The law is the backbone of every business. Most small business owners don’t think of the law in this way. They usually think of the law only when they are facing a lawsuit.

But in reality, the law sets out the structure for how businesses interact with each other, with their customers and with their employees. After reading the list below, it may surprise you to see how much the law interacts with every day business.

While there is great latitude for businesses to grow and develop in different ways, these are the seven key areas where the law affects every service business:

#1        Entity Structure

The law defines certain entity types for businesses and each type has its own set of rules. The most common types are corporations, LLC’s, sole-proprietorships and partnerships. Within each of these types of businesses, there are rules governing operation, ownership, documentation and taxation.

#2        Owner Relationships

The law protects owner(s) through agreements designed to govern the relationship. Without strong structure, guidelines or rules to establish expectations and accountability, business partners can pose a high risk of business failure.

#3        Worker Relationships

The law affects how a business hires employees, the terms of employment, the use of independent contractors, the policies dealing with behavior and treatment, and many other issues such as non-compete agreements and non-disclosure agreements.

#4        Client Relationships

The law weighs in on how customer contracts are interpreted, the warranties that are provided with services and products, the disclosures and disclaimers that accompany any product or service and the rules governing transactions (especially those involving the sale of goods).

#5        Intellectual Property

The law governs the ownership of intellectual property – the creations people make and use in their business – such as copyrights, patents and trademarks. It also includes the use of technology, and the licensing of that technology, as well as cloud storage and data protection.

#6        Regulatory Compliance

The law sets out rules for particular industries regarding licensing and registrations. There are also regulations that must be followed for certain business transactions and interactions.

#7        Vendor Relationships

The law is involved in how businesses interact with other businesses in terms of contract interpretation, confidentiality and non-compete obligations, data protection, payment and delivery terms and liability limitations.