Running a business entails a lot of responsibilities. From taking care of day-to-day operations, product research, staffing, marketing, and customer relations, the legalities of your business must also be safeguarded.
When it comes to legalities, a business owner has no choice. Unlike business procedures and strategies, which are dependent on the owner’s or manager’s discretion, legal requirements are mandated by the government. Non-compliance would mean fines, penalties, or, worse, the closure of the business.
For some entrepreneurs, complying with legal requirements is a tedious and costly process. This is true. But, dealing with a class suit or class action lawsuit, being slapped with court orders, and paying off penalties are definitely much more expensive and complicated. In other words, it’s best to prevent legal problems from arising, rather than dealing with one.
To ensure that your business’s legal status is safe and secure, you must always comply with the rules and regulations of your state (and city). Below are several ways to do that.
Hire A Dedicated Legal Compliance Team
Before any business can officially operate, it must be registered with the proper authorities. As a business owner, you’re probably familiar with the license and registration requirements of your state.
The requirements and concerned agencies differ depending on the state and the type of business structure you have—whether it’s a partnership, corporation, or limited liability company (LLC). Now, you may have complied with all of these already. However, that’s not the end of it. Most states require businesses to file annual reports and even biennial statements. Most of all, if your business has federal licenses and permits, these need to be updated annually, too.
It’s obviously hard to keep track of all these annual filing requirements and renewals, that’s why you need to hire a dedicated legal compliance team to do the job. Some businesses opt to have an in-house compliance department, but some prefer to outsource everything to a law firm like Sadaka Firm. Either way, their duties remain the same—to make sure that the business adheres to state regulations and federal laws in terms of filing and reporting annual statements.
Keep Your Tax Records Updated
Tax records can also be taken care of by your business’s legal compliance department. However, it needs the cooperation of your accounting department, too. Like permits and licenses, taxes have to be updated and paid each year.
The government imposes harsh penalties for tax evasion, so it’s really not a good idea to avoid this obligation. Aside from income tax, your business might also need to pay an excise, employment, and business taxes that might be required by your city.
Follow Fair Labor Standards
The state imposes many labor laws and regulations to ensure the safety and fair treatment of workers. As a business owner, part of your duty is to follow the minimum standards that are set by the government. These include paying employees the minimum wage, following the standard hours of work and giving overtime pay for work rendered beyond standard hours.
Employees are also entitled to a minimum number of leaves, including leaves for medical purposes. Keeping the workplace safe from risks and hazards is also the duty of the employer. Your business also has to file annual records and reports that concern your employees. Again, these can be taken care of by your legal compliance department.
Following Fair Labor Standards generally avoid labor disputes from arising within the workplace. It also avoids accidents and injuries from happening to your employees, which prevents your business from paying damages and extra compensation for injuries incurred during work hours.
Non-compliance with labor laws and regulations can result in hefty fines and penalties for the business. Small businesses that have 20 or fewer employees may have special accommodations in some states, so you might want to check that out.
Comply With Data Privacy Regulations
Businesses are mandated to comply with data protection laws and regulations today. Aside from employee data and information, your customers’ personal information must be kept safe, too. This is very important, especially if your business has a website where customers can sign up and enter sensitive information on.
To ensure that your business adheres to data privacy laws and regulations, you must strengthen data security and cybersecurity measures by using trusted software and programs that can detect malware and prevent cybercriminals from breaching your database. Failure to adhere to data privacy laws may result in fines.
Practice Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) is usually associated with branding and press relations (PR) purposes. But, beyond that, it can also be used as a way for your business to keep its legal status safe.
CSR programs can include environmental programs and advocacies. Using sustainable methods of production can easily make your business compliant with new environmental laws. Less emissions and fewer waste mean your business can avoid extra penalties, and you might be even eligible for tax credits!
Be Conscious About Intellectual Property Use
Registering your business name and logo is one way of protecting your intellectual property since this is part of your trademark. If your business delves with inventions and innovations, you might need to file a patent as well. However, all these are geared towards protecting the assets of your business. What you should be careful about is to avoid overstepping into others’ intellectual property rights.
This means that you must be diligent and careful whenever your business comes up with a new product design, brand name, or concept. You must check with the Intellectual Property Office if such names, logos, and signs haven’t been used by any other business before. Otherwise, this may result in a trademark dispute that could be a costly and litigious process.
Keeping the legal status of your business safe requires yet another round of work and extra expenses. It seems very tedious and crippling, especially for small businesses. However, all the effort and costs are worth it. Keeping your business legally compliant is not just for the sake of following bureaucratic requirements; it’s also for the safety and protection of your business and consumers, too.
Following minimum legal requirements can boost your reputation among customers because they’re assured that they’re dealing with a legal and registered business. Securing permits, licenses, and trademark registrations also keeps your business protected from fraud and unscrupulous individuals who are out to take unfair advantages over your business.