Owning your own business is one of the most rewarding experiences. You will enjoy unmatched independence and a flexible lifestyle. This is not to mention the financial rewards and personal satisfaction. However, running a company comes with tons of responsibilities. You must market your business, provide timely customer service, innovate, hire and manage staff, and ensure your business is legally compliant.
Unlike other day-to-day tasks, you have no choice regarding the legalities of your business. Failure to comply with legal requirements can lead to penalties, fines, and even the closure of your business. Keeping a company legally compliant and secure is overwhelming and expensive for many entrepreneurs. It’s better to comply with the legal requirements instead of dealing with class action lawsuits, court orders, penalties, and the chance of your firm becoming a dormant company.
In order to comply with all legal requirements, you must do the following.
1. Have An Experienced Legal Compliance Team
Your business must be registered with relevant authorities whether you own a partnership, limited liability company, or corporation. Additionally, your business must comply with all your state’s licensing and registration requirements. Although it is possible to handle these requirements on your own when registering your company, it does not end there. Federal and state governments require businesses to file various reports throughout the year. These reports include permits, statements, and licenses.
Failure to file the required paperwork on time can result in heavy fines, penalties, and loss of business. However, handling all the paperwork alone can be tedious and costly. Fortunately, you can hire a legal compliance team to handle everything so that you can focus on other business aspects.
2. Pay All the Required Taxes
Businesses are required to pay taxes to the federal and state government every year. The taxes you are required to pay are determined by the business structure you own. Some of the general types of business taxes you might be eligible for include the following:
- Income tax
- Excise tax
- Employment tax
- Self-employment tax
- Estimated tax
Income tax is paid by all types of businesses except partnerships. It’s a pay-as-you-go tax that should be paid as you receive income throughout the year.
On the other hand, an estimated tax is a federal tax that should be paid throughout the year on income that is not subject to federal withdrawal, including capital gains, self-employment, and prizes.
Excise tax is levied on particular goods or services. The excise tax you may have to pay also depends on the kind of business you operate.
Self-employment tax is a social security tax that self-employed individuals pay to cover the cost of Medicare and social security.
On the other hand, employment taxes are levied on employees and employers. As an employer, you must take a certain percentage from your employees’ salaries and pay the federal government.
Although many businesses leave tax compliance to their legal compliance team, involving your accounting department is vital. This way, you can avoid harsh penalties due to tax evasion. Our recommendation is to find best business accountants in Australia, because knowing the right information can make all the difference.
3. Get Surety Bonds
Surety bonds are essential regulatory tools to keep your business legally compliant and secure. Getting surety bonds can help your business win contracts by guaranteeing that the project will be completed successfully and on time. A surety bond is a three-party contract involving a principal, obligee, and surety company. The principal buys the bond, whereas the obligee is the client who requires the service.
The surety company offers the bond if it is proven to be bondable. Bondable meaning your business qualifies for a surety bond. Principals pay a small percentage of the total bond amount as a premium to the surety company. But no two surety companies are equal. To find the best bonding company, you must consider years of experience, prices, number of happy clients, and professionalism.
4. Protect Your Intellectual Property
Did you know that intellectual property theft costs the US government and businesses around $225 billion to $600 billion yearly? That’s why it is essential to register your business name and logo to protect your intellectual property. This is especially important for businesses that deal with inventions and innovations.
You can also take it a notch higher by filing a patent. At the same time, ensure that your business is not violating other businesses’ and individuals’ intellectual property rights. To do that, you must always check with the Intellectual Property Office before designing a logo or creating a brand name to avoid costly litigations.
5. Comply With Fair Labor Laws And Regulations
The federal and state government has put in place various labor laws and regulations to safeguard workers’ fair treatment and safety. You must follow these standards to keep your business legally compliant and secure. Start by ensuring that each employee receives the minimum wage and works the set hours. You should also give overtime pay to those who work beyond the set hours.
Additionally, ensure that all your workers get the minimum number of leaves required by law. Failure to comply with labor laws and regulations can lead to hefty fines and penalties.
6. Prepare For Emergencies
Every business faces challenges from time to time, and the financial cost of recovering from these challenges can be overwhelming. That’s why you should always be prepared for any eventuality by insuring your business. Having comprehensive business coverage will also give you great peace of mind.
To ensure your business is protected, you should take time to identify weaknesses and vulnerabilities. Knowing the risks your business is likely to face can help you take the right insurance coverage. You can use this life insurance company ratings chart if you need some help knowing the limits regarding your insurance policy. Some of the coverages you should consider include:
- Workers’ compensation insurance
- General liability insurance
- Commercial property insurance
- Data breach insurance
- Business income insurance
- Cybersecurity liability insurance
- Commercial auto insurance
- Commercial umbrella insurance
- Key person insurance
7. Follow Data Privacy Regulations
Every employer is required to keep employee data and information safe. Additionally, the law requires businesses to safeguard customers’ data and information. You can hire an in-house cybersecurity team to help you comply with all data protection laws and regulations. Alternatively, outsource your cybersecurity services to a reliable IT service provider.
Owning and running your business comes with its share of responsibilities and challenges. Keeping your business legally compliant and secured is probably the biggest challenge you are likely to save as a business owner. Fortunately, these tips will help you protect your business and keep it legally compliant.