Making sure your business is fully compliant is a complex and time-consuming task. BUT DON’T IGNORE IT.
Non-compliance can lead to serious aftermaths — severe fines and penalties, lawsuits, loss of goodwill, and even business closure, ultimately affecting your future business prospects.
Compliance means abiding by the guidelines set by the government and other relevant authorities — basically meaning you are on the right side of the law.
Compliance can come in many forms. As basics, you need to consider a few things.
For instance, whether you own a small handicraft business or run a packaged food industry or a momo shop, make sure you’re on the right side of the law.
First, register your company with the Department of Industry and with the local government. You will be considered as a legitimate business entity and your activity will be more reliable.
The next thing you need to consider is tax compliance. For this, registration for VAT (not necessary for all nature of businesses) and receiving a PAN (Permanent Account Number).
If you plan to employ people, you must be aware of labor laws. These laws include paying a fair wage, maintaining safe workplaces, following proper working hours, and providing appropriate leave entitlements.
However, as we said earlier, compliances come in many forms – for instance, if you are in the food packaging or processing industry, your business should strictly adhere to quality standards. For instance, in the fiscal year 2021/22, the Department of Food Technology and Quality Control (DFTQC) filed cases against 115 companies for producing and selling inedible food.
There are also cases where business operators have been arrested.
Businesses that follow federal and local government laws frequently outperform. Further, it can freely sell its products or services across several markets. Thus, a compliance-driven strategy strengthens the market presence and gives them a competitive advantage.
To learn more about the importance of business compliance, read along!
Importance of compliance for your business
Here are five reasons that make compliance important for your business:
Protects the company from legal action
When you follow the rules and regulations, you’re playing it safe and making sure your business stays on the right side of the law. Keeping proper records, paperwork, and financial reporting is usually necessary for compliance. These documents serve as proof and will help defend you in court and safeguard your company’s interests.
There may be severe fines, penalties, and legal repercussions for non-compliance. You reduce your risks of encountering such financial hardships and legal liabilities by maintaining compliance. This shows your commitment to upholding the law, which may be an alleviating factor if any minor breaches take place.
[For hyperlink: How to make sure your business is compliant? Read Here]
Improves internal processes
By ensuring that each employee is aware of and abides by the company’s regulations, compliance officers can enhance internal operations. To achieve this, you can develop training programs or request your suppliers and vendors to provide the instruction necessary to operate specific tools.
Proper guidelines and procedures are usually set by businesses to help with operations, ensure a certain degree of quality, and guarantee employee safety. In this way, you can ensure that the steps used in daily operations are followed and that emergency protocols are in place to stop unplanned shutdowns and mishaps.
Enhances customer trust
Customers are more inclined to trust a business and use its products and services if they are aware that it strictly follows the law and high standards. This is achievable because they know the law guards their rights and well-being. The requirements imposed by the business take their preferences and expectations.
Let’s say, you manage an online store where clients can buy a variety of goods. You can put a high priority on following rules that concern data privacy, consumer protection, and safe payment processing to increase your customer’s trust. Doing so can raise awareness of the brand and reduce customer complaints and product returns. This can help your company to boost sales, enhance brand reputation, avoid criticism, and grow your customer base.
Boost employee retention
Employee protection in the case of an unfortunate event is the root cause of many business compliance issues. Therefore, it’s critical that employees feel that their workplace is fair, professional, and secure. They will develop loyalty as a result of providing this overwhelming feeling, which will encourage them to stick around for longer.
The company’s primary duty is to make sure that no employees are subjected to harassment of any kind, including from coworkers as well as anyone in the management. This might cost loyalty and the loss of valuable employees. Thus, it is a wise move to include policies and procedures in your employee handbook that reflect your legal compliance duties.
Increase business revenue
A company can see a substantial rise in deals with other companies when it exhibits compliance, allowing it to expand its B2B activities. This is achievable as the majority prefer to purchase regulated products over unregulated ones to reduce risk.
Customers also tend to purchase more goods and services from businesses that adhere to regulations since they are confident that they are not selling anything illegal or outdated.
Compliance is a crucial component that can make or break your company. To avoid potential legal issues and unforeseen circumstances, you first need to internalize the importance of compliance and then follow necessary guidelines.
By ensuring the safety and security of the customer and employees as well as the organization, a healthy compliance environment contributes to sustaining the company’s professional conduct.
