You’ve achieved your dream of owning your own business, and you can’t wait to see how you’ll make it grow. When you have your eyes on your success, don’t forget to keep your feet on the ground and your business in compliance with federal, state, and internal requirements.
Internal compliance is also related to what kind of business you own. As the name implies, it includes all the things that the company must do within itself and documents for itself.
Corporations have the most internal requirements of any type of business: they need to hold recorded annual meetings for directors and shareholders, they need to adopt and follow their bylaws; they need to issue stocks to their shareholders and record the transfers. The internal requirements help to ensure transparency for your clients, customers, and the general public. As a general rule, internal regulations do not have any penalties, except for those determined by the corporation. Limited Liability Corporations (LLCs) have similar rules to follow, but they are not as stringent.
Even if you’re not a corporation, you should create and follow your own rules. It never hurts to document your standard operating procedures, important decisions, or rules for employment and continued employment.
Most external requirements involve filing paperwork or paying taxes with state or federal governments. Unlike internal compliance which often does not affect small businesses, all businesses must follow external requirements.
State requirements for businesses are broken up by the type of business that you own and operate. You’ll want to check in with your state to find out what your filing requirements are, and how often you need to fulfill your reporting requirements. Often you will need to create annual or biennial statements of some form, as well as amendments and changes that you’ve made in larger types of businesses. In addition to reports, you will generally have fees and taxes to pay to the state. Those fees commonly accompany your reports to cover costs incurred.
Federal requirements, unsurprisingly, tend to focus on taxes and safety requirements.
One requirement that only applies to larger small businesses or LLCs and corporations is the Affordable Care Act. It is a requirement for businesses that have 50 or more employees.
There are other requirements for businesses that don’t require any reporting but still need to be followed. These include copyright laws, marketing/advertising laws, and any specific health and safety laws. If you do not follow these requirements, you can be fined or face penalties from the state or federal government.
Some of the requirements are specific to business types. Licenses, permits, and certificates are required by both state and federal laws. Two common examples are nursing certification or inspections for food sales.
The US Securities and Exchange Commission (SEC) has a detailed list of small business compliance guides. The Federal Communications Commission (FCC) has a very specific and detailed list of their requirements for small businesses on their website.
Being – and staying – compliant is a way to make sure that you can make your business grow. It might feel like it takes a lot of effort, but all success does.