When you identify compliance issues within your business, it can take time to design new internal policies, educate staff, and monitor the efficacy of a newly implemented strategy. This is the biggest benefit of evaluating your company’s labor law compliance in the Fall of each year: to ensure that if new changes are required (alas, they often are), any issues you need to address and resolve won’t carry over into the first or second quarter of the new year.
Although certain types of businesses are obligated to comply with more federal, state, county, and local labor laws than others, it’s fair to say that ensuring company-wide compliance is a universally demanding task. Many businesses worry that they are missing legislative updates, overlooking a poster requirement, failing to adhere to a local requirement, or failing to properly meet a “good standing” jurisdictional standard in a region where they operate.
In this article, we’ll explore some of the compliance issues that could impact your business and offer actionable suggestions to “grade” and improve your company’s compliance strategy well in advance of the new year.
Whether it’s a regulatory or corporate compliance issue, the legal and financial consequences of noncompliance can be severe. These penalties not only cost you financially and detract from your daily business operations, but risk damaging your reputation in your industry and among your client base. Let’s explore the compliance issues you should evaluate in the Fall of each year based on your business type, geographical location(s), and other factors.
Internal compliance requirements vary based on your business structure and type. For instance, LLCs should hold yearly meetings, issue membership shares, uphold an operating agreement, and manage membership shares. Corporations are required to abide by even more stringent internal compliance requirements. They must formulate bylaws, host annual meetings for directors and shareholders, document meeting minutes, issue stock to shareholders, and keep records of any stock transfers. Even businesses that fall outside of these two categories should aim to keep records of all major business decisions, policy changes, and meetings.
If your business operates in multiple jurisdictions, you must maintain legal “good standing” in each state/region by completing the following steps:
To demonstrate the nuances and potential challenges of this process, Virginia (as just one example) requires that corporations submit annual or biennial reports and personal property tax returns. In the latter case, policies in Virginia vary county-by-county, so that in Arlington County, furniture, computer equipment, and other forms of property are taxable under the county’s Business Tangible Personal Property Returns policy while other counties have their own distinct requirements.
Additionally, submission deadlines for jurisdictional documents vary across states and localities, leaving corporations to navigate a host of regulatory and corporate laws while ensuring timely delivery of all internal documents. The challenges are compounded further when a corporation operates in multiple jurisdictions where, in each case, local and state compliance requirements must be strictly upheld.
In terms of federal filing compliance, the majority of businesses must pay federal taxes, meet the standards of the Affordable Care Act, and frequently update or renew any certificates, permits, or licenses specific to their industry.
Additionally, businesses must stay in compliance with a host of labor laws related to workplace posters, health & safety in the workplace, the Americans with Disabilities Act (ADA), and other industry-relevant requirements.
As most employers know, state labor laws are frequently updated or amended. For instance, many states are currently updating or introducing legislation related to increases in the state-wide minimum wage, healthcare coverage, 401(k) programs, and mandatory workers’ compensation.
Even so, when it comes to annual filing requirements, corporations, LLCs and other business types share some common compliance “musts.” These include the following and more:
Although addressing the full range of compliance concerns within your company can feel like a daunting task, there are practical and proven methods that can improve your policies, increase accountability, ensure open communication, offer training, monitor violations, and help you articulate best practices for the year ahead.
All alliteration aside, we recommend keeping your compliance review process annual and autumnal. Simply put, many businesses “save” compliance review or compliance auditing for December of each year. The obvious downside of this approach is that you may need several months (at least) to identify compliance issues and rectify them with new policies, procedures, and trainings that set a new company standard. If you start this process in August or September of each year, you can move forward into the new year with assurance that your compliance record will be issue-free from start to finish and not be compromised by a rocky first quarter.
As Fall approaches, use your in-place compliance review procedures to evaluate the number of violations that have occurred company-wide. This is an opportunity to notice trends/recurring problem areas and to calculate how much violations have cost your business in fines, legal fees, etc. While reviewing the results of your company’s compliance audit, you may determine that your business will need software, outside support, or monitoring tools that can assist you with reducing noncompliance, including its yearly financial impact.
Your compliance and ethics program should ideally offer all of the following, but bear in mind that this is an area where you can get creative and adaptive to match the specific needs of your business and industry:
Implementing a comprehensive and effective compliance strategy is simplified when you work with experts in regulatory and corporate regulations. With Payday in your corner, adhering to federal, state, and local business laws has never been easier. We know the ins and outs of filings, deadlines, eligibility, reporting, oversight, and everything else that compliance can throw your way.
We’re dedicated to helping you develop a compliance strategy that keeps you ahead of schedule, reinforces an accountable company culture, and keeps you free of all penalties so you can focus on your core business operations. Interested in permanently resolving your compliance issues? Contact us today to start our collaboration.