The core mandate of any business is to make profits. Unfortunately, that is not all that occupies a business owner or manager, as they have to deal with many other things to keep the business running. One of the things that a business owner or manager has to do to ensure that they maintain their operating license, keep the business running and attract and retain customers is ensuring they are compliant with various government rules and regulations as well as those of bodies in their area of business.
There are many governmental and legislative rules and standards a business has to comply with either voluntarily or that are mandatory to keep the business running smoothly. Maintaining compliance for your business comes at a cost and is a time-intensive activity since it is a process and not a one-time event. Business compliance can be either internal or external and both impact on the success of a business.
Internal business compliance is applied within the business and stipulate actions that are to be taken by various stakeholders such as shareholders, employees and managers. They are important in ensuring that a business is operating optimally and that the interests of various stakeholders are addressed. Some internal business compliance requirements include determining when and how often director and shareholder meetings take place, stock issuing to shareholders and updating of bylaws to name but a few.
External business compliance is placed on the business by the state the business has operations in as well as various regulatory bodies. There are the various requirements the state or regulatory bodies place on the business to protect the public from the business or its activities such as environmental and tax compliance.
It is therefore paramount that a business maintains compliance and there are several ways of doing it. Below are some tips:
Determine your business’ compliance status
This requires that you list down the various types of compliance your business must adhere to as well as those you would like it to comply to. This provides you with a way of determining what needs to be done and by when. It is also important to determine how much resources are being invested currently on compliance as well as what resources will be needed in the future for the same. This enables you to be well prepared in advance.
Have a compliance department
Ensure you have a department dedicated to ensuring your business stays compliant. The department can be an offshoot of your legal department or a separate department entirely. You should be able to determine how the resources required in achieving targeted compliance from the compliance audit results. A compliance department handles tasks such as risk identification e.g. loss of an operating or franchising license, determining ways to control the risks, monitoring the performance of the measures put in place, resolving any compliance problems that arise and providing information and advice on compliance.
Proper record keeping
Various documents are necessary for compliance and also to prove a business’ compliance. It is important to keep evidence of all your filings and documents related to compliance for future reference and as evidence in case of any problems.
Various compliance requirements also require that proper records be kept, such as bookkeeping for tax purposes and annual reports to ensure external business compliance and for internal auditing and analysis to meet internal business compliance requirements.
Business compliance is important to not only to ensure that a business can remain operational but as a way of managing risk and improving a business’ reputation and relationship with its customers and surrounding community.