Like individuals, businesses are constrained by laws and organizations that protect the well-being of society as a whole. Although companies such as Enron have received publicity for trying to profit by disregarding their legal obligations, many of the legal constraints that businesses face make clear sense and can even contribute to a company's long-term bottom line. For the most part, legal obligations of businesses are also moral obligations, and most ethically sound companies would follow these rules whether or not they were legally obligated to do so.


Your business is responsible for harm that its products or services may inflict on customers. If you sell food, you must take precautions to ensure it will not make people sick. If you operate a taxi service, you must make sure your drivers are safe and sober so they do not hurt customers by causing accidents. Being mindful of customer safety is a legal obligation, but it also makes good business sense: Customers who are hurt as a result of your negligence are unlikely to become repeat customers, and negative publicity about your negligence can multiply the damage to your business.

Financial Accountability

Your business is financially responsible to a variety of stakeholders -- from vendors, to employees, to the landlord who owns the commercial property you lease. You are legally obligated to pay for the products and services you use, and you are legally obligated to compensate employees for their time and labor. Fulfilling these obligations are also in your best interests as a business owner: Vendors and employees who are paid fairly and on time will continue to provide your business with the products, services and labor you need when you need them.

Contractual Accountability

Your business is legally required to honor contractual obligations that you make, including meeting the terms of a commercial lease and abiding by any noncompete clause you sign. Contractual obligations include commitments to provide goods or services and agreements to use services or facilities. A sole proprietor business owner has a personal obligation to honor the terms of these arrangements, and a business with a corporate structure is a business entity that must honor its own contractual obligations.


Businesses are legally obligated to pay the taxes they accrue to city, state and federal revenue agencies. Tax obligations include revenue taxes on gross sales and income taxes on net earnings after subtracting operating expenses from gross revenue. Retail businesses must also collect sales tax from customers and remit these amounts to state agencies. Businesses with employees are legally responsible for withholding and remitting income taxes and also for paying employment taxes to state and federal agencies.