A lot of people dream of launching a company, yet not all of them get to experience it. Entrepreneurship is not an easy journey. It comes with risks and hurdles. One of the challenges in running a business is to ensure corporate compliance at all times. Whether the company is a small venture or a big organization, compliance is necessary. Not only will it ensure smooth business operations, but it will also provide legal protection.
What Is Corporate Compliance?
The first thing a company needs to know is what compliance is all about. Generally, it is defined as the ability to lead a team to achieve certain standards of conduct.
However, what many people fail to realize is that there are two types of compliance. The first is internal compliance. The other one is external compliance. What is the difference between them? The answer can be found in the terms themselves.
Internal compliance refers to measures that a business entity has to take within its business to set standards and maintain a specific level of quality. It may include having a code of conduct or business ethics that the whole organization adheres to.
On the other hand, external compliance is also referred to as regulatory compliance. It involves the measures that a business entity has to take in order to comply with federal and state laws.
Simplify Corporate Compliance
Ensuring compliance, both internally and externally, does not have to be a complicated ordeal. Simplifying it may even help in preventing any issues. Here are some of the things companies can do:
- Review compliance laws.
The first step in creating a simple yet effective program is to figure out the requirements from the federal government and the state governing agency. For instance, a business entity will have to register with the state through the submission of formal paperwork and payment of filing fees. That includes the completion of other tasks as well, such as obtaining an Employer Identification Number (EIN), getting certain business licenses and permits, and registering with the state tax agency.
- Come up with standards for internal compliance.
If the company does not have standards yet, start drafting one. Those that have existing standards will have to review them and ensure that all aspects are covered. For example, include compliance regulations for employees and vendors. Those should include ethics, behavior, hygiene requirements, and corporate procedures.
It would also help to think of a way to effectively communicate the internal compliance regulations. Some create employee handbooks. Others make employees sign a written agreement. There are also those that host training programs to help instill these values in employees.
- Combine the company’s internal policies with its legal requirements.
It is important to make sure that the company’s internal policies support external compliance obligations as well. Doing this can prevent contradicting compliance requirements that could lead to bigger issues.
Other Steps to Take
While the above mentioned practices can help in creating a good compliance program, taking extra steps may be necessary to further simplify compliance. Here are some aspects a company needs to look into:
- Auditing And Monitoring – The company has to audit its compliance program to make sure that everything is being properly executed. Periodic assessment can also gauge the effectiveness of the program.
- Risk Assessment – After auditing and monitoring, the company will have to conduct a risk assessment. Find out what types of violations could lead to the closure of the company. Are there any safety risks for the customers or employees?
- Communicate – Another important thing a company has to ensure is proper communication of the compliance program and requirements. No matter how solid a program is, it will not be effective without proper implementation. To do that, a company will have to educate and train its employees to make sure that they know their part in ensuring company compliance.
Get Professional Help
Corporate compliance helps a company stay on track in achieving its goals. At the same time, it will also maintain the good standing status of a business entity with the state.
Running a business comes with many responsibilities that make it hard for some companies to focus on ensuring compliance, both internally and externally. Fortunately, there is no law requiring the company to handle everything on its own.
For instance, a third-party organization like DoMyLLC can help ensure external compliance. Our team of experts can handle compliance needs, such as business filing, corporate entity management, and a registered agent. Contact us to learn more about our services.