Compliance is a term that is often used in the business world, but many business owners need to learn what it means and how to stay compliant. This blog post will help you understand compliance and how it can benefit your company. Adhering to industry requirements and workplace norms is a necessity for businesses. However, it can be challenging to keep up with all the changes in regulatory policies.
Check with the Secretary of State
Many states require businesses, including corporations, limited liability companies (LLCs), and partnerships, to register before engaging in business activity within the state. It typically involves obtaining an Employer Identification Number (EIN) from the IRS, which functions as the business’s legal identity and helps route state tax payments to the appropriate government agencies. It may also include registering a trading name or doing business-as (DBA) if the business uses a different name than its registered name. It can be easy for a company to overlook its registration obligations, primarily when it operates across multiple jurisdictions. Whether through an out-of-the-blue questionnaire from a state or local agency, during due diligence before purchasing a new company, or as the result of the recently overturned Wayfair decision, there comes a point when business leaders realize they may have missed some or all state and local registration requirements. The severity of a compliance failure can vary depending on the type of business and the nature of the violation. For example, while failing to file taxes is not necessarily a breach of corporate law, corporations that do so will lose their good standing status and face the potential for back state or local tax liability along with associated interest, penalties, and fees. It can have severe consequences on a company, including the automatic voiding of contracts entered into before the noncompliance was discovered.
Check with the IRS
Maintaining compliance with the IRS is crucial if you want to employ the Occupational Safety and Health Administration’s workplace standards, trademark your business name, or apply for a federal tax ID number (EIN). It may include filing income taxes, maintaining records, and meeting other business owners. Keeping your business registration up-to-date can help avoid future legal disputes or challenges. It will also prove to your clients and customers that you are a legitimate business, especially in building trust. While you’re at it, you should also maintain any other documents that your state or local government requires for compliance, such as permits and licenses. Some of these may require renewal, while others can expire. These requirements vary depending on your industry and location, so check with the issuing organization.
Check with the issuing organization.
No matter the sector or location, all firms must abide by specific laws and rules to ensure their operations are legitimate. Some of these requirements include paying taxes, following employment laws (such as minimum wage and employee benefits), registering intellectual property, and adhering to workplace health and safety regulations. In addition, many companies must obtain licenses and permits from state, city, or county governments to operate in a particular area. Some of these licenses and permits require renewal, so keeping track of them is essential.
Another critical step is obtaining an Employer Identification Number from the IRS, which is like a social security number for your business. It will enable you to register bank accounts, submit applications for business permits, and offer evidence that your company complies with tax regulations. It’s also a good idea to create a checklist of all the business requirements and deadlines you need to meet to stay on top of your compliance obligations.
Compliance can be a tedious task, and even minor errors in paperwork can have significant consequences. However, entrepreneurs prioritizing compliance can avoid legal issues and maintain their reputations. They can also ensure their employees are paid appropriately, access funding and contracts, and remain competitive in their markets.
Check with your local government.
You must comply with business registration regulations depending on your business and region. Most of these requirements are external; they involve submitting paperwork or paying taxes with government agencies. There are also internal business compliance criteria that your company must meet for its record-keeping purposes. These records may be required if your business wants to sell or if legal action is initiated against the company. A few types of businesses require registration documents that must be renewed. These include licenses, permits, and certifications from state, county, or city governments. These must be maintained even after a company has ceased operations or changed ownership. Obtaining these licenses takes time and money, so planning is essential.
Regulatory compliance isn’t easy, but avoiding penalties and fines is necessary. The good news is that many resources are available to help businesses stay informed about changes at the federal and local levels. These resources can be found online, at events, through magazine subscriptions, or by working with a trusted tax professional. The process of registering your business can vary greatly depending on your location and industry. The best way to ensure compliance is to check with your local government. These individuals can provide the necessary information and help you register your business correctly. Once written, opening a bank account and operating your business as an established entity is possible.