Nowadays, businesses have to comply with a wide range of laws and regulations which can seem like a chore at times. However, organizations spend $5.47 million on compliance, which is still much less when compared to $14.82 million for non-compliance.
Needless to say, non-compliance can cost you a lot of money, lose your business, and in the worst-case scenario, land you in jail. But all of that can be avoided if you know the ways for your business to stay compliant and keep you out of financial and legal trouble.
Write a sound business planNo matter if you’re just starting your business or have had it for a while; if you don’t have a business plan, that needs to change right away. Just like a house would come crashing down without a foundation, so would a business without a sound business plan.
A business plan is a document that is written up by the leaders of an organization and later used as a roadmap for success and growth. When you write up this plan, you need to take the company’s strengths and weaknesses into account as well as multiple other factors.
Business planning is important for many things. This will be your roadmap to success, what you turn to when things aren’t going how you thought they would, a way to bag investors, and finally, a document to help you stay compliant. When your business planning also includes a legal section, saying compliant will be much easier.
Ensure SOC 1 complianceSOC 1 compliance isn’t important for every business, but it is for those whose services impact the financials of their clients. Some examples include payroll processors, SaaS companies that may impact financials, data center companies, and so on.
If you have an impact on your clients’ financials, pair up with a SOC firm that will help you get your SOC 1 report and ensure SOC 1 compliance. To stay SOC 1 compliant, you need to have a SOC 1 report, which can be done by a CPA firm that specializes in auditing business process controls and IT.
In this report, management needs to assert that certain controls were put into place to ensure the objectives of the report were made. The CPA firm you hired needs to provide an opinion on whether or not they agree with the assertions the management made.
Within a SOC 1 process area, there are certain control objectives which are the purpose or aim of controls. You can view these control objectives as the category of the audit process area. Their purpose is to address the risks these controls were intended to migrate.
In simpler terms, when you ensure SOC compliance, you’re making sure that your organization’s services are valid, and that you have taken all the necessary steps to protect your clients’ data. The report pays special attention to the internal controls over financial reporting.
Use compliance softwareWe live in a digital world and companies have the opportunity to benefit from various tools and software that are on the market. There are many ways tech innovations can help you manage business operations more efficiently and ensure compliance, but only if you have the right tools.
There is certain software that was made specifically for compliance, but there are also some tools that can help you stay compliant while also making your job easier.
For example, you can use an automated payroll tool to ensure all of your employees get their salaries on time and that there isn’t any financial non-compliance. In a recent survey, 86% of companies surveyed agreed that innovative digital technologies have helped identify financial crime.
Some other tools you can use include HR management software, EPR systems, and customer relationship management solutions.
Work with a lawyerNobody knows all the regulations a company needs to comply with better than a professional lawyer. Even though hiring one can be expensive, having a lawyer on your payroll can be very beneficial because they will be up to date with all the latest laws and regulations so they can give you the best legal advice.
When you work with a lawyer, they will also conduct legal check-ups regularly during which they can find those small errors that you might miss. And it would be much better for your business if you spend money on a lawyer than pay high fines for non-compliance.
Make sure your employees follow proceduresCreating policies that ensure your company stays compliant won’t do anything unless your employees are following the proper procedures. Non-compliance from employees can happen very easily, especially if you have to change certain practices due to new laws and regulations.
It’s important to communicate your company policy and procedures with your employees frequently because sometimes, accidental non-compliance happens due to simple miscommunication.
Include a section on the policy and procedures in your onboarding process, and discuss any changes before they happen. You can also create an easily accessible digital library where your employees can check the rules.