Legal environment simply means a set of rules and regulations that govern doing business in a given country. These rules and regulations vary from country to country. As home business owner, you need to know how the legal aspects that govern the type of business you are involved in affect you. They may positively or negatively affect your business. How knowledgeable are you about the legal aspects pertaining to starting and running a business in your country? If you have never bothered to find out about the legal environment in which you operate and how it can impact on your business, it’s important that you try to know how the law affects your business at every stage of its development before it’s too late. And if you intend to start a business, some of the things to give first priority are the legalities involved in running a business in your marketplace. If you are finding it difficult, then I recommend you seek the services of an expert in this area to help you.  Firms, as societal entities, operate in particular economic, political, and legal environments. The legal environment is a result of legislative intervention by the government (state) and the positive practices that are recognized and sanctioned by the positive law. Historically, the legal environment has usually been nationally defined, although scholars have tried to group legal systems into various groups, based on their similarities and dissimilarities. A student of this topic would usually argue that there are two basic groups of legal systems, which traditionally have been opposed: the Anglo-Saxon (Anglo-American) model and the continental European law. However, although both main systems of law may have their distinctive features listed, in fact there are far too many convergences in recent times. In the past the common law (Anglo-Saxon) model would be predominantly based on the precedents, and the continental European law would be primarily based on the codifications. But, there is ever-increasing legislative activity in the Anglo-Saxon countries, with a number of codifications taking place as judiciary may uphold the consistency of court practice. In either system, a judge may take a stance to create a precedent, but the sources of precedent would differ significantly. Growing empirical literature has attempted to prove the overall superiority of the Anglo-Saxon model.  Under a federal form of Government, people tend to confine authority of the Central Government with functional autonomy of the State Government.  Similarly, when the principle of democratic decentralization is accepted, people authorize even the local Government to collect some business taxes and spend money on local activities. Thus, the system of Government and the structure of administration affect business. In order to secure maximum favor from the existing Government, the businessmen also create their own lobby and it is the strength of this lobby which reflects whether the Government adopts pro business or anti business measures. Political stability is another critical element which also affects business operations and business grows in a region which is politically stable. Government formulates and executes  a number of policies and programs and in case the Government frequently changes its industrial licensing policy, tax policy or trade policy and the like, then it unnerves the business sector and thereby affects business investment and related activities.