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The pros and cons of government regulation on businesses

On Behalf of | Aug 23, 2022 | Business Law And Litigation |

There is an old adage that everything is big in Texas, and for many small business owners, that includes governmental impact on their operations. And when government agencies show up unannounced, it is often not good. Rules and regulations are needed, especially with major corporations, but meeting the standards required by various agencies can be expensive when small business managers must deal with other pressing and often costly matters as well. The problem is not regulation as much as over-regulation. But there are still some advantages to government oversight for smaller operations.


The primary advantage for small business owners with respect to staying within government guidelines is putting them in a position for protecting themselves in certain legal situations. Business licenses and the establishment of a business format allow many owners to protect personal assets and wealth, and acquire business insurance that can be important if litigation happens. Small business disputes are more common than many new business owners realize, and being validated (such as by having proper licenses) through government agencies can be an asset.


There are also disadvantages to government regulation when it is excessive. Tax implications are the first issue all businesses must address, and taxes can be local as well as state and federally based. In addition to a tax burden, some businesses face the threat of fines and other types of additional expenses when the government steps in. Depending on the type of business, there is any number of government oversight bureaus that can investigate any company and present certain legal challenges.

Government requirements should always be a component of any feasibility study for a new business startup. It is also important to establish a company with an ongoing strategy for reducing government intervention stress as much as possible, including businesses that are already in operation. Laws can change quickly, and all businesses must adapt.