Maintaining compliance with all of the regulations that apply to your business keeps you in good legal standing, helps you avoid fines, improves your operational processes and boosts customers’ trust in your company. Keeping up with these requirements can be challenging though, especially since they can change over time.
How can you ensure that your company meets all of the standards that it needs to? Here are five basic steps for ensuring compliance.
Understand Which Requirements Apply to You
Before you can make sure you’re in compliance, you need to know which regulations apply to your company. The rules that matter to you will vary based on where you’re located, your company’s structure, the sector you’re in and more. Start by researching what rules apply to a company in your situation. Working with a lawyer, a regulatory expert or the regulatory agencies themselves may be able to help with this.
Internal requirements, which include those that owners, director or managers handle, vary according to your business structure. Corporations have the most stringent internal requirements, including holding shareholder meeting, adopting bylaws and recording stock transfers. LLCs have less strict requirements, and other businesses have relatively few obligations.
You also need to ensure that you’re in compliance with:
- All federal requirements, primarily federal tax requirements
- State requirements, which vary from state to state
- Sector-specific requirements, such as HIPAA for the healthcare sector
- License, permit and certificate requirements from your state, city or county
Create Written Policies and Plans
Once you understand what regulations you need to comply with, create written plans, policies and procedures that describe how you will achieve and maintain compliance. These documents should be specific about who is responsible for what tasks, how they should accomplish them and how they should document their compliance activities. These plans and policies should be easy to understand, use the right terminology and be in an accessible format.
Ensure Everyone Is on the Same Page
Everyone within your company that may impact compliance needs to be on the same page regarding why compliance is important and how it will be achieved. To help accomplish this, ensure that your policies and procedures are accessible to everyone who may need to reference them. Any time a procedure is updated or a new rule is introduced, ensure that all relevant employees are aware of the change. Also, all employees should receive training on the applicable regulations. When hiring new employees, make understanding regulatory requirements part of their onboarding training. It’s also beneficial to provide regular training to current employees to ensure that knowledge stays fresh and up to date.
Documentation is critical to ensuring compliance. You should establish a system for documenting all compliance-related activities as well as important business decisions. Then, ensure that employees follow that system closely. When in doubt, more documentation is always better than less.
To prove compliance, you often need to provide documentation of compliance activities. You may also need documentation of your compliance with internal requirements if you sell your business or if someone takes legal action against your company.
Regulatory requirements can change over time. Your business will likely change over time too, which could change which rules apply to it. Because of this, you need to keep a close eye on the regulatory landscape. Defining who is in charge of this task can help ensure it gets done.
It’s also helpful to periodically review your compliance plans, policies and procedures to determine if there are any changes you could make to improve them. This will help keep your company ahead of the curve, which is much better than playing catch-up.
Ensuring compliance with all relevant standards is crucial for any business. Doing so, however, can be complicated. While the applicable regulations vary from business to business, almost all organizations can benefit from following the steps above.