Maintaining compliance in business can seem like a daunting task. There are countless laws and regulations to keep track of that can feel ever-changing.
What is corporate compliance, exactly? Why should you care about maintaining it for the health of your own business? Today, we will cover what corporate compliance is and why it is critical for business owners.
In short, corporate compliance is a set of guidelines and best practices that businesses must adhere to in order to avoid legal penalties.
These can include federal, state, and local laws as well as industry-specific regulations. Depending on the size and scope of your business, you may need to comply with one or more of these regulatory bodies.
For example, the medical industry operates under heavy corporate compliance regulations surrounding informational privacy. The Health Insurance Portability and Accountability Act (HIPAA) dictates how medical organizations can record, store, and transfer confidential patient data. Failing to comply with HIPAA standards can result in heavy consequences for businesses.
There are a few key reasons why corporate compliance should be a priority for business owners. These include, but are not limited to:
Perhaps the most obvious reason to maintain compliance is to avoid incurring costly financial penalties. Depending on the severity of the violation, businesses can be fined by government agencies or other regulatory bodies.
Additionally, non-compliance can hinder your ability to attract investors or secure loans. Financial institutions are often hesitant to work with businesses that have a history of violating regulations.
In some cases, corporate compliance violations can lead to criminal charges. This is particularly true in instances of fraud or embezzlement. If convicted, business leaders can potentially face jail time in addition to financial penalties.
Another significant consequence of failing to comply with corporate guidelines is reputational damage. This can harm your business’s public perception and may also impact customers’ willingness to pay for your products or services.
Last but not least, corporate compliance helps to ensure that businesses are operating ethically. This plays a significant role in maintaining a positive company culture and ensuring that employees feel secure working for your business.
Take time to educate yourself on federal, state, local, and industry-specific corporate compliance regulations. Online and print news publications that serve your industry will often supply you with information on any evolving legal topics that you should pay attention to. You can also consult your corporate attorney, accountant, and/or HR manager for further guidance.
Your employees play a critical role in maintaining corporate compliance. Be sure to educate them on your company’s compliance policies and procedures as well as the potential consequences of violating these policies. You might also want to consider establishing an anonymous reporting system that allows employees to report any potential violations they witness without fear of retaliation.
As a business owner, it is important to lead by example and set a positive tone for your organization. Model ethical behavior for your employees and encourage them to do the same. Promote an environment of mutual respect in which employees feel empowered to conduct their work ethically.
Make sure to review your corporate compliance policies on a regular basis to ensure that they are up-to-date and effective. As your business grows and changes, your compliance needs will likely change as well. By being proactive, you can help to avoid any potential legal issues down the road.
Maintaining absolute corporate compliance can feel like a full-time job in itself. While you’re focusing on the core products and services that make your business unique, you cannot afford the time to distract yourself with other obligations. That’s where a team of corporate compliance experts can provide immense value to your operations.
At TBM Payroll, we equip our partners with the means to confidently ensure complete corporate compliance across governmental and industry-specific regulations. Serving transportation, hospitality, and contracting business in the New York Capital Region, our team can fulfill your human resources management, accounting, and benefits administration needs to help your organization thrive from within.
To learn more about the power of partnering with our team, contact us any time.