go ahead
with legal proceedings if the company fails to provide required safety and health
facilities.