Business compliance is a general industry term for the way a business follows the regulations and laws governing its particular industry. No one starts a business to be a regulator. However, as your business grows over time, you inevitably bring others along on the journey with you, who are also regulating their business. You may initially meet industry standards for business conduct. However, as regulatory needs change, your company may need to adapt to those changes. And while business compliance is a general term, it’s important to understand that there are different business compliance requirements in different industries.
One example of business compliance at the grass-roots level would be home-based businesses.
Home-based businesses vary tremendously in what they are required to do by law. Home-based companies need to make sure that they follow all laws that apply to them, and that they are always fully compliant with those laws.
Another example of business compliance as a service at the regulatory level would be corporations filing federal or state income tax returns. Those returns must adhere to certain business compliance requirements, including the filing of the appropriate form(s). If the form-filing business fails to file the appropriate form(s), they run the risk of stiff penalties. Corporate compliance officers have a very specific job: ensuring that the forms are filed in a timely manner.
At the higher corporate level, business compliance involves company leadership. In fact, leaders of large businesses are typically required by law to have ongoing professional development and education regarding issues that pertain to their business structure. Additionally, those leaders may need to perform audits on an ongoing basis. They may need to make recommendations about changes in company structure that will enhance competitiveness. As such, leaders need to have a strong understanding of business compliance and its importance to their company.
Additionally, business compliance requirements vary from state to state.
In some states, there are no formal business compliance requirements; however, most states require that companies register with the state in which they do business. Furthermore, these states require that companies provide their clients with certain documents. For example, many states require us to file the annual Non-Disclosure Agreement (NDA) for state reporting.
The process of complying with state and local business compliance obligations is tedious. Every business owner should make sure they understand what their legal obligations are. If a company is not compliant, there are some very serious penalties that can result. For example, if a business does not file the appropriate form(s) and does not provide the appropriate information, they could be sued. Also, if they are sued, they may not have enough cash on hand to properly fight the suits.
- Business owners that choose to skip any one of the required filing steps can face criminal charges.
- As previously mentioned, failure to comply with business compliance filing obligations can result in criminal charges.
- In addition, they may be hit with additional civil suits as a result of not meeting all of their legal obligations.
It’s better to be careful than to be sorry, which is why every business should be fully aware of their legal obligations.
Even smaller businesses can benefit by knowing what their obligations are. Smaller businesses often do not have a dedicated staff to specifically file all of the paperwork. This means when they do choose to go ahead and be fully compliant, it can be difficult for them. Even if they can make sure they are compliant, they may not be able to get many of the small fines imposed as a result. It’s good to make sure your company is fully compliant, but it’s even better to make sure you’re never going to have to worry about being penalized or sued.