Business Responsibilities to Government

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Businessman filling out paperwork at desk
Businessman filling out paperwork at desk (Image: AndreyPopov/iStock/Getty Images)

The primary responsibility of a business, according to economist Milton Friedman, is to its investors -- the people who have put up their own money in an effort to help it succeed. Yet businesses must also abide by the laws of the countries in which they operate, making them responsible to the respective governments in several areas.

Pay Taxes

Businesses must pay taxes and fees to the government in the course of carrying out their operations. These can include taxes on revenues, tariffs on imported products, and a number of administrative fees necessary to register the business. Withholding these payments, particularly taxes, is considered a crime.

Follow Environmental Regulations

Many companies, particularly those in the industrial and manufacturing sectors, face heavy regulations regarding the number and variety of pollutants that they are allowed to emit. Some companies, feeling a "social responsibility" toward the common good, may seek to limit their pollution more than the law requires.

Abide By Labor Laws

Businesses that hire employees in the United States must abide by a slew of laws relating to how they treat their employees. These include laws related to how much an employee can be paid, how many hours he may work and the criteria under which he can be hired and fired.

Avoid Restrictive Trade Practices

Companies are forbidden from engaging in certain kinds of restrictive trade practices that limit competition. For example, most companies may not develop monopolies within a particular sector or provide substantial barriers for new companies to compete with them. Restrictive trade practices of this kind can often reduce the quality of products available to consumers and drive up prices.

Financial Disclosure

Companies must disclose a number of financial statements to the government in the form of tax returns, and, if the company makes ownership of shares of stock commonly available, to the public as well. This financial transparency helps to ensure that the company is not violating any laws, such as withholding taxes, and to aid the public in deciding whether to invest in the company.

Avoid Corruption

Businesses in most nations are also forbidden from bribing public officials, which would subvert their ability to carry out their jobs impartially in the interest of the country's citizens. In the United States, companies are forbidden from offering brides to domestic officials and, according to the Foreign Corrupt Practices Act, to members of the government of another country.

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