Why is knowledge of legal rules necessary before starting an enterprise?
Answer and explanation
Correct answer: To avoid penalties and risk of closure
Before starting, an entrepreneur should identify rules related to registration, taxation, safety, employment, consumer protection, and the particular business activity. Compliance reduces the risk of fines, legal action, suspension, or closure and supports responsible operation. It cannot automatically increase profit. Its purpose is lawful and safe business conduct, not frightening customers or copying competitors.
Frequently asked questions
What is the correct answer to this question?
To avoid penalties and risk of closure
Why is this the correct answer?
Before starting, an entrepreneur should identify rules related to registration, taxation, safety, employment, consumer protection, and the particular business activity. Compliance reduces the risk of fines, legal action, suspension, or closure and supports responsible operation. It cannot automatically increase profit. Its purpose is lawful and safe business conduct, not frightening customers or copying competitors.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: MSME and Business Entrepreneurship. Topic: Entrepreneurship Development.
