Why Corporate Compliance Is Essential to Your Business
Corporate compliance keeps your business active and in good standing with the government. When you are not in compliance, you can face fees, lawsuits, and damage to your business. Compliance regulations may differ from company to company but if you are not in compliance you may not be allowed to continue operations in your state.
Different Businesses, Different Rules
Corporate compliance involves the rules and regulations that governments set out for how companies should behave and operate. For example, a restaurant business has sanitary and food quality rules that must be obeyed to remain legal and compliant. In another field, someone in construction will have building codes and material requirements to follow.
All businesses will have rules outlining recommended financial activities and tax management practices. Every company needs to know the specific regulations that apply to them and then make sure all operations are in compliance.
What Happens If You Fall Out of Corporate Compliance?
It’s not usually a criminal act to fall out of compliance, but there are legal and financial consequences that get more severe the longer a business fails to comply. First, most businesses will receive warnings that they’re not meeting compliance regulations. If this is ignored, warnings become fines. If these warnings are still ignored, the business can fall out of “good standing” with the local government and business community. Losing “good standing” status results in a few different consequences like being denied court access, receiving tax liens, refused loan or credit line applications, and even personal legal liability. If this continues then the local or state government may shut down and dissolve the company.
Maintain Your Policy
Businesses should stay informed about what rules apply to their practices at the local, state, and sometimes even federal levels. For smaller businesses, you can likely follow these rules yourself. At bigger companies, you’ll need a corporate compliance plan to share with employees.
If your company maintains and follows a corporate compliance policy, your business can remain in good standing.