If you're looking to start a business venture, you have probably stumbled upon the word "compliance" a number of times. Regardless of size, compliance is one area that no business owner should neglect. However, many business owners are still unaware of what it is or unsure on how exactly it can benefit their business. If you're one among them, we hope this article will help you get your basics right.
What does compliance mean for your business?
In a general sense, compliance means abiding by a set of rules. For your business to function legally, it needs to comply with specific industry standards, laws, regulations, and ethical conduct standards that apply to your business. For example, when we say Zoho is GDPR compliant, it means we handle our EU customers' data in accordance with the standards set by GDPR for protecting their personal information and privacy. In fact, Zoho follows GDPR standards for all our business operations worldwide. As a business owner, you must ensure that your business complies with all applicable regulations and have the right documents to back up your claim.
Giving importance to compliance can help you:
Become a trustworthy business
Avoid paying hefty fines or facing potential lawsuits due to negligence.
Maintain a clear standard on what you can and cannot do, and how your business should operate.
Make employees feel that they work in a secure and professional environment.
What's the difference between internal and external compliance?
Compliance becomes increasingly important as a business expands and is exposed to various challenges and audits. However, this isn't an excuse for ignoring best practices. To avoid any unfair or substandard business operations, there are several compliance regulations in areas such as health, security, data-privacy, finance, environmental concerns and more. Whether your business is large or small, if you're serious about growing, it's essential that you have a solid balance of both external and internal compliance right from the start.
External compliance, also known as regulatory compliance, refers to following the rules, regulations and industry standards set by the law. These are mandatory guidelines you must follow in order to stay in business. For example, registering your business name is an act of practicing external compliance.
Some important external compliance requirements you should be aware of:
Australian Business Number (ABN)
Goods and Services Tax (GST)
Tax File Number (TFN)
Privacy and data protection
The Privacy Act (1988) and Australian Privacy Principles (APPs)
Do Not Call Register Act (2006)
Spam Act (2003)
Competition and Consumer Act (2010)
Trade Practices Act (1974)
Free Trade Agreements (FTAs)
Workers’ Compensation Insurance
Work Health and Safety (WHS)
Internal compliance, on the other hand, refers to following the rules, protocols, and codes of conduct set by your business. Having your own compliance program can help your business avoid internal conflicts and maintain high operating standards. Implementing a social media policy for your employees is a good example of internal compliance.
Other internal compliance rules you can include:
Which employee activities you can monitor, and how.
How to handle discrimination complaints.
What forms of donations you can make on behalf of your business.
The penalties for damaging a business resource or property.
How to address conflicts of interest between employees.
Steps you can take to ensure compliance
Here are a few strategies to keep your business compliant in the long run.
Keep track of changing laws and regulations.
When you run a business, it's always important to stay updated on changing laws, regulations, workplace norms, and applicable industry standards. To prevent unintentional breaches, periodically seek legal advice from a consultant or hire a full-time compliance officer to help you create a compliance program and identify potential regulatory risks. These people will take responsibility for monitoring and reviewing business operations to make sure you comply with applicable laws and internal policies.
Schedule regular internal audits.
Conducting regular internal audits allows you to uncover where you're falling short on compliance requirements and highlight areas you need to improve. These audits are usually conducted by your employees or a compliance officer to check how strictly your business adheres to its internal guidelines and code of conduct. More importantly, they help your business prepare for external audits conducted by government or regulatory agencies.
Enforce employees to be compliant
Employee cooperation is crucial for business compliance, so it's important that your staff are aware of it. As an equal-opportunity employer, it's your responsibility to ensure that your policies are applied fairly. Make sure everyone understands your workplace policies and acceptable codes of conduct, why they are in place, and the consequences of not following them. Additionally, it's important that your staff are well-trained in documenting and keeping a record of all critical information and transactions that occur on behalf of your business.
Use the right software.
It's no news that today, technology has a solution for almost every business problem. By investing in the right compliance management software, your business can reduce human error and automate the tedious task of identifying potential warning flags before they become a serious issue for your business. Before you choose your software, do your research to make sure it's from a reputable cloud vendor and has all features necessary to your industry, as well as the right integration capabilities to help you get the most out of it.
We hope this post helps you better understand compliance regulations and why your business should follow them diligently. If you're looking for more detailed information about compliance, here are some helpful links to continue your research.
Legal essentials for business - business.gov.au
Legal requirements for small businesses - Australian Securities and Investments Commission
Small business and the Fair Work Act - Fair Work Ombudsman
Implementing a compliance program - Australian Competition and Consumer Commission
Workplace safety requirements - Safe Work Australia
Comparison of data protection laws worldwide - DLA Piper
Note: This article is intended only to help businesses understand the importance of compliance and should not be interpreted as legal advice for making business decisions.