Running a compliant business will help you avoid litigations. You won’t have to worry about penalties and fines. You’ll protect your corporate veil and find it easier to access credit. This piece provides insight into three most important compliance levels for small businesses.
You should note that being complaint along these three compliance levels doesn’t necessarily guarantee that you won’t face some challenges in your business. Yet, being compliant will increase the odds of your business ship sailing smoothly.
Pay attention to Corporate Compliance
Corporate compliance generally refers to the activities and actions expected of your business as a corporate entity. Most small businesses are set up as LLCs. Hence, corporate compliance is a function of the actions that members and managers take.
An LLC must have filed articles of formation and paid filing fees. As part of corporate compliance, your business activities must remain within the scope outlined in your articles of formation. More so, you’ll be expected to pay taxes, annual report filing fees, and other fees for membership such as chambers of commerce to keep your business compliant in your state.
Corporate compliance on the part of a corporation will be the function of the actions taken by the shareholders and directors of a company. A corporation is expected to keep up to date with resolutions and minutes of meetings and the company will need to hold annual meetings. Corporations are also required to file annual reports in order to stay compliant.
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Lender compliance can keep you in business
Your business might be in a strong financial position today but there’s no telling the event (or series of events) that will push you off your comfort zone into a place where you need to search for funding for your business. However, business funding doesn’t happen in a vacuum and potential lenders want to see lender compliance before they are comfortable with giving you a loan. In fact, suppliers, industry partners, and some customers will want to see proof of lender compliance before they give you credit facilities.
To get started with lender compliance, your business must have a Federal “Employer Identification Number” (EIN) and it must match your business legal name. You also need to ensure that your business credit is decent (or least) showing signs of consistent improvement.
Regulatory compliance will save you from trouble
In order to avoid troubles with the state, it’s also in your best interest to keep your business compliant with regulatory requirements. Regulatory compliance means that your business is not flouting any law, regulation, and guidelines created to provide a framework for your operations and industry.
A business owner must endeavor to be compliant with local, state, and federal business laws and regulations. Some regulations may vary across state borders.
Regulatory compliance protects a company from lawsuits, fines, unfortunate incidences, and the bad press that such events usually attract. For instance, if you own a restaurant business, you’ll need to ensure that you are compliant with public health regulations in sourcing raw materials, storing, preparing, and serving food. You’ll also need to pay attention to public health with respect to ventilation, emergency exits, and building codes.