Registering your business as a corporation or an LLC is a smart thing to do. However, once the filing of the initial paperwork is done, there’s more work to be done. As a business owner, it’s your responsibility to ensure your growing business remains operational by staying compliant with the federal and state rules.
Here are a few ways of keeping your startup compliant with regulatory requirements.
1. Have a Checklist of All Compliance Requirements
You’ll need a checklist of all the requirements your business needs to meet to be compliant. You can visit your state’s Small Business Administration website for these requirements. Moreover, you’ll need a timeline and the paperwork that will have to be filled to comply with the requirements. Here are examples of regulations that your startup needs to look into:
Tax Code
This relates to the taxes you need to pay, when to pay them, and how to set up your business for tax payments in the future
Employment and Labor Regulations
These are federal and state laws that govern employees. If you are not aware of them, visit the First Step Employment Advisor in the Department of Labor to help you determine the federal labor laws that your business should comply with.
Some of the labor laws you’ll need to comply with include:
- Wages and hours standards, which are provided by the Fair Labor Standards Act
- Workplace safety and health standards contained in the Occupational Safety and Health Administration (OSHA) Act
- Equal opportunity requirements as enforced by the Equal Employment Opportunity Commission (EEOC)
- Family and medical leave requirements as provided by the Family and Medical Leave Act (FMLA)
Antitrust Laws
Antitrust laws address issues that may arise when your company is competing with other businesses or vendors. These may include:
- Discussion about prices with competitors
- Conspiring to allocate customers or markets
- Conspiring to boycott other competitors’ services or products
- Price discrimination regulations
Environmental Regulations
There are many federal and state environmental regulations that will affect your startup. You can check on the EPA small Business Gateway to understand the environmental laws you need to comply with.
Advertising Laws
Advertising can take your startup to the next level. However, you should play by government rules and regulations as a violation can lead to hefty fines.
For instance, there are advertising regulations you have to meet if you use testimonials in your ads. You also need to ensure that the claims you use in your advertisements aren’t deceptive.
Privacy Rules
Your business will likely have sensitive data relating to your employees. There are specific rights to privacy in the workplace for your employees.
For instance, the Health Insurance Portability and Accountability Act (HIPAA) doesn’t allow for sharing of a patients’ health data without their consent.
2. Keep a Clear Paper Trail
In case federal or state regulation officers need you to prove compliance, you’ll need to provide the case using business records and documents.
For instance, when you make an entry on the tax return, you bear the burden of proof. Therefore, you need documentation that proves that you are eligible to claim certain deductions and expenses. You can establish proof by having records substantiating such claims.
It is critical to keep records on matters such as the handling of debts, business assets, and other business-related activities. Some of the documents that you need to retain in a bid to keep a clear paper trail include:
- Meeting minutes
- Business governance and regulations documents
- Cash register receipts
- Invoices
- Bank deposit slips
- Canceled checks
- Accounts statements
- Credit card receipts
- 1099s forms
3. Digitize Your Original Documents
Technology is changing how startups do business. Having a pile of paperwork records can be risky for your business.
Hardcopy original documents can get lost, destroyed, or stolen. Moreover, when you need documents, going through a pile of paperwork can be a daunting task.
In the past, the Internal Revenue Service (IRS) requires businesses to retain their tax returns and documents for at least seven years. However, IRS Publication 583 indicates that retention of such documents can be based on the statues they fall under.
Moreover, the IRS accepts electronic accounting systems such as QuickBooks for audits. Government agencies are also likely to accept virtual copies of your original documents.
Having virtual copies of your records saves space and makes record-keeping more manageable and more organized. Scanning your original paper documents and storing them on a hard drive also protects them from disasters such as fire and theft.
Set up a virtual document retention process for your startup. The process doesn’t need to be sophisticated as you can use email to store your documents and to keep records. Other options include storing the documents on a hard drive or the cloud.
Complying with federal and state business regulations protects your startup and the management from hefty fines and possible jail terms. Follow the above tips to ensure your startup is compliant.
